The recent Competition Commission of India (CCI) verdict annulling the Amazon-Future Coupons Private Ltd (FCPL) deal approval it gave two years ago brings back memories of the UPA government’s retrospective tax move in 2012. On both occasions, the government/regulator managed to shake the confidence of foreign investors.
The recent verdict, in which the country’s anti-trust regulator suddenly realised it had not correctly read the ‘intent’ of Amazon to ultimately ‘acquire interest over Future Retail Ltd (FRL)’, raises serious questions over the working of the CCI. The verdict is significant not just because it exposes how easily the commission could be gamed, but also due to the direct and indirect involvement of big corporates in this case. If one goes by the argument of the order (to annul its earlier one), it reeks of failure of the regulator to see through the real ‘intent’ of the acquirer, which might harm competition in the market.
The commission cannot redeem itself by blaming Amazon for ‘suppression of facts’ as it was its role to see through all the details of the deal before giving it a go-ahead. What is more worrying, though, is the perception that the regulator might have reversed its earlier order under pressure from a large industrial house with a keen interest in retail or from a traders’ body with strong links to the party in power at the Centre.
A careful reading of the current and earlier verdicts shows that while the commission now feigns ignorance about Amazon’s real intent of having strategic control over Future Retail, the same is not reflected in the wordings of its 2019 verdict approving the deal. The commission was clearly aware of the fact that “the wholesale and retail activities” of Amazon or its affiliates “have horizontal overlap(s) and/or vertical relationship(s) with business activities of FRL”, and that the presence of FRL and Amazon affiliates in overall B2C retail “is not such as to raise any competition concern”. Besides, Amazon had made it clear in its contract with FCPL that the Future Group could not sell stakes in Future Retail to a ‘restricted’ group. Whether it was regulatory oversight or insinuation of pressure from certain vested interests, the CCI order leaves a bitter taste.