Sellers body moves CCI against Flipkart's acquisition of Walmart India

Says a few sellers will get preferential treatment, Flipkart will engage in deep discounting in groceries

Flipkart's recent acquisition of Walmart India is facing a big challenge as the All India Online Vendors' Association (AIOVA) has approached the Competition Commission of India (CCI) against this deal.

AIOVA, which is an alliance of sellers, has approached the CCI on the ground that the acquisition of Walmart India will lead to preferential treatment for a few sellers and the combination will lead to deep discounting by Flipkart in its grocery segment. It has said the investigation by the CCI against Flipkart was already ongoing for abuse of dominant position, and thus the acquisition can’t be allowed.

“All we are saying is the acquisition of Walmart India by Flipkart will contribute to the appreciable adverse effect to competition, as the goods will be sold at a discounted price on the recently started online grocery store, Flipkart Supermart,” said Chanakya Basa, legal counsel representing AIOVA, which sent the letter to CCI on Monday.

In March, the National Company Law Appellate Tribunal (NCLAT) had asked CCI to initiate a probe against Flipkart for alleged abuse of its dominant position in the market.

Flipkart recently strengthened its wholesale presence with the acquisition of Walmart India, which operates the Best Price cash-and-carry business.

Bengaluru-based Flipkart, in which Walmart Inc holds a majority, also announced the launch of Flipkart Wholesale — a new digital marketplace that looks to transform the kirana retail ecosystem by leveraging technology.

Walmart India runs 28 Best Price stores across nine states. Following the acquisition, Walmart India employees will join the Flipkart group, while the Best Price brand will continue serving its 1.5 million members via its omni-channel network stores and e-commerce operations.

An email query to Flipkart related to AIOVA approaching CCI remained unanswered till the time of going to press.

Walmart had invested $16 billion in 2018 for a majority stake in Flipkart. Earlier this month, it led a $1.2-billion round in Flipkart, valuing the e-commerce firm at $24.9 billion.   

Commenting about AIOVA approaching CCI, Salman Waris, managing partner at TechLegis Advocates and Solicitors said AIOVA has alleged that when Flipkart was acquired by Walmart, they had objected to the move then also. “Among the objections raised then was of Walmart's existing operations being merged with Flipkart's operations, which was perceived to be detrimental to sellers interests, (and) now over the years it has been seen that sellers have been neglected by them,” said Waris.

In a separate case, the CCI had launched an investigation against e-commerce majors Amazon and Flipkart in January to probe some of their business practices including giving deep discounts on online sales of smartphones and cherry-picking sellers. In a major relief for Amazon India and Flipkart, the Karnataka High Court in February granted an interim stay on the CCI’s order of an investigation into some of the firms’ business practices.