The Competition Commission of India has approved the acquisition of India’s largest e-commerce marketplace Flipkart by US-based retail giant Walmart Inc, the agency said Wednesday. In May, Walmart had announced acquisition of 77 per cent stake of Flipkart for $16 billion in its biggest takeover yet. This values Flipkart at over $20 billion.
“We welcome the CCI’s decision. Walmart remains committed to contributing to the Indian economy by supporting smallholder farmers, manufacturers, and our Kirana customers. Our partnership with Flipkart is testament to our continued confidence in our ability to contribute to this market. Flipkart is a prominent player in India with a strong, entrepreneurial leadership team that is a good cultural fit with Walmart. We believe that the combination of Walmart’s global expertise and Flipkart will position us for long-term success and enable us to contribute to the economic growth,” Walmart said in a statement.
In its order approving the combination, the antitrust body has said it received representations against the acquisition from trade associations, retailers, etc, which besides expressing concerns on compliance of FDI norms by Flipkart by engaging into predatory practices and preferential treatment to specified sellers on the market place, also raised issues pertaining to employment, entrepreneurship, small and medium scale enterprises, etc. Further, the Competition Commission said that while these factors merited examination from the anti-competitive perspective, the facts on record showed that “the discounting practice of Flipkart and its preference, if any, to select etailers in its online marketplaces are not specific to the Proposed Combination, as they are already prevalent in the market even without the proposed acquisition by Walmart”.
“Considering the facts on record and the foregoing assessment, the Commission is of the opinion that the Proposed Combination is not likely to have an appreciable adverse effect on competition in India and therefore, the same is hereby approved,” the agency said in its order.
The aforementioned concerns were raised primarily by the Confederation of All India Traders (CAIT) and the All India Online Vendors Association (AIOVA). In a statement, CAIT Secretary General Praveen Khandelwal said that the body will move court against the order of the antitrust agency. “It is most unfortunate that leaving aside the objections raised by CAIT…the Commission has approved the deal,” he said. A spokesperson for AIOVA said: “We welcome Walmart to Indian e-commerce market and we hope to get more business under them. However, the current anti-competitive practices and violation of FDI policy…can be a problem for the Indian companies held by Flipkart Singapore”.