INDIA Trends and Developments Contributed by: Vaibhav Choukse, Ela Bali, Aditi Khanna and Faiz Siddiqui, JSA
The order confirms that the CCI will apply a purpo - sive construction to the Exemption Rules where a literal reading produces results inconsistent with the Competition Act’s underlying objectives. It provides timely clarity on intra-group restructurings under the new exemption framework, though Rule 3 Exemp - tion conditions must still be independently satisfied in each case. Supreme Court Reins in CCI’s Powers in Amazon– Future Case In one of the most consequential merger control deci - sions in recent years, the SC set aside the CCI’s pen - alty order against Amazon.com NV Investment Hold - ings LLC (“Amazon”) for alleged gun-jumping and concealment of information, overturning the National Company Law Appellate Tribunal’s (NCLAT) earlier affirmation of the CCI’s decision. Factual background In September 2019, Amazon sought CCI’s approval of its proposed acquisition of a 49% shareholding in Future Coupons Private Limited (FCPL), a Future group promoter entity holding a 9.8% stake in Future Retail Limited (FRL). As part of the broader combina - tion framework, Amazon was granted certain protec - tive and consent rights in relation to specified FRL matters under the FRL Shareholders’ Agreement (the “FRL SHA”), alongside a series of Business Commer - cial Agreements (BCAs) between Amazon affiliates and FRL. In its Form I notification, Amazon described the com - bination structure as comprising inter-connected transactions and furnished copies of the FRL SHA and the BCAs to the CCI. Following its review, the CCI approved the combination in November 2019. In June 2021, more than a year after the combina - tion had been consummated, the CCI issued a show- cause notice to Amazon, alleging that it had mischar - acterised the combination as a passive investment while failing to adequately disclose its strategic inter - est in FRL’s retail business. It concluded that Amazon had not adequately dis - closed the true scope and purpose of the combination, particularly the arrangements relating to FRL, which
it considered to be intrinsically linked to the combi - nation. Consequently, it imposed a record penalty of INR202 crores (approximately USD22.15 million), kept its 2019 approval in abeyance, and directed Amazon to file a fresh Form II notification. Subsequently, the CCI order was substantially upheld by the NCLAT. The SC’s findings The SC noted as follows. • Substance over characterisation – Amazon had filed a composite notification setting out the inter - connections between the various transaction steps and had disclosed all material agreements, includ - ing the FRL SHA and BCAs, which were reviewed by the CCI. Mere imperfections in presentation or characterisation did not amount to concealment or a failure to notify the combination. • Section 43A has limited reach – Section 43A penal - ises non-notification, not alleged mischaracterisa - tion. A combination that has been notified, and approved by the CCI, cannot subsequently attract liability under Section 43A merely because of dif - ferences in how disclosed facts were described. • Strict threshold for penal liability – Sections 44 and 45, being penal provisions, require clear findings by the CCI on the false statements or omission of material particulars, its materiality to the CCI’s assessment, and the notifying party’s knowledge or intent. A mere disagreement over the characterisa - tion of disclosed information could not justify penal action. • Finality after one year – The one-year limitation under the proviso to Section 20 (1) is a jurisdic - tional bar. Once it expires, the CCI cannot reopen, re-examine or require re-notification of a combi - nation. As the combination was consummated in December 2019, the show-cause notice issued in June 2021 and related directions were issued beyond the statutory period and constituted an impermissible reopening of the review. • No power to suspend approvals – The Competition Act does not confer any power on the CCI to keep an approval in abeyance or require re-notification once the combination is approved.
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