Reliance has established itself as the most premium brand in almost all the sectors it has entered to date. Reliance enjoys great profits from telecom, petroleum, and recently from the retail industry. Moreover, in the past passing months, a great number of investors such as Google, Facebook, and Silverlake who have deep pockets have invested in Reliance Industries.
India’s Biggest Retail Deal
Recently Reliance has acquired Future Group’s business which is a retail and wholesale business that is commonly known as Big Bazaar, Fbb, Easyday, and Central.
The retail segment of Reliance is not available in all the cities but Big Bazaar can be found in every city and small towns. Thus, on the success of this deal Reliance Industries Limited will receive accessibility in 1800 stores nationwide and DMart will face a huge crisis. On the completion of this deal along with Big Bazaar, Fbb, Easyday, and Central there would be products of Reliance Fresh and Reliance Trends. The transaction of Reliance Industries Limited with Future Group will strengthen Reliance retail which is already the largest retail sector of India in terms of stores.
The War between Amazon and Reliance
In 2019, Amazon purchased a 49% (1500 crore) stake in Future Couponswhich is a promoter company of Future Group. After this transaction, Amazon also holds 3% stakes in Future Group. In the terms and conditions of the agreement, Amazon put forward a list of companies to whom Future Groups cannot sell its assets and one of the names of the company in that list was Reliance Industries. Thus, the condition put forward by Amazon makes the deal between Future Group and Reliance Industries void.
Amazon challenged this deal between Future Group and Reliance Industries. It took Future Group to Singapore Arbitration Forum over the Reliance Retail deal.
Singapore International Arbitration Centre (SIAC) was brought into picture because as per the deal between Amazon and Future Group it was clearly stated that in case of any dispute between them the matter will be resolved by the Singapore International Arbitration Centre (SIAC).
Singapore International Arbitration Centre (SIAC) gave the judgement in the favour of Amazon and the deal between Future Group and Reliance Industries was put on hold.
The judgement was delivered in favour of Amazon by the Singapore International Arbitration Centre (SIAC) but India has no express mechanism on following the orders of international arbitration. Thus, International Arbitration orders are not enforceable in India. Then Amazon appeals to the market regulators to accept the judgement of the Singapore International Arbitration Centre (SIAC). Further, Amazon urges Securities and Exchange Board of India (SEBI) and Competition Commission of India not to approve Reliance-Future Group deal. Securities and Exchange Board of India (SEBI) also owns the right to declare this deal valid or invalid but Competition Commission of India approved the Reliance-Future Group deal.
Arbitration and Conciliation Act, 1996 has no express provision for an interim order passed in a foreign seated arbitration. Moreover, Reliance Industries and Future Group do not comply with this judgement of Singapore International Arbitration Centre (SIAC) as it is not binding nor enforceable in Indian Courts. In this case, Amazon can file a suit in High Court under Section 9 of the Arbitration and Conciliation Act, 1996 which is for granting interim measures.
Thus, the biggest retail deal that happened in October 2020 in which Reliance acquired Future Group for almost a whopping Twenty-six thousand crores. But this deal was interrupted by Amazon recently as indirectly it also holds a small in Future Group. There was a condition between Amazon and Future Group that the latter cannot sell it to Reliance according to the agreement.
It is evident to all that Amazon obviously does want Reliance to take over the retail market in India. There has been a tussle ever since between Amazon, Reliance, and DMart for India’s retail and e-commerce market. Now it will be interesting to see whether this deal between Reliance and Future Group is given a green signal or not in India.