Ali Hasan
Amazon has been handed a major legal victory in its fight to block a multibillion-dollar deal between two of India’s biggest retailers. A court in New Delhi, ruled on Tuesday that an agreement by Reliance Industries to purchase local rival Future Retail for $3.3 billion should be put on hold after Amazon objected to it last year.
The Delhi High Court said it was “satisfied that immediate orders are necessary to protect the rights of [Amazon]” and ordered all parties involved in the deal to “maintain status quo” pending its final judgment.
“We have utmost respect for the Indian legal system and appreciate the interim order of the Delhi High Court,” an Amazon spokesperson said.
Future Retail said in a statement that it would “explore all legal remedies and take appropriate steps to pursue” its deal with Reliance. The company could potentially challenge any judgment in a higher court.
Reliance declined to comment.
The ruling is the latest development in what is shaping up to be a proxy battle between two of the world’s wealthiest men for India’s fast-growing online retail market. What’s at stake is strategic access to a network of popular grocery stores and retail shops in India, something both Jeff Bezos’ Amazon and Reliance — owned by India’s richest man Mukesh Ambani — want to either have for themselves, or to prevent the other from acquiring.
Amazon, which holds a 49% stake in a Future Group arm, Future Coupons, has accused Future Group of breaching terms of a contract that stated that it would need the US e-commerce giant’s consent if it planned to raise money or sell a stake to another company. The agreement reportedly had a list of five to six companies, including Reliance Industries that Amazon had drawn.
The cash-strapped Indian retailer Future Group is at the risk of bankruptcy if the deal with Reliance fails. It is caught between 2 of the world’s richest men as they compete for dominance in India’s estimated $1 trillion consumer retail market.
The stakes are high. For Amazon’s Bezos, who has struggled to gain traction in China where local giants dominate the e-commerce sector, India with a population of 1.3 billion is the only other market of similar size that can boost his company’s growth. Blocking Reliance, which is already the country’s biggest brick-and-mortar retailer, is key. Acquiring Future’s assets will double Reliance’s retail footprint — an advantage Amazon is not willing to cede.
A victory for Amazon means a loss for Future Group and Reliance Retail but this battle is about to get even more fierce and deadly. Stay tuned to us and we will keep you updated on the matter.
