Competition Commission clears Walmart’s acquisition of Flipkart
In May, multinational retailer Walmart had acquired 77% stake in the Indian e-commerce firm for nearly $16 billion.
The Competition Commission on Wednesday said it has approved multinational retailer Walmart’s plan to buy out Indian e-commerce firm Flipkart.
On May 9, Walmart had acquired 77% stake in Flipkart for nearly $16 billion (Rs 1.07 lakh crore). Flipkart’s existing shareholders, including Flipkart co-founder Binny Bansal, Tencent Holdings Limited, Tiger Global Management LLC and Microsoft Corp will hold the remainder of the business, the American retailer said in a statement. The deal values Flipkart at $20.8 billion (Rs 1.39 lakh crore).
Sachin Bansal, co-founder of the e-commerce giant, announced his exit from the company following the deal.
Later that month, the Confederation of All India Traders filed a petition with the CCI, alleging the acquisition would create unfair competition and an uneven playing field. The CCI, which monitors unfair business practices, is supposed to clear deals above a certain limit, said PTI.
The traders’ body said the deal would destroy small traders who work offline, as well as other online competition. It also claimed that the agreement had circumvented the existing laws and the government’s policy on Foreign Direct Investment. “The ultimate object of Walmart is to enter the retail trade of the country, which it otherwise cannot enter due to the FDI policy,” it said.
In a letter to Union Commerce and Industry Minister Suresh Prabhu, the confederation had called Walmart “the United States version of the East India Company” and called for a thorough investigation into the retailer’s deal.
Flipkart was rated the third-most funded private company in the world in 2017 after it secured over $7 billion from major investors including Softbank, Tiger Global and DST Global. The firm, founded by Indian Institute of Technology-Delhi alumni Sachin Bansal and Binny Bansal in 2008, is considered to be one of the most successful firms in India.