CCI nod for Walmart-Flipkart deal likely to be delayed

The Walmart-Flipkart deal, currently in the process of getting approval from the Competition Commission of India (CCI), is likely to be delayed.

According to sources privy to the proceedings, the delay is due to the continued letters of protests and petitions made to the CCI by trader organisations, including CAIT, SJM and AIOVA, which reached a crescendo on Monday when 10 lakh traders staged a protest against Walmart’s proposed acquisition of 77 per cent stake in Flipkart in a $16-billion deal, as well as, support to the traders from right wing and left-leaning political parties like the CPI(M).

“For CCI to come out with a prima facie approval of the deal, it would have to take into consideration all the objection letters, complaints and petitions from various parties, so that its decision does not come up for further scrutiny. Additionally, now that right and left-leaning political parties have also extended support to the trader associations, the approval will be further delayed,” a competition lawyer, working with a top law firm, told BusinessLine .

In case the CCI does not approve the deal and suggests a deeper investigation into the deal which may require more time, the outer time limit for CCI to pass an order as per Section 31 of the Competition Act is within 210 calendar days or 7 months from the first date of notification by Walmart. This would fall in mid-December, failing which, the transaction is deemed to be approved, explained the lawyer.

After Walmart filed Form 1 with CCI for approval on May 17, it would have ordinarily taken 30 working days for CCI to approve it, which usually amounts to a total of 45-60 days because of weekends, public holidays and queries raised by CCI and time taken by Walmart and Flipkart to respond to the queries raised. Form 1 is usually filed if any of the overlapping businesses of Walmart and Flipkart, in this case only the B2B wholesale business, amounts to less than 15 per cent of the wholesale business market share in the country. And also if there are no overlaps or competing businesses besides this.

Walmart hopeful

When contacted, Rajneesh Kumar, SVP and Chief Corporate Affairs Officer, Walmart India, said: “Walmart is working with the authorities in India and is hopeful of timely approval. We are still expecting closing later this calendar year, subject to regulatory approval. In line with the Government’s FDI policy which allows 100 per cent FDI under automatic route in marketplace e-commerce model, our partnership with Flipkart will provide thousands of local suppliers and manufacturers access to consumers through the marketplace model.” Meanwhile, Praveen Khandelwal, Secretary-General of CAIT, said, the ‘peaceful protest’ on Monday was a resounding success with a turnout of more than a million traders pan India, which forced Walmart to issue a statement about the advantages of the combined capabilities of two companies.

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