A court in the country’s capital, New Delhi, ruled on Tuesday that an agreement by Reliance Industries to buy local rival Future Retail for $ 3.3 billion should be suspended Amazon(AMZN) objected to it last year. The Delhi Supreme Court said it was “convinced that immediate orders are needed to protect the rights of [Amazon]and ordered all parties involved in the deal to “maintain the status quo” pending final judgment.
“We have the utmost respect for the Indian legal system and appreciate the preliminary order of the … Delhi Supreme Court,” an Amazon spokesman told CNN Business.
Future Retail said in a statement that it “would investigate all remedies and take appropriate steps to continue its deal with Reliance.” The company may be able to challenge any judgment in a higher court.
Reliance declined to comment.
The ruling is the latest development in what appears to be a proxy battle between two of the world’s richest men for India’s burgeoning online retail market. What is at stake is strategic access to a network of popular supermarkets and stores in India, something both Amazon and Jeff Bezos’ Amazon and Reliance – owned by India’s richest man Mukesh Ambani – either want to have for themselves or avoid it the other buys something. .
The core of the current battle is Future Retail, the cash cow of the Indian conglomerate Future Group. The retail unit includes brands such as Big Bazaar, a popular supermarket chain. In August 2019, Amazon invested in a Future Group entity which, according to filings on September 30 last year, gave it an approximately 4.8% stake in Future Retail. The deal gave Amazon the right of first refusal to acquire more shares in Future Retail, one of the documents said.
Amazon argued that the 2019 deal between the company and the Future Group entity contained a non-compete clause, a person familiar with Amazon’s perspective told CNN Business last October. The clause listed 30 limited parties that Future Retail and Future Group could not do business with, and Reliance was on that list, the person said.
Amazon tried to enforce that agreement through the Singapore International Arbitration Center (SIAC), with the Southeast Asian country often seen as a neutral jurisdiction to settle disputes. The SIAC emergency arbitrator ordered a temporary halt to the deal last October.
While Future Group had questioned the validity of the Singapore Arbitration Court’s order in India, the Delhi Supreme Court declared on Tuesday that the order is “enforceable”.
Amazon and Walmart(WMT)Owned by Flipkart, Flipkart dominates online shopping in India and controls more than 60% of the market between them. But Ambani and Reliance have been playing an aggressive game for some of that market through JioMart, an initiative announced in 2019 to bring thousands of Indian mom-and-pop stores online known as ‘kiranas’.
Ambani definitely has the resources to rival Amazon. Its tech subsidiary, Jio, has more than 400 million users and Reliance Retail has more than 12,000 stores across India.
According to analysts, Future Retail’s approximately 1,500 stores are not a must-have for either company, but the legal battle could turn into an “ego battle” between the two billionaires.
And while it’s currently an advantage to Amazon, that battle is far from over.
