Business Desk, ETV Bharat: The Rs 24,713 crore deal between the Future Group and Reliance Industries has reached the highest court of appeal in the country as Amazon on Thursday approached the Supreme Court challenging the lifting of "status quo" orders by the division bench of Delhi High Court.
Earlier, a Delhi High Court single judge bench had directed the Kishore Biyani-led Future Retail Ltd to maintain status quo on the Future-Reliance deal.
In the same week, reversing the order, a Delhi High Court division bench stayed its single judge direction stating Amazon has no ‘locus standi‘ to oppose the deal as it was not a part of it.
To understand the tussle between these three prominent companies, here is a brief overview of the case.
What is the case?
The tension between Jeff Bezos-led Amazon and Kishore Biyani’s Future Retail began when the latter was suffering high losses due to the pandemic.
To keep the business afloat, Biyani had to sell Future Retail to Mukesh Ambani's Reliance Retail. In August 2020, Future Group sold its retail, wholesale, logistics and warehousing units to Reliance Retail, a subsidiary of Reliance Industries Limited (RIL).
Amazon, which in 2019 bought 49 per cent stake in Future Coupons Ltd (FCL) for Rs 1,500 crore, objected to the deal signed between Future Retail and Reliance Retail.
The US e-commerce giant alleges that by entering in a deal with Reliance Retail, Future Group violates the contract signed in 2019 which bars the company from selling its assets to 15 ‘restricted persons’ including the Reliance.
Citing this particular clause, Amazon has been objecting to the deal signed between Future Retail and Reliance Retail.
In October 2020, Amazon took the case to Singapore International Arbitration Centre (SIAC) which passed an interim order in favour of Amazon.
Tug-of-war between Reliance and Amazon
The resistance of Amazon towards the deal between Future Group and Reliance Group lies in the USD 1 trillion consumer retail market of India.
If the deal between Reliance and Future Group gets successful, the reach of Reliance's retail group in the Indian market would multiply.
Amazon--the main competitor of Reliance Retail--has sensed the danger for its business in India by competition of this deal and therefore is leaving no stone unturned to cease the deal.
Arguments of the parties involved
Each party has put forward arguments to incline the decision in their favour. Future Group's lawyers have said that Future Retail is not the part of the deal between Amazon and Future Coupons and therefore is not violating the deal.
Future Group has also argued that if the Future-Reliance deal is aborted, it would result in the loss of jobs of thousands of Indians.
To respond to Future's argument, Amazon had said that both the Future firms are controlled by the same owners and therefore the deal applies to Future Retail as well.
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