Stock Mukesh Ambani
Mukesh Ambani Image Credit: AP

India's antitrust regulator approved Reliance Industries Ltd.'s $3.5 billion acquisition of Future Retail Ltd., disregarding calls by Inc. to block the deal.

Competition Commission of India approved the transaction by Reliance Retail Ventures Ltd. and Reliance Retail Ltd., the regulator said on Friday. Jeff Bezos-led Amazon had written to the antitrust and market regulators asking them to block the deal alleging that Future's sale to Mukesh Ambani, Asia's richest man, violated a contract it had with US e-tailer.

The antitrust approval intensifies Amazon's fight with Reliance in the race to dominate India's estimated $1 trillion retail market, where online shopping is gaining ground. For Amazon, the Indian partner was crucial to strengthening its foothold after becoming the authorized online sales channel for Future Retail's stores that sell everything from groceries to cosmetics and apparel.

The approval came on the day the Delhi High Court reserved its verdict on Future's petition against Amazon, seeking to bar the US company from interfering in its asset sale by writing to local antitrust and market regulators. Amazon has also accused Future and its founder Kishore Biyani of flouting disclosure rules, according to court filings seen by Bloomberg.

Amazon had bought 49% in one of Future's unlisted firms last year, with the right to buy into the listed flagship Future Retail after a few years. But the retailer ran into a severe cash crunch when India went into a lockdown in March to curb the coronavirus outbreak.

In May, Amazon was considering increasing its stake in Future Retail, people familiar with the matter said at the time. But no such transaction materialized quickly and Future cut a deal with Reliance, infuriating Amazon. The U.S. firm claims that its contract with the unlisted Future unit barred a transaction with a number of persons and companies, including Ambani and Reliance.