India’s Supreme Court rules in favour of Amazon to block $3.4bn sale of shopping giant

Amazon welcomed the decision but stocks of Future Group and Reliance tanked

Amazon has accused Indian firms of violating pre-existing contract (REUTERS)

India’s Supreme Court has ruled in favour of Amazon to block a $3.4bn (£2.5bn) merger deal between the country’s two biggest shopping giants, in a major blow to both of them.

The legal battle between the world’s largest e-commerce business Amazon and India’s largest company Reliance began after both made separate deals with the same retailer – Future Group – and could impact the future of the nearly trillion-dollar retail market in India.

Reliance Retail announced last year it had reached a $3.4bn (£2.5bn) deal with Future Group to acquire its retail assets. But Amazon, which owns a 49 per cent stake in Future Group’s units, insisted it was a violation of their contract.

In October 2020, Amazon approached Singapore’s emergency arbitrator and won an interim order to put a stay on the deal.

Future Group, owned by Kishore Biyani, challenged this order in Delhi High Court, arguing that Singapore’s court order wasn’t valid in the South Asian market. It also said that the deal was crucial after the Covid pandemic hit businesses and the Indian economy.

The deal was blocked at first but then allowed to proceed when challenged again. Amazon finally approached the Indian Supreme Court, which agreed with the High Court’s first order.

On Friday, the court asked Future Group to maintain its “status quo” on the sale of its retail assets to Reliance, putting the deal into limbo.

Amazon welcomed the verdict, saying: “We hope that this will hasten a resolution of this dispute with Future Group.”

But Future Group’s stocks took a sharp tumble, crashing by around 10 per cent while Reliance Retail’s shares decreased by 2 per cent.

Future Group said in a statement they have been “advised that it has remedies available in law, which it will exercise”.

The deal would have given Reliance access to over 1,800 stores in more than 420 cities belonging to Future Retail, including Future Group’s wholesale business and logistics arm.

Amazon has injected more than $6.5bn (£4.7bn) into India after setting up in the country eight years ago. The Jeff Bezos-founded company has been aggressively trying to expand in India, a huge market for e-commerce.

The latest court decision is seen as a setback in Reliance’s fight for dominance of the country’s lucrative retail market.