Indian antitrust regulator Competition Commission of India (CCI) has approved the proposed acquisition of Flipkart by Walmart. According to a report by Live Mint, the regulator confirmed the approval with a tweet on its official Twitter handle. The report pointed out that the approval comes despite fears that this deal could push a number of smaller retailers out of business because of the uneven playing field. A number of traders took part in protests throughout the country when the acquisition deal was initially proposed. To recap, Walmart agreed to pay $16 billion for 77 percent stake in Flipkart on May 9, 2018, while valuing the e-commerce giant for about $21 billion.
However, in addition to the approval, CCI also stated that it will deal with Flipkart’s discount practices separately considering how the country has already banned the discounts offered by online marketplaces. According to the report, the discount practices by Flipkart has gained “significance” because of the new draft policy that is proposing more restrictions when it comes to online marketplaces. CCI pointed out in the order, “The issues concerning FDI policy would need to be addressed in that policy space to ensure that online market platforms remain a true marketplace providing access to all retailers.”
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Moving back to the acquisition, with the approval done Walmart is free to buy the 77 percent stake in Flipkart. Walmart also clarified that this deal did not create any concerns regarding the competition stating that the Indian retail market will “remain unaffected by the deal.” According to the report, Walmart issued a statement adding, “Our partnership with Flipkart is a testament to our continued confidence in our ability to contribute to this market. Flipkart is a prominent player in India with a strong, entrepreneurial leadership team that is a good cultural fit with Walmart.”
@CCI_India approves proposed acquisition of Flipkart Private Limited by Wal-Mart International Holdings, Inc
— CCI (@CCI_India) August 8, 2018
Walmart went on to state, “We believe that the combination of Walmart’s global expertise and Flipkart will position us for long-term success and enable us to contribute to the economic growth.” This is Walmart’s largest acquisition in its quest to take on Amazon and the biggest deal in the e-commerce industry across the globe.
The report also pointed out that this approval is likely to spark more protests from traders. Secretary-General for Confederation Of All India Traders, Praveen Khandelwal added that the trader’s body had asked for an appointment with the ministry of commerce to discuss this matter while pushing to the deal to be blocked. He stated, “We have been expecting the government to reject this deal, but so far, we haven’t heard from them… We will fight this deal tooth and nail, and, if necessary, take this matter to the Supreme Court.”