One of the formalities that could have potentially scuppered the Flipkart Walmart merger had been removed as the Competition Commission of India (CCI) formally approved the deal.
@CCI_India approves proposed acquisition of Flipkart Private Limited by Wal-Mart International Holdings, Inc
— CCI (@CCI_India) August 8, 2018
All major mergers and acquisitions in India have to be approved by the CCI and there had been talks of retailers taking legal action over the Flipkart Walmart merger. However, the commission has ruled that neither company has significant enough market share or over lap of business practises that would lead them to block the deal going ahead.
“Considering the facts on record and the foregoing assessment, the Commission is of the opinion that the Proposed Combination is not likely to have an appreciable adverse effect on competition in India and therefore, the same is hereby approved”
– Decision of the Competition Commission of India
Crucial to the decision is that Walmart operate 20 Best Price Stores in India but they are membership only for business customers such as resellers, offices and institutions and hotels, restaurants and caterers. Walmart India’s
B2B e-commerce platform is also only available to registered Best Price members. This means that Flipkart customers – largely consumers – have very little overlap with Walmart customers (Flipkart do have a small amount of B2B sales) and so the merger will have little impact on consumer choice moving forwards. Plus Walmart’s market share is a tiny less than half a percent so is pretty insignificant anyway.
“It has been submitted that given the limited size of the B2B Sales of the parties to the Combination, the Proposed Combination is not likely to cause any adverse impact on competition. As per the notice, the market share of Walmart in B2B sales in India is less than half a percent and thus, the incremental changes on account of the proposed combination is insignificant.”
– Competition Commission of India
The CCI also noted that the Walmart investment would preserve consumer choice rather than destroy it, leaving the merger clear to go ahead and Walmart.
“Furthermore, the Commission notes that the proposed combination is not resulting in elimination of any major player in the relevant market. The Flipkart marketplace platform will remain under the operation of Walmart, thus not only preserving a successful ecommerce platform but also enhancing the financial strength of the platform.”
– Competition Commission of India
