Amazon Sends Legal Notice to Future Group Over Reliance Deal

Reliance said in August it would acquire the retail and wholesale business as well as the logistics and warehousing business of Future.

By Reuters | Updated: 8 October 2020 10:08 IST

Reliance said it'd acquire the retail and wholesale business as well as the logistics business of Future

Highlights

Amazon, Reliance and Flipkart are in battle to gain market share in India
Amazon last year acquired a 49 percent stake in Future Coupons
Amazon's investment in Future Group came with contractual rights

Amazon said on Wednesday it has sent a legal notice to a promoter of Future Group, alleging the Indian retailer breached the terms of its contract by signing a deal with Mukesh Ambani's Reliance Industries.

The online retail giant last year acquired a 49 percent stake in Future Coupons, the promoter entity which owns a 7.3 percent interest in Future Retail, the operator of more than 1,500 stores in India including grocery chain Big Bazaar.

Amazon's investment in Future Group came with contractual rights that include a right of first refusal and a non-compete-like pact, a source told ET Now, which first reported the news.

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The e-commerce firm, in its legal notice, cited a contract arrangement that included "a restricted list" of companies Future was not supposed to enter deals with, ET Now said.

An Amazon spokesperson confirmed the company had started the proceedings.

Amazon, Reliance and Walmart's Flipkart are in a battle to gain market share in India, where millions of middle class customers are newly adopting online purchases of food and groceries due to the COVID-19 pandemic.

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Reliance said in August it would acquire the retail and wholesale business as well as the logistics and warehousing business of Future in a deal valued at $3.38 billion (roughly Rs. 24,771 crores).

The oil-to-telecoms group, whose retail operation already runs close to 12,000 stores, is expanding its so-called new commerce venture, which ties neighborhood stores to Reliance for online deliveries of groceries, apparel and electronics in a space currently dominated by Flipkart and Amazon's Indian arm.

Future Group was not immediately available for comment. Reliance declined to comment.

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