Amazon’s bid to acquire stake in Future Retail faces antitrust hurdle: Sources

According to sources, India’s antitrust body has asked more information from about its planned acquisition of a stake in India’s Future Retail. Amazon also agreed to acquire a 49% stake in a unit of India’s Future Group which owns 7.3% of Future Retail that would ultimately proffer the US-based company a 3.58% stake in the retailer which operates more than 1,500 stores in the country. Moreover, Future Retail runs about 290 budget department and grocery stores branded Big Bazaar.

Amazon’s bid to acquire stake in Future Retail faces antitrust hurdle: Sources
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The Competition Commission of India (CCI) in a notice to Amazon last month said “in certain overlapping segments and areas of operation of the parties, the combined market share exceeds the threshold specified in the combination regulations”, one of the sources told Reuters.

When CCI asked Amazon to seek approval for the procedure adopted, Amazon notified the CCI through a so-called Form I instead of Form II that is required when parties assess the combined entity. The CCI also asked for justification from Amazon on why it chose to file a Form I to which Amazon and Future Retail declined to comment. Typically, a Form I filing takes 2-3 months compared with three to six months for Form II.

A source with knowledge of the matter said that the competition watchdog has asked Amazon more than 40 questions related to the deal and its businesses. “There are questions about e-commerce … the CCI needs to assess whether there is any adverse impact on competition or not,” the source said.

“Such queries mean the deal is being closely scrutinized and could face potential delays, but it can eventually sail through if no antitrust concerns are found, typically in such cases, the company needs to defend its decision and, if the watchdog disagrees, has no choice but to give more details in a Form II filing”, said Karan Singh Chandhok, an antitrust partner at Indian law firm Chandhiok & Mahajan who is not involved in the proposed stake purchase.

Moreover, Amazon’s notification available on the CCI’s website states that the company believes the deal is “not likely to cause an appreciable adverse effect on competition” in India.


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