In the letter sent to CCI on Sunday, which TOI has reviewed, the directors quoted the contents from a letter by Amazon’s legal counsel in India to its founder Jeff Bezos, where it was mentioned that the etailer had initially planned to invest in FCPL through a foreign portfolio investment route.
But after the government tweaked the foreign direct investment regulations for online marketplaces via Press Note 2 in 2018, “the investment structure was changed to Amazon investing in a twin-entity investment structure i.e. Amazon would invest in FCPL and FCPL will acquire 9.82% of FRL.”
Through amendments, the government had barred foreign e-commerce marketplaces from selling products from sellers in which they have an equity stake.
In the letter to CCI that comes close on the heels of the first one in which Amazon was accused of breaching India’s FDI rules, the directors alleged that while Amazon represented its rights as “investment protection rights” to CCI, the rights acquired by Amazon over FRL were “strategic”.
While Amazon, which did not comment for this story, has maintained before several courts that the protective rights were to protect its investment in FCPL, the FRL directors alleged that the price paid for the FCPL shares has been determined by Amazon on the basis of FRL’s valuation.