Flipkart-Walmart deal is the most talked about acquisition news in the past months. Officially, Walmart has now completed its 77% acquisition in Flipkart and has also got a go ahead from Competition Commission of India. But amidst the good news, is a bad one also where the retail traders across India have reportedly got affected and offended, pertaining to the new threat posing in front of them as the foreign giant is trying to enter retail market of India directly or indirectly.
Let us go through the sequence of events in this Article in which the traders have taken legal recourse against the E-Commerce Unicorn and what are the laws in context.
Competition Act, 2002 and Power of Competition Commission of India (CCI)
Competition Act, 2002 provides for establishment of a Commission to prevent practices having adverse effect on competition among other aims. Legally, for any Acquisition (termed as a ‘combination’ under the Competition Act, 2002) taking place involving entities having presence in India and fulfilling the turnover and assets size limit as prescribed, it needs to get an approval from the Competition Commission of India (CCI). In its last leg of deal, Flipkart-Walmart fitting into the said criteria, had approached the CCI for its in-principle approval in the May 2018.
What is a Combination?
As per Section 5 of the Competition Act, A Combination is defined as, ‘The acquisition of one or more enterprises by one or more persons or merger or amalgamation of enterprises shall be a combination of such enterprises and persons or enterprises’; subject to further turnover and assets criteria specified in the Competition Act.
Section 6 of the Competition Act empowers the CCI to regulate ‘Combinations’, and specifically states that combinations which cause or are likely to cause an appreciable adverse effect on competition within the relevant market in India shall be considered as void.
Indian Traders’ move against the Acquisition & Legalities in question
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