Anti-competition watchdog Competition Commission of India (CCI) said on Wednesday it has approved U.S. retail giant Walmart’s proposed $16 billion acquisition of home-grown ecommerce firm Flipkart, paving way for the largest cross-border merger and acquisition (M&A) deal involving an Indian business.
In a tweet on Wednesday evening shared from its official handle (embedded below), CCI said it has approved the “proposed acquisition of Flipkart Private Limited by Wal-Mart International Holdings, Inc” without sharing further details.
On May 9, Walmart said it would acquire 77% stake in e-commerce firm Flipkart, subject to regulatory approval in India. While seeking approval for the deal 10 days later, the American retailer claimed that the transaction would not create any competition concerns or distort the market. However, traders have been protesting against the transaction over fears that it may impact small and medium merchants and vendors, including driving them out of business. The Confederation of All India Traders (CAIT) on June 2 held protests at nearly 1,000 places in 500 cities.
Meantime, the government has indicated its intention of putting home-grown players in ecommerce on an equal footing with global players through its draft ecommerce policy, which was released a few days ago. Taking cognizance of the much-talked about topic of M&As that could distort competition, it was proposed that the CCI look into what comprised anti-competitive practices and entry barriers, among others, in such transactions. This was seen as a significant proposal in the context of the Walmart-Flipkart deal.
In the draft it was proposed that the CCI “consider suitably amending the thresholds so that potentially competition distorting mergers and acquisitions below the existing de minimis also got mandatorily examined by them in case of e-commerce entities.” De minimis refers to the worth of a transaction which will draw the attention of the CCI.
“The draft policy for e-commerce indicates strong intent to create a level playing field among all ecommerce players, accelerate the growth of the sector by widening the base of manufacturers and traders,” Vidhya Shankar, executive director, Grant Thornton India LLP, had said on the draft in a note on July 31.
