Ahmedabad, June 11, 2018:
The Walmart-Flipkart deal is slated to come under a massive attack as the Confederation of All India Traders (CAIT) has decided to hold a nationwide dharna to protest against the same on July 2, 2018. A dharna (peaceful agitation) will be held simultaneously by lakhs of traders and manufacturers from various industries including cosmetics and personal care segments at nearly 1,000 locations across the country.
A decision to this effect was taken at a two-day meet of CAIT’s National Governing Council that started in Ahmedabad today, informs Kajal Anand, Head, Women’s Cell – Maharashtra, CAIT. Ms. Kajal is also the immediate past president of All India Cosmetic Manufacturers Association (AICMA).
In what is being described as the world’s largest e-commerce deal, on May 9, 2018, Walmart, Inc. announced to have signed definitive agreements to become the largest shareholder in the India-based e-commerce giant, Flipkart. As per the terms of the deal, Walmart will pay $16 billion (₹ 1.08 lakh crore, approximately) for an initial stake of 77 percent in Flipkart. The remainder of the business will be held by some of Flipkart’s existing shareholders including the co-founder Binny Bansal, Tencent Holdings, Tiger Global Management, and Microsoft. The acquisition is pending a regulatory approval in India.
Break the seal; block the deal
CAIT, in a unanimous resolution passed at the conference, demanded that the Indian government should reject the deal, an e-commerce policy be framed, and an independent body be established for regulating the e-commerce sector. CAIT represents nearly 6.5 crore traders and 40,000 trade associations in India.
“This time CAIT shall be pursuing the matter with both, Enforcement Directorate & Reserve Bank of India, so that e-commerce companies including Flipkart and its new owner Walmart should not escape from the liability of malpractices, predatory pricing and deep discounting," says CAIT in a statement.
The CAIT further states that the e-commerce market in India, since its inception, has been attracting a serious scrutiny of the “ill-designed business practices adopted by various leading e-commerce players”. In the absence of any policy–both for e-commerce and retail trade–these practices such as deep discounts and predatory pricing smack of a single motto of controlling and dominating retail trade and have vitiated the fundamentals of commerce by easily circumventing the laws aimed at protecting the free market economy and competition.
The legal backdrop
The decision of a nationwide dharna planned by CAIT comes soon after a petition filed by All India Online Vendors Association (AIOVA) with with the Competition Commission of India (CCI), as reported by The Hindu BusinessLine . In its petition, AIOVA, which represents 3,500 sellers on e-commerce marketplaces, has accused Flipkart of abusing its dominant position and imposing unfair terms on buyers as well as sellers. Indirectly refering to Walmart-Flipkart deal, AIOVA to has demanded creation of a separate body to regulate e-commerce sector before any such major deal amounting to transfer of company ownership is approved.
It should however be noted that in the year 2015, the Competition Commission of India had cleared five major e-commerce portals, Flipkart, Amazon, Snapdeal, Jabong and Myntra, in similar allegations made against them of unfair business practices. Those complaints were filed by companies such as Amazon Seller Services, Jasper Infotech, Vector E-commerce, and Xerion Retail.
New strategy: All India agitation
In its statement, CAIT further notes that e-commerce platforms are grossly and openly flouting the Press No.3 of FDI Policy issued on March 29, 2016 which restrains e-commerce companies for influencing the prices and make responsible for creating a level-playing field. However, despite several complaints the government has chosen to remain a mute spectator giving them a free-hand, CAIT mentions.
In the wake of this current situation, CAIT has demanded that till the time an independent, overarching e-commerce policy is formulated, strict directions should be issued to adhere to Press Note No.3, implementing it in toto. Stating a precondition that CAIT must be made part of the formulation of e-commerce policy, it has also demanded forumation of a Special Task Force comprising government officials as well as the representatives from trade and e-commerce sectors.