Traders body CAIT challenges Walmart-Flipkart deal in CCI
Earlier this month, Flipkart sold its 77 per cent stake to Walmart in USD 16 billion deal. The CAIT is against this deal as it claims that the entry of US retail giant in India will create an unfair competition and hit small traders on offline platform.
- May 29, 2018,
- Updated May 29, 2018 12:06 PM IST
The Confederation of All India Traders (CAIT) on Monday approached the Competition Commission of India against the multi-billion dollar deal between US-based Walmart and Flipkart. Earlier this month, Flipkart sold its 77 per cent stake to Walmart in USD 16 billion deal. The CAIT is against this deal as it claims that the entry of US retail giant in India will create an unfair competition and hit small traders on offline platform.
In a statement, the traders body said that it has filed its objection petition in CCI against the deal. It said: "The merger of two companies will create an unfair competition and uneven level playing field and will indulge in predatory pricing, deep discounts and loss funding."
The CAIT said that Flipkart is a combination of exclusive tie-ups and preferential sellers where even online vendors face discriminatory conditions. After the deal, Walmart would sell its inventory on the platform of flipkart.com either directly or through a web of associated preferred sellers, it claimed. "This will create an unhealthy competition much to the disadvantage of both offline and online sellers," CAIT said.
Before approaching to CCI, the traders body wrote two letters to Commerce Minister Suresh Prabhu to express the business community's concerns. In one of its letters, the CAIT called Walmart 'a US version of The East India Company'. In the letter written recently, the traders body said: "Walmart is nothing but a US version of The East India Company which conquered the country."
The CAIT feared that Walmart will penetrate the retail trade through e-commerce and indulge in predatory pricing with deep discounting which will eventually create an uneven playing field for domestic players. "It will source globally the cheapest material and will dump in the country to wipe out the competition. As of now, no rule or law exists which can put restrictions on such practises of any company," the letter had stated.
It accused the US retail giant of having hidden agenda and said that the deal will "offend FDI policy once it is implemented and will create an uneven level playing field beside accomplishing hidden agenda of Walmart to reach out to offline trade through e-commerce way".
The body had also demanded that a national policy for e-commerce be framed at the earliest and a regulatory authority be constituted to regulate the online retail business in India. "...and till such time, the deal should be put in abeyance by the Government and a close scrutiny should be held in the entire deal," it had said.
Earlier on May 7, the traders body had sought Suresh Prabhu's intervention ahead of the Flipkart-Walmart deal. The CAIT had argued that the government should make it mandatory that such deals can take place only when 75 per cent of the sellers on an e-platform give their assent since they would be the worst sufferers.
(With inputs from PTI)
The Confederation of All India Traders (CAIT) on Monday approached the Competition Commission of India against the multi-billion dollar deal between US-based Walmart and Flipkart. Earlier this month, Flipkart sold its 77 per cent stake to Walmart in USD 16 billion deal. The CAIT is against this deal as it claims that the entry of US retail giant in India will create an unfair competition and hit small traders on offline platform.
In a statement, the traders body said that it has filed its objection petition in CCI against the deal. It said: "The merger of two companies will create an unfair competition and uneven level playing field and will indulge in predatory pricing, deep discounts and loss funding."
The CAIT said that Flipkart is a combination of exclusive tie-ups and preferential sellers where even online vendors face discriminatory conditions. After the deal, Walmart would sell its inventory on the platform of flipkart.com either directly or through a web of associated preferred sellers, it claimed. "This will create an unhealthy competition much to the disadvantage of both offline and online sellers," CAIT said.
Before approaching to CCI, the traders body wrote two letters to Commerce Minister Suresh Prabhu to express the business community's concerns. In one of its letters, the CAIT called Walmart 'a US version of The East India Company'. In the letter written recently, the traders body said: "Walmart is nothing but a US version of The East India Company which conquered the country."
The CAIT feared that Walmart will penetrate the retail trade through e-commerce and indulge in predatory pricing with deep discounting which will eventually create an uneven playing field for domestic players. "It will source globally the cheapest material and will dump in the country to wipe out the competition. As of now, no rule or law exists which can put restrictions on such practises of any company," the letter had stated.
It accused the US retail giant of having hidden agenda and said that the deal will "offend FDI policy once it is implemented and will create an uneven level playing field beside accomplishing hidden agenda of Walmart to reach out to offline trade through e-commerce way".
The body had also demanded that a national policy for e-commerce be framed at the earliest and a regulatory authority be constituted to regulate the online retail business in India. "...and till such time, the deal should be put in abeyance by the Government and a close scrutiny should be held in the entire deal," it had said.
Earlier on May 7, the traders body had sought Suresh Prabhu's intervention ahead of the Flipkart-Walmart deal. The CAIT had argued that the government should make it mandatory that such deals can take place only when 75 per cent of the sellers on an e-platform give their assent since they would be the worst sufferers.
(With inputs from PTI)