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Traders irked with CCI’s nod to Flipkart-Walmart deal; will take the issue to courts

The Competition Commission of India’s (CCI) approval to the Walmart-Flipkart deal has irked offline traders in India, with the traders body, Confederation of All India Traders (CAIT) announcing that it will take legal action against the approval of the said deal.

CAIT said that the CCI’s approval is “arbitrary, illogical and in utter disregard of the principles of natural justice since the Commission neither took cognisance of the valid objection raised by the Confederation of All India Traders and various other organisation nor gave any opportunity to place their view point.

CAIT added that it is a one-sided exercise by the CCI, much against the larger interest of the economy and the nation.

The CAIT has decided to take the matter to the Courts to seek justice and has also convened an emergency meeting of its National Governing Council on 19th August at Nagpur to decide the future strategy “for a nationwide movement against the deal”. The CAIT said that it will also knock the doors of the Central Government and has sought an appointment with Union Finance Minister Piyush Goyal and Commerce Minister Suresh Prabhu and if the need arises, the CAIT will also urge Prime Minister to intervene.

CAIT National President  B.C.Bhartia & Secretary General Praveen Khandelwal said that “the Competition Act mandates the CCI to act in furtherance of the principles of natural justice”.

CAIT said in a statement that despite repeated objections of many trade associations, including by the itself, the CCI denied them an opportunity of being heard on the pretext that the same is not envisaged at this stage of combination approval explicitly under the Act. “Passing an order without hearing CAIT which would be affected by the combination showed a gross misstep on the part of CCI and is a violation of natural justice principles,” it added.

Traders’ bodies protested the deal, wrote to CCI before

Earlier in May, traders body 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.

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