Aditya Kalra & Abhirup Roy

NEW DELHI, (Reuters) – For over a year Amazon.com Inc (NASDAQ) and India’s Future Group have been at odds. This has stalled Future’s $3.4 Billion sale to Reliance Industries (NS), which is the largest conglomerate in India.

After months of arguing in courtrooms, Amazon and Future suddenly agreed to meet on March 3, to discuss their disagreement.

This is what the controversy, which was seen as crucial to decide who has the upper hand in the fastest-growing retail market in the world, really about. And what caused the abrupt change of tone.

WHAT CAUSED THE DISPUTE TO BREAKOUT?

When the U.S. invested $200 million to acquire a unit in the Indian company, Amazon and Future became business partners.

Amazon claims that the deal contained non-compete clauses which prohibited Future’s sale of retail assets to rivals such as Reliance owned by Mukesh Ambani, one India’s most wealthy men. Additionally, the deal included provisions for the resolution of all disputes in accordance with rules established by Singapore International Arbitration Centre.

Future was hit very hard by COVID-19 and decided in 2020 to sell assets.

Amazon approached Singapore’s arbitrators to stop the sale. Amazon and the Supreme Court of India have filed suit against each other, as well as lawsuits, in Indian courts. The “seat for arbitration” is in New Delhi, while Indian law regulates the proceedings.

What do AMAZON and FUTURE SELL?

Amazon claims it obtained special rights in several Future agreements it signed with Future. These included some retail assets it had hoped it would eventually acquire should India loosen its foreign investor rules. American company Future-Reliance claims that the potential Future deal would “destroy” this prospect.

Future says Amazon is unlawfully trying to take control of Future’s retail business. Future strongly denies that it did anything wrong. Future Retail, the flagship retail unit of the group, says it is at risk and that its 27,000+ employees could lose their jobs if the Reliance deal falls through.

Each side has deployed top-notch Indian lawyers to assist in this high-profile issue. The argument for Amazon and Future was led by two former Solicitor Generals of India.

WHAT’S THE GREATEST PICTURE

It is crucial to determine if Amazon will be able to become more powerful in the $900 billion market for retail with 1.3 million consumers than Reliance.

Future boasts 1,100 Supermarkets while Reliance only has 1. They both are rapidly expanding into ecommerce. However, the Future deal will instantly increase the retail footprint for Reliance. This has attracted prominent foreign investors to the company.

Amazon invested $6.5 Billion in India to boost its e-commerce business. Amazon was already able to expand its online delivery service by using the Future partnership. It also integrated Indian companies’ stores into its site.

Amazon’s plans to counter billionaire Ambani’s growth strategies are reflected by “Keeping Future from Reliance”. Amazon stated in a confidential legal filing that Reliance’s consolidation with Future would “further restrict competition within the Indian retail sector”.

HOW WAS INDIA’S ANTITRUST AGENCY INVOLVED IN THIS PROCESS?

Future filed a complaint to India’s antitrust regulator last year claiming that Amazon had made inconsistent and inaccurate submissions concerning the intention of the 2019 deal.

Amazon stated it had never hidden any information. But, last December, Future suspended its approval. Future claimed that Amazon was deliberately trying to conceal the true scope of its 2019 agreement and its investment in Future’s businesses.

The U.S. has suffered a major setback when an Indian court stopped the Singapore arbitration proceedings due to the Indian antitrust ruling.

WHY IS AMAZON EXTENDING AN OLIVE BRANCH

Reliance took over 500 Future retail stores in a quick and unexpected move, which was not public.

Reliance was responsible for many of the leases owned by Future, a cash-strapped company. Future has moved to take possession due to missed rent payments.

According to sources, Amazon became concerned about this. Amazon made reference to takeovers of shops on March 3. They also offered an olive branch in a Supreme Court hearing. The Supreme Court heard that Amazon felt the litigation was too much and needed to end. Future agreed to these talks. They are still ongoing.