The Competition Commission of India (CCI) has withdrawn its approval accorded in 2019 for the agreement between U.S.-based retail behemoth Amazon and Kishore Biyani-led Future Group. The action came in the backdrop of a review of allegations that Amazon had suppressed information while seeking approval for the deal.

In its order on Friday, the CCI said it is necessary to examine the Amazon-Future combination deal afresh. Meanwhile, the approval shall remain in abeyance till then, the regulator stated.

The CCI noted that Amazon had suppressed the actual scope of the deal and made false and incorrect statements while seeking approvals, suppressing material facts related to the agreement. The regulator, in June, had asked Amazon why it hid its strategic interest in Future Retail while seeking approvals for its deal with Future Coupons.

The competition watchdog has also imposed a penalty of ₹200 crore on Amazon. The e-commerce giant has been directed to pay this penalty within 60 days of receiving this order.

The CCI order directed Amazon to give notice in Form II within 60 days from the receipt of the order. The approval to the Amazon-Future deal, dated November 28, 2019, shall remain in abeyance till disposal of such notice, it further stated.

The CCI action comes as Amazon and Future are embroiled in a bitter legal battle over a deal the latter signed with Mukesh Ambani’s Reliance Industries to sell its retail, wholesale and logistics business to Reliance Retail for ₹24,713 crore.

Amazon has been citing the first refusal rights under its 2019 deal with Future Coupons to oppose the Reliance-Future deal. The Jeff Bezos-led company had recently argued that a decision by the CCI to revoke its approval to the deal would send a negative message to foreign investors in India and allow Reliance Industries to further consolidate its foothold in the Indian market. Amazon is contending with Reliance in the highly-competitive Indian retail market.

Amazon had secured favourable rulings from the Singapore emergency arbitrator in its opposition to the Reliance-Future deal, which was then upheld by the Supreme Court of India, putting the deal on hold.

Meanwhile, the blockade to the Reliance-Future deal has pushed Kishore Biyani’s company to the brink of bankruptcy. Future Retail, the second-largest retailer in the country after Reliance Retail, saw dues to vendors swell to ₹6,000 crore even as stores remained closed due to the pandemic.

If the deal does not go through within three 0months, the group companies might face insolvency as there is no cash flow to repay the vendors, company sources had told Fortune India.

Banks will take a hit too, as they have a cumulative exposure of ₹19,000 crore to Future, and from the dues to vendors. Future Retail alone owes ₹6,278 crore to a consortium of 28 banks, including State Bank of India, Union Bank, Bank of India, Bank of Baroda, Axis Bank, and IDBI Bank, and others.

Banks who have loaned funds to the Future group had executed the one-time restructuring (OTR) of debt under the RBI guidelines issued on August 6, 2020, in April this year. However, the condition for the OTR was the conclusion of the deal with Reliance Retail.

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