Walmart files caveat in HC to pre-empt move by Cait and SJM
21 August 2018
US retail major Walmart has filed a caveat in the Delhi High Court to pre-empt any legal action by traders body Cait and the Swadeshi Jagran Manch (SJM) against its acquisition of Indian e-commerce major Flipkart.
A caveat is a notice submitted in anticipation that another person or entity may file a lawsuit against them and asks for a fair hearing on the matter brought in front of the court, possibly by SJM and CAIT.
Walmart and Flipkart had cleared the Competition Commission of India (CCI) test, the biggest hurdle to their $16 billion transaction where Walmart gets to own 77 per cent of Flipkart and gains control over its operations.
Since the approval of the CCI, the body authorised to assess if deals of these nature were in conformity with the Competition Act, gave its clear approval last week and the government is more or less willing to oblige, the dissenting voices against the deal are from the Confederation of All India Traders (Cait) and the Swadeshi Jagran Manch (SJM).
Cait and SJM are not convinced with the detailed explanation given by CCI on why it considered the deal quite above board. SJM is an organisation which propagates use of indigenously available technology and resources and opposes foreign investment being encouraged indiscriminately in all areas.
Cait, on the other hand, has high stakes in retail business as its members consist of traders from across the country who will now face debilitating competition.
Cait may take the legal recourse to place obstacles on its way, which Walmart has tried to pre-empt by filing a caveat in the Delhi High Court. Filing a caveat ensures that the court will give Walmart an opportunity to place its position before the court in case SJM or Cait file a case against the Flipkart deal.
The opposition from these entities revolves around the FDI policy and the illegitimate discounts that online retailers offer to woo customers.
Foreign companies like Amazon and Walmart are violating the Foreign Direct Investment or FDI regulations under which they obtain their licences to operate businesses in India.
The other issue raised from the trading community has to do with the huge discounts they offer to the customers in their online transactions which gives them some unfair advantages which the brick and mortar traders don’t enjoy.
CCI, however, has dismissed all these charges, giving a big blow to local traders It is yet to be seen whether the arguments of Walmart and Flipkart will stand in a court of law.
A day after Walmart Inc announced the completion of its acquisition of a 77 per cent stake in Indian e-commerce major Flipkart, traders across the country announced a “Bharat Trade Bandh” on 28 September in protest against the government policy of facilitating the merger of US retail giant and the Indian online marketplace, which, they say will create an uneven platform for local retailers.
The Confederation of All India Traders (Cait) plans to start a nationwide ''Rath Yatra'' beginning 15 September and a massive traders rally on 16 December at New Delhi.
CAIT secretary general Praveen Khandelwal said the deal has “violated Press Note No 3 of 2016 of government and is a combination with a sinister design to control and dominate the retail trade through the passage of e-commerce policy”.