India's antitrust body has sought more information from Amazon.com
about its planned acquisition of a stake in India's Future Retail,
sources with knowledge of the matter told Reuters, which could
potentially delay the deal.
Amazon in August agreed to
acquire a 49 percent stake in a unit of India's Future Group which owns
7.3 percent of Future Retail, giving the US-based company a 3.58
percent stake in the retailer which operates more than 1,500 stores in
the country.
The deal would help Amazon tap into the booming
retail market in India, as it separately boosts its e-commerce
operations, offering everything from electronics to groceries on its
Indian website. Future Retail runs 290 budget department and grocery
stores branded "Big Bazaar".
In a notice to Amazon last month, the
Competition Commission of India (CCI) said "in certain overlapping
segments and areas of operation of the parties, the combined market
share exceeds the threshold specified in the combination regulations",
one of the sources told Reuters.
The
CCI also queried the procedure Amazon adopted to seek approval. Amazon
had notified the CCI through a so-called Form I, instead of a Form II
that is more onerous and is required when parties assess the combined
entity will exceed a pre-defined market share threshold.
The CCI
sought justification from Amazon on why it chose to file a Form I, the
source added, which could potentially delay approval of the deal. A Form
I filing typically takes 2-3 months compared with three to six months
for a Form II.
Amazon and Future Retail declined to comment for
the story. A source at Future group said it had recently answered the
CCI's questions related to the deal, but did not elaborate.
The CCI did not respond to Reuters queries.
Additionally,
the competition watchdog has asked Amazon more than 40 questions
related to the deal and its businesses, the first source with knowledge
of the matter said.
A second source confirmed to Reuters that the
CCI had sent additional queries to Amazon, calling it part of the
regular deal approval process by the watchdog.
"There are
questions about e-commerce ... the CCI needs to assess whether there is
any adverse impact on competition or not," the source said.
Amazon's
notification available on the CCI's website says the company believes
the deal is "not likely to cause an appreciable adverse effect on
competition" in India.
"Such queries mean the deal is being
closely scrutinised and could face potential delays, but it can
eventually sail through if no antitrust concerns are found," said Karan
Singh Chandhiok, an antitrust partner at Indian law firm Chandhiok &
Mahajan who is not involved in the proposed stake purchase.
Typically
in such cases, the company needs to defend its decision and, if the
watchdog disagrees, has no choice but to give more details in a Form II
filing, Chandhiok added.
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