New Delhi, India (CU)_ Following Amazon’s appeal to Indian court to halt the $3.4 billion deal between the Indian retail giants Future retail and Reliance, the Delhi High Court on Tuesday temporarily restrained the Future Group’s selling of assets to competitor Reliance Industries in a war of retail titans which could remodel the shopping market. An Amazon spokesperson said, “We have utmost respect for the Indian legal system and appreciate the interim order of the … Delhi High Court”.
On Tuesday, the Delhi High court ruled that the $3.3 billion deal of Reliance Industries to buy Future Retail should be put on hold after Amazon (AMZN) opposed to it last year. The Delhi High Court declared that it was “satisfied that immediate orders are necessary to protect the rights of [Amazon]” and ordered all parties engaged in the deal to “maintain status quo” until the final verdict.
Being the country’s second largest retailer with more than 1,700 outlets and brands such as Big Bazar, the court’s order is a major knock to Future Group. The retailer which runs super markets and food stores across India announced last year to sell its retail business to the competitor Reliance. The company expressed concerns of facing liquidation if the $3.4 billion deal with Reliance fails.
The US e-commerce titan Amazon, which eventually focused owning major part of the retail assets itself, claimed that it had a 2019 agreement with a Future unit containing provisions banning the Indian company from selling them to those on a list of “restricted persons” including Reliance. The clause listed 30 restricted parties that were unable to do business with Future Retail and Future Group, and Reliance was one among that list.
This huge corporate race for India’s fast-growing online retail market involves the two leading corporations of the e-commerce sector headed by two of the richest men in the world, Jeff Bezos of Amazon and Mukesh Ambani of Reliance. During the time when the COVID-19 pandemic has witnessed shoppers rushing online, it could help decide if Amazon would be able to eat away at the supremacy of Reliance, which owns its network of more than 12,000 outlets.
Following Future’s statement that it was not bound by an arbitrator’s order that placed the deal on halt, Amazon insisted the Delhi High Court to enforce it last month. On Tuesday “Justice J. R. Midha stated that an instant order was required to secure the rights of the US Corporation and said that the arbitrator had proceeded correctly against Future. Midha ordered, “This court is of the clear view that the (arbitration) order … is enforceable. All the concerned authorities are directed to maintain status quo.”
Following the court’s order, Amazon said it welcomed the order. Future retail said it would search for all possible legal means to continue the deal. There was no response from Reliance to requests for comment. Amazon had stated earlier that it intends to become Future Retail’s single largest shareholder, which it claims has a unique and extensive network of stores across India.
