Reliance vs. Amazon: The Battle of Titans

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It is hard to imagine a world without big companies like Microsoft or Apple in it. Things get worse when they rival each other to satisfy their wants. Something similar is happening in India, where two big giants in the business world, Reliance and Amazon are in pursuit of a similar goal i.e., to dominate the retail market of the country.

It all started when the debt-ridden Future Group agreed to sell various assets of its subsidiary, Future Retail to Reliance in August last year for a total value of Rs. 24713 crores. The deal was the only way out for the struggling Future Group which has been adversely affected by COVID-19 lockdown. It would have also provided a major boost to the retail chain of Reliance as the deal would increase its presence in more than 150 cities. Also, major Future Group brands like Big Bazar and Food Bazar would be under their shawl.

But to add to the miseries of Future Group, Amazon disapproved of the deal. The basis of the objection between Amazon and Kishore Biyani's Future Retail lies in an agreement signed between both companies in August 2019. Amazon agreed to buy 49 percent of one of Future's unlisted firms - Future Coupons Ltd - with the right to buy Future Retail after a period of three to ten years. Future Coupons hold 7.3 percent equity in Future Retail Ltd. So, according to Amazon, its contract with Future Coupons bars any sale of assets to Reliance. 

To deal with the situation Amazon filed an emergency arbitration at the Singapore International Arbitration Centre (SIAC). The decision was in favor of Amazon and the maintenance of the status quo was expected. However, Kishore Biyani believed that the arbitration was done abroad and was invalid in India. He went to Delhi High Court to challenge Amazon’s opposition. The Delhi High Court initially disapproved the deal, only to approve it later.

Amazon has challenged the High Court decision in the Supreme Court and it seems that Reliance still got to wait before completing the deal. If the decision is in favor of Amazon the only option left for Future Retail Ltd. is to liquidate itself. This would leave over 10000 employees from the company unemployed.

The destiny of Future Retail and its employees is uncertain. The only way out for them is if the authorities approve the deal. However, it is not to be expected anytime sooner.

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