The Competition Commission of India (CCI) has approved Walmart’s proposed $16 billion acquisition of a majority stake in online marketplace Flipkart, despite protests from traders across the country over fears that the acquisition would drive several small retailers out of business. The anti-trust regulator’s nod has cleared the way for the biggest acquisitions in the country.
The CCI confirmed its nod in a tweet yesterday.
@CCI_India approves proposed acquisition of Flipkart Private Limited by Wal-Mart International Holdings, Inc
— CCI (@CCI_India) August 8, 2018
Traders’ bodies protested the deal, wrote to CCI
Earlier in May, traders body Confederation of Indian Traders (CAIT) filed a petition with the CCI objecting to the $16 billion Walmart-Flipkart deal. CAIT represents 7 crore traders across India. In a statement, CAIT had said that it objected the merger of two companies in the petition and said that Walmart will create an unfair competition, uneven the existing level playing field and will indulge in predatory pricing, deep discounts and loss funding.
Walmart would sell its inventory on the platform of Flipkart.com either directly or through a web of associated preferred sellers with the result that their market share would rise exponentially and pure offline retailers / wholesalers would have two options either exit the market or sell their goods on flipkart.com and face discriminatory terms and conditions from flipkart.com in comparison to its preferred sellers. This will create an unhealthy competition much to the disadvantage of both offline and online sellers.
-CAIT statement to the CCI
Soon after, in June, the All India Online Vendors Association (AIOVA) reached out to the anti-trust regulator about the deal and wrote in its petition that Walmart has considered B2B market as the relevant market in India, and that after the completion of the deal, the US giant will dominate the market on Flipkart.com via a B2B company, which will affect other sellers on the Flipkart and may also lead to shutdown of their businesses.
The CCI, however, has said Flipkart’s discounting practices will have to be dealt with separately. The body may have to be reviewed by relevant authorities, putting pressure on regulators to clamp down on discounts on online platforms. CAIT had in its statement to CCI also written about Flipkart’s preferential treatment to selected sellers on its website.