Walmart says its business model and activities in India were different of Flipkart's.
New Delhi: Traders' body CAIT has told the NCLAT that Walmart has been found "guilty of predatory behaviour" in countries like Germany, Mexico and South Africa and "may repeat such behaviour in India" through its acquisition of online major Flipkart.
The Confederation of All India Traders (CAIT), which has challenged the CCI's approval of Walmart's USD 16 billion acquisition of Flipkart, in its reply filed before the NCLAT has said that the US retail major "may cause an appreciable adverse effect on competition" in the domestic market post combination as its "predatory tendencies" would be on on a much larger scale.
Wal-Mart International Holdings Inc, however, in a separate reply has said its business model and activities in India were different of Flipkart's. Moreover, on account of FDI restrictions, Walmart India can not engage in selling directly to consumers.
Even in business segments, where there is an overlap with Flipkart, Walmart said the "combined market share of Flipkart and Walmart in the market of B2B sales are less than five per cent and the incremental change in the market shares as a result of this transaction is less than 0.5 per cent".
It further said that product offerings of Walmart and Flipkart are different in B2B sales where there is an overlap. "... the product line for the parties are largely different. While Wlamart India's focus is on food and grocery products, Flipkart B2B entities major sales are in mobile, other electronic and lifestyle, which are an extremely small part of Walmart India portfolio."
Wal-Mart International Holdings Inc, a subsidiary of Walmart Inc, also said that the FDI policy 2017 restricts Walmart to do B2C sales whether offline or online as seller or any end-consumer market place based e-commerce platform, including on Flipkart marketplace platforms, which also include Myatra, jabong and ebay.in.
Earlier, on September 6, the NCLAT which is also an appellate authority over the Competition Commission of India (CCI), has asked Wal-Mart International Holdings Inc to file a reply before it explaining way of doing business in India.
The CAIT, which has filed an appeal before the National Company Law Appellate Tribunal (NCLAT) challenging the go-ahead by the Competition Commission of India (CCI) on Walmart's acquisition of home-grown Flipkart, was also asked to file its understanding over the Walmart's business model in India.
The NCLAT had directed to list the matter on October 5 'for admission' of CAIT petition opposing approval granted by the CCI on August 8 to the Walmart-Flipkart deal. In its reply, trader's body has said this deal may eliminate smaller players in the market and is a matter of concern for them as they are financially incapable of competing at such low price levels.
According to it, Walmart was found guilty of 'predatory pricing' in Germany in 2003. While, in Mexico, Mexico's antitrust authority COFECE blocked Walmex (Wal-mart's Mexican entity) from acquiring certain retail stores of its main competitor Soriana.
"In South Africa, in an appeal against a merger between Walmart and Massmart, the South African authorities observed that Walmart's activities tend to affect small and medium sized enterprises," it said.
According CAIT, it is a "matter of concern" that "Walmart may repeat such behaviour in India as well combined with India's largest e-commerce portal Flipkart".
"It is unfortunate that despite the Act mandating an examination of combinations on the basis of the likelihood of an AAEC, the CCI has only considered the pre-merger overlaps and status quo while passing the Section 31 order instead of looking at the possible anti-competitive concerns that may arise based on the past conduct of Flipkart and Walmart in India and other jurisdictions, despite categorically noting that the activities of Flipkart may need to be examined under Section 3(4) of the Act," it said.
Earlier, on August 18 Walmart had informed that it has completed deal with Flipkart and holds 77 per cent stake in the Indian e-commerce major. Besides, the Bentonville giant's investment includes USD 2 billion of new equity funding to help accelerate the growth of the Flipkart business.
Walmart India, a wholly-owned subsidiary of Walmart Inc, owns and operates 21 Best Price Modern Wholesale stores in eight states in the country.