Amazon, Reliance Retail battle gets messy after legal notice

No laughing matter (Image credit: Twitter)

The Amazon vs Ambani battle, as it were, is intensifying. The Indian arm of Jeff Bezos' company has fired a legal salvo at Kishore Biyani's Future Group, which has recently struck a deal with Reliance Retail.  Amazon's legal notice says the Future-Reliance tie-up cannot go ahead without Amazon’s approval in view of the non-compete clause entered earlier with the retail group. 

Earlier in August, Reliance Retail acquired the retail and wholesale business and the logistics and warehousing business from the Kishore Biyani-promoted Future Group for Rs 24,713 crore.

However, exactly a year ago, Amazon had acquired a 49 per cent stake in Future Coupons for about Rs 1,500 crore in a complicated deal. Future Coupons owns about 7.2% stake in Future Retail that has more than 1,000 stores under Big Bazaar, Fbb, Foodhall and Easyday Club brands.

At the time of its investment in the Future Group, Amazon had received certain contractual rights under the agreements. Non-compete restrictive clause was apparently one, which is what it is invoking now.

Battle of the Biggies

It is interesting that Amazon has taken the legal route and pouncing on Future Group, even though the latter had actually sounded out Amazon for a take over. It was only after Amazon not being able to make much headway in the possible deal that the Future Group went to Reliance.  

Market analysts, however, see the whole development as being on expected lines. And they also believe that the Amazon India and Reliance Retail battle will only intensify in the coming days.

Reliance Retail and its online arm Jio Mart are on an expansion spree. Reliance Industries' retail arm has managed to get huge investments, over $5 billion  in the last one month. And the whole idea is to cut into the dominance of Amazon India's online dominance.

Reliance Retail is planning to build on its brick and mortar set up (It has over 12000 shops) and its connection with local kiran shops to scale up Jio Mart's operations.

Amazon, for its part, owns 49% in More, a popular brick and mortar supermarket chain. Samara Capital holds the rest of the equity in More. Both made an investment of $450 million in 2018 and followed up with an additional $37 million last month.

When two behemoths clash, the earth below is bound to shake in the process.

Balakumar K
Senior Editor

Over three decades as a journalist covering current affairs, politics, sports and now technology. Former Editor of News Today, writer of humour columns across publications and a hardcore cricket and cinema enthusiast. He writes about technology trends and suggest movies and shows to watch on OTT platforms.