A court in the country’s capital, New Delhi, ruled on Tuesday that a Reliance Industries deal should be suspended to buy local rival Future Retail for $ 3.3 billion later Amazon (AMZN) he opposed it last year. The Delhi High Court stated that it was “satisfied that immediate orders are needed to protect the rights of [Amazon]”and ordered all parties involved in the agreement to” maintain the status quo “pending its final judgment.
“We have the utmost respect for India’s legal system and are grateful for the interim order of the … Delhi High Court,” an Amazon spokesman told CNN Business.
Future Retail said in a statement that it would “explore all legal remedies and take appropriate action to pursue” its agreement with Reliance. The company could challenge any ruling in a higher court.
Trust declined to comment.
The ruling is the latest development in what is becoming a proxy battle between two of the world’s richest men for India’s fast-growing online retail market. What is at stake is strategic access to a network of grocery stores and popular stores in India, making both Amazon and Reliance by Jeff Bezos, owned by India’s richest man, Mukesh Ambani, they want to have for themselves or prevent the other from acquiring.
At the center of the current battle is Future Retail, the cash cow of the Indian conglomerate Future Group. The business unit includes brands such as Big Bazaar, a popular supermarket chain. In August 2019, Amazon invested in a Future Group entity that granted it a 4.8% stake in Future Retail on September 30 last year, according to securities statements. The deal gave Amazon the right of first refusal to acquire more Future Retail shares, according to one of the requests.
Amazon argued that the 2019 agreement between it and the Future Group entity included a non-compete clause, a person familiar with Amazon’s outlook told CNN Business in October last year. The clause listed 30 restricted parts with which Future Retail and Future Group could not do business, and Reliance was on that list, the person said.
Amazon tried to enforce this agreement through the Singapore International Arbitration Center (SIAC), with the Southeast Asian country often seen as a neutral jurisdiction to resolve disputes. The SIAC emergency arbitrator ordered the temporary halt of the agreement last October.
Although Future Group had raised questions about the validity of the Singapore Arbitration Court’s order in India, the Delhi High Court on Tuesday ruled that the order is “enforceable”.
Amazon i Walmart (WMT)Flipkart ownership dominates online shopping in India, controlling more than 60% of the market between them. But Ambani and Reliance have made an aggressive move for a portion of this market through JioMart, an initiative announced in 2019 to put online thousands of Indian mom and pop stores known as “kiranas”
Ambani definitely has the resources to match Amazon. Its technology subsidiary, Jio, has over 400 million users and Reliance Retail has over 12,000 stores across India.
According to analysts, the 1,500 Future Retail stores are not essential for either company, but the legal battle could turn into a “battle of the ego” between the two billionaires.
And while it’s currently Amazon’s advantage, this battle is far from over.
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