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Showing contexts for: Internal documents in Confederation Of All India Traders vs Competition Commission Of India on 13 June, 2022Matching Fragments
34. Another important internal document of Amazon that shows the basis of entering into the Commercial Arrangements and the share acquisition is its internal note dated 24th May, 2018, the relevant extract of which is reproduced as under:
"Project Taj - National Multi-category Copperfield-seller Background:...Amazon's India team likes Taj's management team, store footprint, private label capability and believe they are one of the key players in the offline retail space to partner with. In January 2018, the founder of Project Taj had visited Seattle and Competition Appeal (AT) No. 01 of 2022 Competition Appeal (AT) No. 02 of 2022 Competition Appeal (AT) No. 03 of 2022 presented the Taj Group's capabilities to Jeff Bezos and the senior leadership team. Since then, we engaged with Taj and discussed a Business Commercial Framework (BCF) to build and accelerate Ultra-Fast Delivery across top-20 cities in India leveraging Taj's national stores footprint as a Copperfield seller. In India, our ability to pursue investments / acquisitions of retailers is limited because laws restrict foreign investment in multi-brand retail assets (i.e., retailers selling multiple brands across categories under one roof). However, because Taj's Retail entity is a listed company, we could invest up to 9.99% of the company directly as foreign shareholders. To execute on the above Business Commercial Framework (BCF) the founder of Taj believes a close alignment via a strategic investment with an online player is important. We seek your approval to indicate our non-binding interest (to Taj's founder) to invest between $400 to $500 MM for up to 9.99% stake in the company. Eventual ownership will vary upon final pricing discussions. This indication of interest to invest in Taj will allow us to get engaged deeper into discussion on pricing / valuation (given fluctuating stock price & regulatory pricing guidelines), deeper financial performance of Taj, regulatory hurdles/challenges and strategic rights... Investment Rationale: We believe that a two-hour delivery promise, for 15,000 SKUs across top-20 cities will be a unique differentiating capability. It will allow us to cover 85% of our Prime members and 63% of all customers. To serve this customer base, we believe working closely with large Copperfield seller is important. We believe that Taj is one of two key pan-India retailers worth pursuing. Other retailers are sub-scale or part of business groups, or are unsuitable to partner with. Taj has a strong portfolio of private label selection in grocery (450+SKUs, across packaged foods, home and personal care) and value-fashion (27 brands with a median ASP of $9.2 (INR 600), contributing to 80% of their GMS for fashion). An investment in Taj will allow us to provide the following benefits, based the commercial terms we have been discussing with Taj: (a) expand coverage in top four Competition Appeal (AT) No. 01 of 2022 Competition Appeal (AT) No. 02 of 2022 Competition Appeal (AT) No. 03 of 2022 cities with improve the merchant fee to 13.5% (+850bps); (b) build a two-hour-delivery service in next 20 cities; (c) exclusively carry their private label portfolio in grocery and value-fashion; and(d) obtain option value to increase our equity stake when laws change. In summary, against an investment of $400 to 500MM in Taj we estimate the discounted cash flow value of BCF over 10 years of $702MM (INR 45.6B). Our investment will be liquid given that Taj is publicly traded in the Indian stock market..."
[Emphasis Supplied]
35. The Commission notes that the above three internal documents (Internal Correspondence) of Amazon Group are relevant to understand its focus during negotiation with Future Group and what were its objectives to be achieved by way of entering into the Combination. As may be seen, the negotiations between the parties relating to the Combination were taking place as early as May, 2018, wherein Amazon initially planned to partner with Future Group, being a key player in the offline retail market, by acquiring 9.99% shareholding in FRL as well as entering into a business commercial framework to build and accelerate ultra-fast delivery services across the top-20 cities in India, leveraging the national footprints of Future Group. Through these transactions, Amazon Group wanted to secure its ability to become the single largest shareholder of FRL when the foreign direct investment opens up in the retail sector; preclude/ block competitive interest in FRL and utilise the pan-India store infrastructure of FRL to bolster the ultra-fast delivery program and exclusively carry private label portfolio in grocery and value fashion; and drive fees for Amazon. The rationale to enter into such Combination included the need for Amazon to build deep strategic alignments with offline grocery retailers to leverage their execution capabilities to power the fresh and grocery offerings of Amazon.
23. The Learned Counsel for the `Appellant' contends that in the instant case, the `1st Respondent/CCI' had acted in breach of the `Principles of Natural Justice' when it considered entirely a new case against the `Appellant' resting on the confidential internal documents/emails dated 24.05.2018, 10.07.2018, 04.04.2019 and Competition Appeal (AT) No. 01 of 2022 Competition Appeal (AT) No. 02 of 2022 Competition Appeal (AT) No. 03 of 2022 19.07.2019 without issuing a separate `Show Cause Notice' to the `Appellant'.
24. The Learned Counsel for the `Appellant' submits that neither the `Show Cause Notice' nor the `FCPLs' complaint dated 25.03.2021 (which formed basis) contained even a `whisper' to either the emails / internal documents or the allegations relating to the failure to notify the `BCAs' as part of the `notified Combination'. According to the `Appellant' later, these documents/emails were filed by `FCPLs' as part of its `Response' dated 22.11.2021.
25. The plea of the `Appellant' is that in the absence of a separate `Show Cause Notice' setting out the case being considered by the `1st Respondent/CCI' against the `Appellant', the `Appellant' was not provided with an adequate opportunity to clarify its position in regard to the emails/documents. If the `Appellant' was apprised that an explanation was required about the context and contents of the internal documents/emails, it could have put forward relevant evidence to explain the purpose and the context of these internal documents/emails.