While Walmart-acquired Indian ecommerce company Flipkart works on getting compliance for its operational model under the new changes of FDI policy in ecommerce, another examination for it by National Company Law Appellate Tribunal (NCLAT) may come to a final conclusion soon.
On August 29, soon after the Competition Commission of India approved the Flipkart-Walmart deal, the Confederation of All India Traders (CAIT) had filed a petition against CCI in the NCLAT asking for the reversal of the Walmart-Flipkart deal.
The CAIT petition alleged that CCI has been ignoring the alleged predatory activities of both Walmart and Flipkart carried out in the past. It also said that CCI has also ignored detailed objection by CAT against the deal.
After multiple hearings and extensions, NLCAT’s two-member bench headed by Justice S J Mukhopadhaya concluded its hearing on Thursday (January 25) after taking note of submissions made by both sides. However, the bench said it will be open to the parties to file a short written submission, not more than three pages, by January 29, 2019.
In the earlier hearings, NCLAT had asked Wal-Mart International Holdings Inc to file its explanation for its business model in India. At the same time, CAIT was asked to file its understanding over Walmart’s business model in India.
In its reply filed before NCLAT, 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.
However, Walmart said its business model and activities in India were different from its newly-owned subsidiary Flipkart’s. Another restriction for Walmart comes on account of FDI restrictions, which prohibit it from selling directly to consumers.
Another traders organisation, All India Vendors Association (AIOVA) had also filed a complaint with the CCI alleging Flipkart’s indulgence in predatory pricing and favouring its own brands.
CAIT continues to target ecommerce companies and their Indian acquisitions as it recently urged Union Minister Suresh Prabhu to examine Amazon and Samara Capital’s acquisition of Aditya Birla’s retail chain More.
However, these ecommerce companies are left out to dry by the government since the December 26 circular in which the changes in ecommerce FDI policy targetted deep discounts being offered by large online marketplaces as it prohibits ecommerce marketplaces from dealing with exclusive vendor-partners. The circular is set to come into effect from February 1, 2019.
The circular specifically targets the control marketplaces enjoy on inventory and pricing, directly or indirectly. With the discussions on deadline extension underway, tough times are cornering ecommerce giants.
[The development was reported by ET.]