In a submission to the Competition Commission of India (CCI) on Friday, Walmart and Flipkart said the proposed transaction between the two does not give rise to competition concerns.
The submission, accessed from paper.vc, comes days after Walmart signed a definitive agreement to invest approximately $16 billion for an initial stake of 77 per cent in Flipkart.
Stating that the proposed transaction is in the nature of an acquisition and falls under Section 5(a) of the Competition Act, 2002, the submission says Walmart is present in India through Walmart India Pvt Ltd, which is engaged in wholesale B2B business.
Flipkart is primarily engaged in the business of providing marketplace-based e-commerce platforms to facilitate trade between customers and sellers in India.
It further states that since the proposed transaction does not give rise to competition concerns, the precise scope of the relevant market that the combined entity will address may be left open.
The CCI nod for the deal is important given that the Swadeshi Jagaran Manch (SJM), which represents the interests of farmers, entrepreneurs and sellers declared the Walmart-Flipkart deal as illegal, unethical and against the interests of the people, and dashed off a letter to Prime Minister Modi with a copy to Suresh Prabhu, Minister of Commerce & Industry to intervene and investigate the deal. Sellers on Amazon and Flipkart represented by All India Online Vendor’s Association also expressed fears of being run out of business as they felt the deal will allow Walmart to sell its products via Flipkart, and Flipkart’s sellers such as WS Retail, Retail Net and others who receive product supplies from its wholesale arm Flipkart India Pvt Ltd will receive preferential treatment.
That’s not all, both the entities could most likely run into tax hurdles, while the government may be forced to review its FDI policy on multi-brand retail and take a stand on whether it will henceforth allow multinational retail chains like Target and Tesco to acquire majority stakes in other Indian e-commerce companies such as Snapdeal and Shopclues.