Walmart-Flipkart Deal: CAIT Threatens Countrywide Stir, CCI May Ask For Structural Changes In Deal

After filing its objection petition to the Competition Commission of India (CCI) against the Walmart-Flipkart deal, the Confederation of All India Traders aka CAIT has reportedly threatened a nationwide agitation if the government clears $16 Bn Walmart-Flipkart deal.

“Since the last five years, we are knocking the doors of the government for bringing reforms in ecommerce, but all has gone to deaf ears, which encouraged Walmart to buy Flipkart and enter into retail trade indirectly,” CAIT said in a media statement.

It must be noted that the Indian government is already in the process of setting up an ecommerce think tank to take proactive action on issues surrounding the $200 Bn worth market. However, no guidelines have been issued by the think tank yet.

CAIT: Protecting Local Retailers Interest Against Walmart-Flipkart

Taking forward the complaint of the All India Online Vendors Association (AIOVA) against Flipkart, the CAIT had earlier approached the CCI, stating that the Flipkart-Walmart deal would create unfair competition and an uneven level playing field for domestic players.

CAIT had also written to commerce minister Suresh Prabhu asking the minister to let the traders’ bodies know of the steps being taken by the government to scrutinise the deal.

“The deal will increase malpractices manifold in the ecommerce spectrum. The basic fundamentals of the deal are based on circumvention of the law with an underlying object to exploit, manipulate, and control the retail sector, including e-commerce,” said CAIT in a media statement earlier.

CAIT is further of the view that Flipkart is a combination of exclusive tie-ups and preferential sellers, where even online vendors face discriminatory conditions, and that Walmart could sell its inventory on the platform of Flipkart.com either directly or through a web of associated preferred sellers.

“This will create an unhealthy competition much to the disadvantage of both offline and online sellers,” CAIT said in the statement.

Retailers have also joined hands to approach the CCI against the $16 Bn Walmart-Flipkart deal as the merger is speculated to result in massive job losses in the retail industry. Most recently, a small traders group also termed Walmart’s entry into India as causing “irreversible damage” to them.

What The CCI Is Doing

In line with the ongoing protest, the CCI is expected to consider some structural changes in the Flipkart-Walmart deal.

The officials ET Tech cited indicated that the CCI might take a cue from the deal between Walmart and South African entity Massmart and might recommend setting up of a long-term fund by the US retail company to modernise kiranas going forward, besides supporting local manufacturing by SMEs (small and medium enterprises).

“The fund could work under the aegis of the DIPP (Department of Industrial Policy and Promotion) along with Walmart representatives to build a robust Kirana development programme wherein the US retailer provides knowledge and resources,” they added.

The Walmart-Massmart deal was approved by the Competition Commission of South Africa. However, it was similarly challenged. Later, in 2011, South Africa’s Competition Tribunal gave its approval to the merger on the conditions that Walmart would set up of a R100 Mn supplier development fund, and that there would be no merger-related retrenchments for a period of two years.