Amazon.com Inc. has claimed that its Indian partner 'Future Group' has breached a contract by entering into a $3.4 billion sale agreement with Mukesh Ambani's Reliance Industries. We have initiated steps to enforce our contractual rights," a spokeswoman for the Seattle-based e-commerce giant said. "As the matter is sub-judice, we can't provide details."
Both representatives for Reliance and Future has declined to comment yet. Amazon agreed to purchase 49 per cent of one of Future's unlisted firms last year, with the right to buy into flagship Future Retail after a period of between three and 10 years. But about two months ago, rival Reliance announced it would buy the retail, wholesale, logistics and warehousing units of the indebted Future Group, almost doubling its footprint as India's largest retailer.
Amazon "certainly would've incorporated a strong non-compete and first right of refusal. Looks like that clause has been breached." said Arvind Singhal, chairman of retail consultancy Technopak Advisors.
With the dispute getting further intense, Amazon is drawing battle lines with Reliance in the race for India's estimated $1 trillion retail markets, where online shopping is gaining ground.
"Amazon's action causes a roadblock to Reliance Retail. Why would they not want to? It's fair game since that's exactly what Reliance would do," Mr Singhal said.
Announced during late August, the deal between Reliance and Future is now awaiting regulatory approvals. ET Now television channel earlier reported that Amazon has sent a legal notice to Future.
And Press Trust of India has reported that future is intending to resolve the matter through mediation or arbitration.