Amazon sues Enforcement Directorate in battle for Future Group; terms inquiry into 2019 deal as ‘fishing'

According to a court file reviewed by Reuters, Amazon.com Inc is suing India's financial crime-fighting agency to stop an inquiry into one of its 2019 transactions. For months, the Enforcement Directorate has been investigating Amazon's $200 million investment in India's Future Group for possible breaches of foreign investment regulations. The investment is at the centre of prolonged court fights. Amazon has used the terms of the arrangement - and highlighted Future's contract violations - to halt the $3.4 billion sales of the Indian company's retail operations to a rival. Amazon describes the probe as a "fishing and roving" inquiry in an 816-page file obtained by Reuters, claiming that the ED sought confidential legal advice and views from Amazon as well as other material unrelated to the Future Group purchase.

The ED had summoned many Amazon officials, including its India chief, in recent weeks, and the inquiry had created "unnecessary harassment," the US e-commerce giant claimed in a plea to the Delhi High Court on December 21. Amazon purportedly stated in the submission that the ED's directions requesting disclosure of legally protected files and litigation privilege information are contrary to the ideals enshrined in the Indian constitution.

Though India's antitrust regulator terminated their 2019 agreement last week, claiming Amazon withheld information when seeking its permissions, the ED's investigation is separate from that. Three commercial agreements signed by Future and Amazon enterprises are at the heart of the dispute. A Singapore arbitration tribunal, also hearing the case, has stated that it must be read collectively when evaluating the purchase. Future claims that combining the business agreements would indicate that the transaction breached Indian law.
Amazon's court filing included a February 19 letter from the ED seeking data on its investment in Future, including copies of agreements, bank account information, and other related internal communication.

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It also revealed that the ED is undertaking a far broader investigation and has demanded information on major merchants on Amazon's e-commerce website in India, including sales figures for those who account for more than 5% of total Amazon.in sales. The notification followed a February Reuters investigation that discovered Amazon aided a small number of vendors in succeeding on its Indian platform by offering them cheaper fees and leveraging them to circumvent foreign investment regulations. At the time, Amazon stated that it was certain it was in compliance with rules and that it "does not offer special treatment to any vendor on its marketplace."