New Delhi —An Indian court allowed to oppose Future Group’s $3.4bn asset sale to Mukesh Ambani’s conglomerate but left it to local regulators to decide on the deal, in a mixed ruling for the US giant fighting Asia’s richest man for dominance in one of the world’s largest retail markets.

The Delhi High Court said on December 21  it cannot bar the e-commerce giant from writing to regulators objecting to the indebted Indian retailer’s plan to sell its assets to Ambani’s Reliance Industries. The ruling by a single-judge bench can be challenged before a higher court. The court’s position neither bars nor allows the Future-Reliance transaction.

The legal spat has drawn the battle lines between two of the world’s richest men, Jeff Bezos and Ambani, as they fight to control India’s estimated $1-trillion retail market. Reliance is already the country’s biggest brick-and-mortar retailer. Acquiring Future’s assets would give it unparallelled edge over rivals — an advantage Amazon is not willing to cede. For the distressed Future Group, the asset sale is a crucial bailout deal.​

While Amazon has been allowed to petition Indian regulators against this transaction, recent experience shows it may not always be fruitful. Despite writing to the local antitrust regulator asking it not to approve the takeover by Reliance until arbitration proceedings are complete, the agency approved the transaction on November 20.

The US company also suffered a setback with the court saying that its investment into Future Group requires government approval and not securing it violates India’s foreign exchange and investment laws.

Future Retail’s shares jumped as much as 5% on Monday in Mumbai while Reliance gained 1.5%.

​Future approached the court in November after Amazon got a Singapore arbitration panel to temporarily halt the transaction on October 25. The US firm, which owns a minority stake in one of Future’s unlisted firms, accused the local retailer of breaching a contract by agreeing to a buyout by an Indian rival.

The Indian court said on Monday that the emergency arbitration on Amazon’s plea was valid but stopped short of commenting on the legal validity of the arbitration verdict.

Reliance said on October 26 that it intends to purchase Future Retail’s assets “without any delay”, notwithstanding the arbitration court order. Future Group, controlled by tycoon Kishore Biyani, had said the matter “will have to be tested” under Indian laws.

Harish Salve, the lawyer representing listed flagship Future Retail, urged the court on November 10 to bar Amazon from writing letters to local antitrust and market regulators in its continued efforts to block the deal with Reliance. Amazon’s counsel argued that Future’s petition was not legally tenable.

The Future group is critically dependent on the asset sale going through. It defaulted on obligations earlier in 2020. Future Retail has posted losses for three straight quarters and reported a 74% revenue drop in the latest quarter.

The Indian retailer will run into serious financial trouble if the asset sale fails, its lawyer Salve told the court on November 10, arguing that the emergency arbitration ruling was not binding in India. Amazon wants to “sink the ship” by not letting Reliance acquire Future’ assets, he said.



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