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Walmart-Flipkart deal faces hurdle; traders move CCI against acquisition

A week after global retail company Walmart approached the Competition Commission of India (CCI) for approval of its proposed acquisition in Flipkart, two top traders’ bodies, including the Confederation of All India Traders (CAIT), have moved the fair-trade regulator against the deal. Flipkart had sealed a $16-billion worth deal with US retail company Walmart this month. Traders across India are fearful that it would lead to a monopoly of few companies like Walmart due to huge cash reserves at their disposal. They called the deal a nightmare for domestic retail trade, which would create massive job loss.

Raising serious objections, the CAIT accused the government of favouring MNCs and not consulting the traders over the issue despite them raising objections to the Ministry of Commerce. It said the BJP, in its manifesto during General Elections in 2014, had promised no encouragement to the FDI in retail, and that the centre has taken a U-turn on its commitment.

The CAIT said as a first step it is moving the CCI for filing objections over the Walmart-Flipkart deal, which would not only cause enormous job loss but would also create an uneven level-playing field. Walmart seeks to acquire 77 per cent stake in the homegrown e-commerce firm Flipkart for around $16 billion.

In a communication to Commerce Minister Suresh Prabhu, the CAIT asked if the government took any steps to scrutinize the deal touted as biggest e-commerce mergers of all time. CAIT Secretary General Praveen Khandelwal said: “Important issues of FDI policy, cybersecurity, apprehension of using e-commerce for entering into the retail trade by circumventing the law, etc. are involved in the deal. And looking at the stiff opposition from trade bodies, online vendors, the centre must go to its depth.” Khandelwal said the government has not taken any steps to ensure the speedy growth of domestic trade while it has been encouraging MNCs to enter into the retail trade.

It said in the US and Europe, financial lending entails an interest rate from 1.5-2.5 per cent only, while in India financial lending entails from 12-20 per cent per annum. This difference in interest rates in itself is enough to kill the domestic trade, said the body.

Besides, AIOVA, an online sellers industry body representing 3,500 sellers on e-com platforms, also moved the CCI against Flipkart India Pvt Ltd, a wholesale company, for allegedly abusing its dominant position on Flipkart’s online marketplace. It has sought action against the Flipkart marketplace, which is run by Flipkart Internet Pvt Ltd, for unfair and discriminatory practices.

Flipkart India owns brands such as Billion, Marq, Smartbuy, etc, and sources goods from various brands and sells it to sellers such as WS Retail Pvt Ltd and many others who eventually sell their goods on Flipkart.com, owned and operated by Flipkart Internet, AIOVA alleged.

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