Less than a week after the announcement of the Flipkart – Walmart India deal, the retail giant is facing problems in acquiring the cash-and-carry business of Walmart. The All India Online Vendor’s Association (AIOVA), which is an alliance of online sellers, has complained to the Competition Commission of India (CCI) regarding the mega acquisition, on the ground that the acquisition will lead to preferential treatment to some sellers that will result in high discounts being offered by Flipkart to its customers.
The letter sent by the AIOVA to the CCI said that the AIOVA “firmly believes that as per the directions of the NCLAT the Director-General has commenced the investigation against the opposite parties (Flipkart India Pvt. Ltd. and Flipkart Internet Pvt. Ltd.).” The acquisition “will result in foreclosure of non-preferred sellers,” and “closure of small Kirana shops which proved to be life savior during the pandemic,” it added.
AIOVA has said that currently, Flipkart is under investigation by the CCI for allegedly using unfair trade practices such as abusing its dominant position, which is in violation of Section 4 of the Competition Act. Therefore, the acquisition deal cannot be concluded, it added. In March, the probe against Flipkart was initiated by the CCI on the directions issued by National Company Law Appellate Tribunal (NCLAT).
Learned Counsel Chanakya Basa told that the accusations were made by the body in 2018, at the time when Walmart had acquired Flipkart. The CCI had given a clean chit to Flipkart in its order dated 2018, though; it was quashed by the NCLAT. He said, “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 Supermarket.”
Last week, Flipkart had announced that it is going to acquire Best Price, the cash and carry the business of Walmart India. Best Price operates through 28 stores across the country.
In addition to this, it also announced the launch of its delivery service ‘Flipkart Quick’. The platform will deliver more than 2,000 products under various categories, including groceries, fresh vegetables, meat, and mobile phones in 90 minutes.
A spokesperson of the AIOVA told, “When Flipkart was acquired by Walmart, we had raised objections to certain parts of the deal in seller’s interests. Over the years it has been seen that sellers have been neglected by them. Amongst the objections raised then, we had raised an alarm over Walmart’s existing operations being merged with Flipkart’s operations, which is detrimental to sellers' interests.”
Salman Waris, Managing Partner at TechLegis Advocates and Solicitors said, “Among the objections raised then (when Flipkart was acquired by Walmart)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.”
In January, the CCI had started an investigation against Amazon and Flipkart to probe their business practices, including giving deep discounts to their customers. In February, the Karnataka High Court granted an interim stay on the CCI’s order of investigation.
