The  National Company Law Appellate Tribunal ("NCLAT"), vide judgment dated 12.03.2020, has upheld the order dated 08.08.2018 passed by the Competition Commission of India ("CCI/Commission") approving Wal-Mart International Holdings' ("Walmart") acquisition of between 51% and 77% of the outstanding shares of Flipkart Pvt. Ltd ("Flipkart").

The appeal against the CCI order was preferred by Confederation of All India Traders ("Appellant") - one of the various stakeholders which raised objections before the Commission with respect to the above-mentioned transaction.


The Appellant argued that pursuant to the approval of the combination, Walmart will have effective control over the e-commerce platform and the web of preferential sellers and in such a situation it will sell its inventory on the platform of Flipkart or through a web of associated preferred sellers and preference will be given to the inventory of Walmart. It was further argued that the alleged practice of Flipkart denying market access to non-preferential sellers will be magnified post the transaction. The Appellant also brought on record Flipkart's alleged anti-competitive activities such as deep discounts, exclusive tie-ups, and preferential listings which might magnify post the transaction.

On the other hand, Walmart contended that the overlaps between Flipkart and Walmart (hereinafter referred to as "parties") are insignificant to warrant intervention. It was submitted that the horizontal overlap is limited to the wholesale business to business (B2B) market in India and the CCI in its order rightly observed that Flipkart and Walmart are not close competitors in B2B sales and their combined market share of less than 5% do not raise any competition concerns. In addition, the vertical overlaps were observed to be minuscule.

Further, Walmart submitted that under the existing Foreign Direct Investment Policy 2017 ("FDI Policy"), the parties cannot engage in Business to Customer (B2C) sales whether offline or online on any end consumer marketplace based e-commerce platform including Flipkart. Walmart finally submitted that the Appellants concerns with potential vertical overlaps between the parties are predicted upon the following baseless presumptions: (i) Flipkart is in violation of FDI Policy and already operates in B2C space; and (ii) Walmart intends to violate the FDI Policy and operate in the B2C space by selling on Flipkart.

NCLAT Decision

NCLAT acknowledged that from a plain reading of the CCI order it was apparent that the Commission had considered the business activities of Flipkart and Walmart and analyzed the horizontal and vertical overlaps which existed between the parties. NCLAT noted that the CCI had observed that both the parties are engaged in B2B sales and there existed a horizontal overlap in the relevant market for 'Pan-India market for B2B sales' which was characterized by intense competition among a very large number of competitors- online and offline. Further, the Commission had also observed that both the Flipkart and Walmart were entities with foreign investments and therefore are governed by the FDI Policy which laid the boundaries of B2B sales within which the parties can operate.

The NCLAT held that CCI was right in approving the combination in absence of any evidence on record that the proposed combination is resulting in elimination of any major players in the relevant market. The NCLAT observed that the appellant failed to show that any major player in the relevant market will be eliminated due to the proposed combination. On the other hand, NCLAT noted that Flipkart will remain under the operation of Walmart which will not only preserve a successful e-commerce platform but will also enhance its financial strength.

NCLAT, towards the end of the judgement, noted that although allegations were made against Flipkart but Flipkart was not impleaded as a party to the appeal and therefore no specific finding can be given against Flipkart in the appeal.

Accordingly, the NCLAT dismissed the appeal and upheld the CCI order approving the transaction.

Comment: This decision by NCLAT , perhaps, marks the end of the ongoing battle between the offline traditional traders and the online e-commerce giants , which got intensified after the entry of Walmart in India through acquisition  of majority stakes in the Indian e -commerce player  FlipKart. 

Note: This article first appeared on the Antitrust & Competition Law Blog   on 16 March 2020.

Specific Questions relating to this article should be addressed directly to the author.

Article by MM Sharma, Head Competition Law & Policy Practice, Vaish Associates, Advocates, New Delhi, India

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