The “cancerous deal for Indian retail industry” — Walmart’s acquisition of Flipkart— is continuing to cause ripples in the industry as the National Company Law Appellate Tribunal (NCLAT) hears the petition filed by Confederation of All India Traders (CAIT) against the said acquisition.
Scheduled for October 5, the NCLAT has adjourned its hearing over the CAIT petition and has scheduled the matter for hearing on November 12 before a two-member bench.
On August 29, soon after the Competition Commission of India (CCI) approved the Flipkart-Walmart deal, CAIT had filed a petition against CCI in the NCLAT asking for the reversal of the Walmart-Flipkart deal. The petition further states that CCI has been ignoring the alleged predatory activities of both Walmart and Flipkart carried out in the past, and has also been ignoring detailed objections filed by the CAIT against the deal.
Under the legal aspect, NCLAT being an appellate forum for any decision that the CCI takes has the right to uphold, modify or set aside CCI’s decision.
Under the appeal being discussed in NCLAT, on September 6, the NCLAT had asked Walmart to file an explanation for its business process in India.
To this, Walmart informed NCLAT that its business model and activities in India were different of Flipkart’s. The global retailer also emphasised that following Foreign Direct Investment (FDI) restrictions, Walmart India cannot engage in selling directly to consumers.
Related Article: Walmart-Flipkart Deal: NCLAT To Hear CAIT’s Appeal On December 14
Highlighting overlap in business segments, Walmart said the “combined market share of Flipkart and Walmart in the market of B2B sales are less than 5% and the incremental change in the market shares as a result of this transaction is less than 0.5%”.
NCLAT had further asked CAIT to file its understanding over the Walmart’s business model in India.
In its reply, CAIT had alleged that Walmart has been found “guilty of predatory behaviour” in countries like Germany, Mexico and South Africa and “may repeat such behaviour in India” through its acquisition of online major Flipkart.
The traders’ organisation further emphasised that the US retail major “may cause an appreciable adverse effect on competition” in the domestic market post combination as its “predatory tendencies” would be on a much larger scale.
Another traders organisation, All India Vendors Association (AIOVA) had earlier filed a complaint with the CCI alleging Flipkart’s indulgence in predatory pricing and favouring its own brands.
Here’s a quick look into the journey of acquisition and mayhem since then:
- The Walmart-Flipkart deal was officially announced on August 18, which valued the homegrown ecommerce company at around $22 Bn
- In May, AIOVA and CAIT had approached the CCI stating that the deal will create an unfair competition and an uneven playing field for domestic players. The deal would deny market access to non-preferred sellers and impact small traders, it said
- In June, associations such as Centre of Indian Trade Unions (CITU), which is a national level trade union and All India Kisan Sabha (AIKS), called for the nullification of the deal
- The traders’ organisation CAIT had also called for Bharat Bandh on September 28 to protest against the deal
- Walmart had filed a caveat in multiple high courts across the country and has also taken pre-emptive action against threats raised by the trade organisations Confederation of All India Traders and Swadeshi Jagaran Manch
An interesting happening that comes to light with these protests and government compliances is the frontend work being continued by Walmart as well as Flipkart.
Walmart recently opened its 22nd Best Price store in the country and has been doing its part for the retail industry and had also committed to grow its direct sourcing from farmers to 25% of produce sold in its Best Price cash and carry stores to accelerate market access improvements and cut transportation costs for producers.
At the same time, Flipkart has been gearing up for the festive season sale from October 10, which is one of the biggest battleground against major ecommerce giant and its arch-rival Amazon and new leading player Paytm Mall.
As first festive season sale for Flipkart as a subsidiary of Walmart against a common rival Amazon is an exciting and interesting watch.
[The development was reported by PTI.]