InvestorQ : Why has the CCI scrapped the Amazon deal with Future Coupons and what does that mean for the merger deal between Future Retail and Reliance Retail?
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Why has the CCI scrapped the Amazon deal with Future Coupons and what does that mean for the merger deal between Future Retail and Reliance Retail?

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Tisha Malhotra answered.
5 months ago
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In a significant move, the Competition Commission has opted to put the deal between Amazon and Future Coupons in 2019 in abeyance. Here is what you need to know.\

· The CCI has kept the Future Coupons and Amazon deal in abeyance due to Amazon’s failure to notify certain commercial arrangements where were part of part of 2019 deal.

· Apart from putting the deal in abeyance, the CCI has also ordered Amazon to pay a huge penalty of Rs.200 crore for the disclosure lapses.

· It may be recollected that this deal with future coupons had given Amazon an indirect 4.81% stake in Future Retail, which was the genesis of the problems.

· Amazon had used this deal to block Future's attempt to sell its retail and wholesale assets to Reliance Retail ventures for a consideration of $3.4 billion.

· CCI had noted that it was a deliberate design by Amazon to suppress the scope of the 2019 Future Coupons deal and keep it deliberately ambiguous.

· The CCI in its order has added that, apart from suppressing the actual scope of the deal, Amazon had also made false and incorrect statements for requisite approvals.

· This is the first time that CCI is keeping an approval in abeyance but for now the approval for the deal stands suspended.

· Amazon is currently reviewing the CCI order and it will get time to submit information once again to seek necessary approvals.

· Amazon has maintained that $200 million deal with Future Coupons pre-empted the Future group from selling Future Retail business to rivals, including Reliance.

· Amazon continues to stand by its argument that it never concealed material information and the order was more a matter of interpretation.

It remains to be seen what happens to the progress of the Reliance Retail – Future Enterprises deal after this CCI order.

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