Sanction of Walmart’s acquisition of Flipkart by CCI was justified

Confederation of All India Traders Vs Competition Commission of India (NCLAT)

Conclusion: In absence of any prime facie opinion framed, that the combination of Walmart-Flipkart was likely to cause or had caused appreciable adverse effect on the competition within the relevant market in India, the sanction of of Walmart’s acquisition of Flipkart by Competition Commission of India (CCI) was justified.

Held: Competition Commission of India (Commission) received a notice under section 6 (2) of the Competition Act, 2002 given by Wal-Mart International Holdings, Inc. (Walmart), a subsidiary of Walmart Inc. for acquisition between 51% and 77% of the outstanding shares of Flipkart Private Ltd (Flipkart) and matters incidental thereto (Proposed Combination). The notice was given pursuant to the execution of a share Purchase Agreement by and among Walmart and certain shareholders of Flipkart (SPA) and a Share Issuance and Acquisition Agreement on the same day by and among Walmart and Flipkart (SIAA). During the inquiry into the matter, the Commission received representations against the proposed combination from trade associations, traders/retailers including appellant, Confederation of All India Traders raising objections to the said transactions. The Competition Commission of India (Commission) after enquiry taking into consideration all relevant facts including the objections raised by the appellant, issued order approving the combination. As a consequence, the Confederation of All India Traders (CAIT) had filed a petition in National Company Law Appellate Tribunal (NCLAT) asking for the reversal of the Walmart-Flipkart deal. Appellant contended that in past years Flipkart and Walmart had undertaken predatory activities to gain maximum profits. It was held that the Commission specifically and rightly came to a finding in absence of any evidence on record that the proposed combination was not resulting in elimination of any major player in the relevant market. Appellant had failed to show that any major player in the relevant market would be eliminated due to combination in question. On the other hand, the Flipkart marketplace platform would remain under the operation of Walmart, thus not only preserving a successful e-commerce platform but also enhancing the financial strength of the platform. Thus, in absence of any prime facie opinion framed, that the combination was likely to cause or had caused appreciable adverse effect on the competition within the relevant market in India, the Commission was not required to follow the procedure under Section 29 and Section 30 and was required to pass order of approval under Section 31.

FULL TEXT OF ORDER OF  NATIONAL COMPANY LAW APPELLATE TRIBUNAL, DELHI

On 18^th May, 2018, the Competition Commission of India (Commission) received a notice under sub-section (2) of Section 6 of the Competition Act, 2002 given by Wal-Mart International Holdings, Inc. (Walmart), a subsidiary of Walmart Inc. for acquisition between 51% and 77% of the outstanding shares of Flipkart Private Ltd (Flipkart) and matters incidental thereto (Proposed Combination). The notice was given pursuant to the execution of a share Purchase Agreement on 9^th May, 2018 by and among Walmart and certain shareholders of Flipkart (SPA) and a Share Issuance and Acquisition Agreement on the same day by and among Walmart and Flipkart (SIAA).

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