Walmart's acquisition of Flipkart unlikely to impact competition: CCI

The Competition Commission of India, which had last week cleared the $16-billion acquisition of Flipkart by American retail giant Walmart, felt that the deal was unlikely to have an adverse effect on competition.

Referring to the stiff opposition to the deal by various trade organisations and even the Swadeshi Jagaran Manch, the CCI said the concerns raised by them were beyond the scope of the Competition Act.
Complaints relating to violating FDI rules did not fall under its ambit, but could merit ‘policy intervention,’ said the CCI. As regards the complaints about Flipkart’s discounting practice or preference to select e-tailers, the CCI pointed out this was prevalent in the market and was not specific to the merger deal.
“The Commission deliberated extensively on the concerns raised in the representations but concluded that the instrument of regulation of combinations cannot address these and different policy and legal instruments may be taken recourse to,” it noted. “Thus, this review process cannot be a window to resolve concerns that are not incidental or arise from the proposed combination.”
The American company is acquiring 77-per cent of Flipkart for $16 billion, which is seen as the biggest deal in India’s e-commerce segment. Walmart, which has been struggling to set up base in India’s retail business, hopes to establish itself in the segment with the qacquisition of Flipkart (See: For $16 bn Walmart bags Flipkart).