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NCLAT seeks details on Walmart-Flipkart business model in India

BusinessToday.In     September 7, 2018

The National Company Law Appellate Tribunal (NCLAT) has asked US-based brick-and-mortar behemoth Walmart and its recent acquisition, Flipkart, to explain their business model in India.

The NCLAT has asked Walmart International Holdings Inc to file its reply before it by September 20, 2018. It has also asked trader's body CAIT, which has filed an appeal before NCLAT challenging the go-ahead by the CCI on Walmart's $16 billion acquisition of Flipkart, to file its understanding over the Walmart's business model in India.

NCLAT is the appellate authority for the Competition Commission of India (CCI).

"Before going into the merit of the appeal, we intend to know the manner in which Walmart International Holdings, Inc. and Flipkart Private Ltd do their business in the relevant market in India," said an NCLAT bench headed by Chairman Justice S J Mukhopadhaya.

The tribunal further said: "The appellant (CAIT) may file relevant list of dates and their understanding of sales by Respondent No 2 (Walmart International) by way of an additional affidavit within a week thereof."

The NCLAT has directed the matter be listed on 5 October.

Last month, while clearing Walmart's acquisition of Flipkart, the CCI observed that complaints about the deal violating FDI rules "may merit policy intervention" but that did not fall in its ambit. The CCI had said it is "not likely to have an appreciable adverse effect on competition in India and, therefore, the same is hereby approved."

It had observed that the complaint about Flipkart's discounting practice or preference to select e-tailers is not specific to this merger deal and is "already prevalent" in the market.

Earlier, on August 18 Walmart had informed that it had completed the deal with Flipkart and now holds a 77 per cent stake in the Indian e-commerce major. Besides, the Bentonville giant's investment includes $2 billion of new equity funding to help accelerate the growth of the Flipkart business.

As per the provisions of the I-T law, Walmart has to deduct withholding tax on payments made to sellers and deposit it with the Indian authorities on the seventh day of the subsequent month, which falls on September 7.

Walmart India, a wholly owned subsidiary of Walmart Inc, owns and operates 21 Best Price Modern wholesale stores in eight states in the country. Walmart International Holdings, Inc is a subsidiary of Walmart Inc.

With PTI inputs

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