Amidst controversy over acquiring controlling stake in Indian e-commerce marketplace Flipkart, global retail major Walmart has finally approached the Competition Commission of India (CCI) for the approval.
Since the Flipkart-Walmart deal announcement, both entities have been facing an allegation of flouting FDI norms and promoting loss funding and predatory pricing culture in Indian e-commerce space. However, keeping a firm stand against all the allegations, Walmart has been saying the deal doesn’t raise any competition concerns.
According to the notice submitted to the CCI by WalMart, the proposed transaction will be effected pursuant to the share purchase agreement and the share issuance and acquisition agreement among Walmart’s subsidiary and Flipkart.
Walmart has told the regulator that Flipkart is a Singapore-based entity and the deal would be done through its subsidiary WalMart International Holdings. As Flipkart India is primarily engaged in the business of wholesale cash and carry of goods, the acquisition of Flipkart only affects the B2B market, not B2C, it added.
However, Flipkart also provides marketplace-based e-commerce platform that facilitates trade between customers and sellers in the country.
Notably, DIPP prohibits FDI in e-commerce companies that own inventories of goods and services and sell directly to consumers using online platforms. To avoid any friction with the government norms, Flipkart operates as B2B as well as the B2C entity.
Additionally, Walmart strategy in India has been hampered by tough regulations that bar foreign investment in multi-brand retail, which is why it started discussions with Flipkart almost two years ago.
Walmart seeking CCI nod was expected to happen as sellers association, traders body and swadeshi lobby led by the Swadesh Jagaran Manch have been opposing the deal saying that it will create a monopoly and against the government regulations.
The aforementioned representing bodies also demand a probe and proposed to form a regulatory body before giving the final nod to the deal.
Last week, Walmart ink the deal with Flipkart in $16 billion to buy a 77 per cent stake, valuing the online marketplace at about $21 billion.
The development was reported by Mint via PTI.