Bengaluru: India’s anti-trust regulator—Competition Commission of India—has approved Walmart Inc.’s $16-billion acquisition of Flipkart, despite vehement protests from traders across the country over fears that the Flipkart-Walmart deal would drive several small and medium-sized retailers out of business.
On Wednesday evening, CCI posted a tweet from its official Twitter handle, confirming that it had given the green light for the Flipkart-Walmart deal to go through, without sharing any further details.
@CCI_India approves proposed acquisition of Flipkart Private Limited by Wal-Mart International Holdings, Inc
— CCI (@CCI_India) August 8, 2018
The CCI approval, which was expected by Walmart and Flipkart to come sometime this month, paves the way for the companies to close the deal.
On 9 May, Walmart agreed to pay $16 billion for a 77% stake in Flipkart, valuing India’s largest start-up at about $21 billion in what is one of the biggest acquisitions in the country.
Walmart had on 19 May sought CCI’s approval for the Flipkart acquisition. At the time, Walmart had said that its proposed buyout of Flipkart did not create any competition concerns and that the pecking order of the broader retail market in India would remain unaffected by the deal.
While experts had said that there were no grounds for CCI to block the Flipkart-Walmart deal, it has become a hot-button issue for the Bharatiya Janata Party (BJP). Thousands of small traders, who are among the core voter base of the BJP, had tried to get the government to block the acquisition.
The CCI approval is likely to trigger further protests from traders across the country. Mint reported on 3 July that traders and shopkeepers were against Walmart’s acquisition of Flipkart and had decided to oppose the deal at every step.
At the forefront of the traders’ opposition is Praveen Khandelwal, secretary general of Confederation Of All India Traders (CAIT). On Wednesday evening, he said that the CCI had approved the deal without hearing CAIT’s objections.
“It is most unfortunate that leaving aside the objections raised by CAIT in CCI , the Commission has approved the deal. We deeply condemn such an attitude and will certainly move to higher court against the decision of CCI. The CAIT has called an emergency meeting of its governing council on 19 August at Nagpur to take stock of the situation and finalize strategy for a nationwide movement,” Khandelwal said.
On the business side, the Flipkart-Walmart deal will redraw the retail landscape in India as Walmart takes its battle in the US with arch-rival Amazon to the world’s fastest growing major economy.
The buyout, which is Walmart’s biggest acquisition and the biggest e-commerce deal globally, marked the end of an era for Flipkart as co-founder and chairman Sachin Bansal left the company, selling his 5.5-6% stake for roughly $1 billion. Flipkart’s other founder Binny Bansal continues as Flipkart group CEO and Kalyan Krishnamurthy has retained his position as Flipkart CEO.