Supreme Court Sets Aside NCLAT Order Upholding CCI's ₹202 Crore Penalty On Amazon In Future Coupons Deal
The Supreme Court on Wednesday allowed Amazon's appeal, setting aside the CCI's ₹202 crore penalty and suspension of approval for its 2019 Future Coupons investment, along with the NCLAT order that upheld it.
A Bench comprising Justices Vikram Nath and Sandeep Mehta ultimately held that both the CCI's December 17, 2021 order and the June 13, 2022 judgment of the NCLAT could not be sustained.
“In view of the findings recorded above, the appeal is allowed. The impugned judgment dated 13 June 2022 passed by the NCLAT, and the order dated 17 December 2021 passed by the CCI are set aside.”
The Supreme Court also directed refund of any amount deposited or recovered from Amazon pursuant to the impugned orders, together with interest at 6% per annum.
“If any amount had been deposited or recovered from the appellant pursuant to the aforesaid orders, the same shall be refunded to the appellant within a period of eight weeks from today, together with simple interest at the rate of 6% per annum from the date of deposit/recovery until the date of actual refund.”
The Bench further clarified that if the refund was not made within eight weeks, the unpaid amount would carry enhanced interest at 9% per annum until payment.
“In the event the refund is not made within the aforesaid period of eight weeks, the amount remaining unpaid shall carry simple interest at the rate of 9% per annum from the expiry of eight weeks until the date of payment.”
Background
The dispute arose from proceedings initiated by the Competition Commission of India against Amazon.com NV Investment Holdings LLC over its 2019 investment in Future Coupons Pvt Ltd (FCPL), a promoter entity of Future Retail Limited. In November 2019, the CCI had approved Amazon's acquisition of a 49% stake in FCPL.
However, after disputes emerged between Amazon and the Future Group during the proposed Future-Reliance retail transaction, complaints were filed alleging suppression of material facts before the regulator.
On December 17, 2021, the CCI suspended its earlier approval and imposed a Rs. 202 crore penalty on Amazon under the Competition Act. The regulator held that Amazon had concealed the true purpose of the transaction and failed to disclose strategic rights over Future Retail and commercial arrangements forming part of the combination.
Referring to Amazon's internal correspondence, the CCI observed that the transaction was aimed at securing a “foot-in-the-door” in India's retail sector and establishing strategic alignment with Future Group.
The NCLAT partly allowed Amazon's appeals and set aside the CCI's direction suspending the 2019 approval and requiring Amazon to refile the combination notice in Form II.
However, the Appellate Tribunal upheld the CCI's findings that Amazon had suppressed material facts and made false disclosures regarding the scope and purpose of the transaction.
The NCLAT also sustained the Rs. 202 crore penalty imposed on Amazon, holding that the company failed to make true and complete disclosures required under the Competition Act and Combination Regulations.
For Amazon: Senior Advocate Gopal Subramanium, Arvind Varma, Pawan Bhushan, Pathak & Associates - Anand Pathak, Shashank Gautam, Sreemoyee Deb, Anubhuti Mishra