MUMBAI: The Competition Commission of India (CCI) has approved American retail giant Walmart’s $16 billion acquisition of online marketplace Flipkart. In May, Walmart acquired a 77 per cent stake in Indian e-commerce company.
With this, Walmart will compete directly with Amazon India in the fast growing e-commerce market.
This is the biggest deal for India’s e-commerce sector, which is estimated to grow close to an annual $200 billion in 10 years. The acquisition will give Walmart a strong foothold in Asia’s third largest economy where the company has struggled to expand due to restrictions on foreign investment in retail stores
In a Twitter post, the CCI has given a heads up to the proposed acquisition of Flipkart by Walmart. The board, in its order, also added that the issue of Flipkart’s discounting practices would be dealt with separately in the upcoming e-commerce policy.
@CCI_India approves proposed acquisition of Flipkart Private Limited by Wal-Mart International Holdings, Inc
— CCI (@CCI_India) August 8, 2018
The regulatory board also mentioned that the discounting practices by Flipkart may have to be reviewed by the relevant authorities, which will put pressure on regulators to clamp down on discounts on online platforms.
Responding to CCI’s approval, Walmart said that the company is committed to contributing to the Indian economy by supporting farmers, businesses run by women in India and small and medium suppliers.
The statement read: Flipkart is a prominent player in India with a strong, entrepreneurial leadership team that is a good cultural fit with Walmart.
Soon after the CCI’s approval on the deal, local trader body, Confederation of All India Traders (CAIT) opposed the Flipkart-Walmart deal on the ground that the acquisition will create unfair competition and drive local convenience stores out of business.
CAIT’s secretary general Praveen Khandelwal said to Reuters, “We will certainly move the court against the CCI’s decision. CAIT has called an emergency meeting of its governing council on August 19 at Nagpur, where we will finalise our strategy for a nationwide movement.”
