Retailers to move CCI against Walmart-Flipkart, say it would lead to massive job loss

Retailers have joined hands to approach fair trade regulator Competition Commission of India (CCI) against $16 billion Walmart-Flipkart deal as they apprehend that it would lead to massive job loss and be a nightmare for retail trade of the country. Traders body Confederation of All India Traders (CAIT) in a strongly worded statement alleged ruling party BJP of bias towards multi-national companies and deviating from its commitment made in 2014 election manifesto.

The traders body said that it will move fair trade regulator CCI to file objections on the proposed Walmart-Flipkart deal, claiming that the agreement would lead to an uneven playing field and massive job losses. On the other hand, an online sellers industry body moved the Competition Commission of India against Flipkart India Pvt Ltd, a wholesale company, for allegedly abusing its dominant position on Flipkart’s online marketplace.

Emails sent to Flipkart did not elicit a response. Global retail giant Walmart had last week approached the CCI for approval of its proposed acquisition in Flipkart, saying the deal does not raise any competition concerns. Walmart seeks to acquire 77 per cent stake in the homegrown e-commerce firm with a buyout of $16 billion.

“The CAIT as a first step is moving to Competition Commission of India for filing its objections to Walmart deal,” CAIT secretary general Praveen Khandelwal said in a statement. Opposing the deal, the CAIT also wrote to commerce minister Suresh Prabhu and sought to know what steps the government has taken to scrutinise the deal. The traders’ body alleged that the deal involves important issues related to FDI policy, cyber security, apprehension of using e-commerce for entering retail trade by circumventing the law, etc.

Khandelwal alleged that the government has not taken any step to consult traders despite lodging their objections with the commerce ministry. “Such an attitude indicates the turning balance towards MNCs at the cost of ignoring the domestic retail trade. It is much against the BJP manifesto of 2014 which has committed no encouragement to FDI in retail. It appears that government has taken a U-turn on its declared commitment,” he said.

According to CAIT, the US, Europe, etc, the financial lending entails an interest rate from 1.5 to 2.5 percent only whereas in India the finance is lent by the banks from 12 per cent to 20 per cent per annum. “This difference in interest rates in itself is enough to kill the domestic trade. The Walmart-Flipkart deal will prove to be a nightmare for retail trade and economy of the country. There will be enormous job losses and an uneven playing field,” Khandelwal said.

While the All India Online Vendors Association (AIOVA), which claims to represent over 3,500 sellers on various e-commerce platforms, demanded an investigation on Flipkart marketplace run by Flipkart Internet Pvt Ltd due to the abuse of its dominance by indulging in unfair and discriminatory practice in dealings related to sister concern Flipkart India Pvt Ltd.

The online retailers body alleged that Flipkart India Pvt Ltd is a wholesale dealer who own brands such as Billion, Marq, Smartbuy, etc. It also sources goods from various brands and sells it to sellers such as WS Retail Pvt Ltd and many others who eventually sell the goods to consumers on Flipkart.com which is owned and operated by Flipkart Internet Pvt Ltd, AIOVA alleged.

The representative body claimed that such a preferential treatment and discriminatory conduct, which is prohibited under the Competition Act, is killing many independent sellers who depend on its platform for their livelihood. It has prayed to the commission to immediately prevent Flipkart from selling goods at a discounted price to certain sellers which are further sold on Flipkart.com.

“If not stopped immediately, many independent sellers would be forced to leave the market, resulting in concentration of the market,” it asserted. The online vendors have demanded a regulatory body for the sector should be formed before any changes are made in the ownership and control of the power of any of the marketplace.