NCLAT Sets Aside CAIT Plea Against CCI Nod to Flipkart's Acquisition by Walmart

New Delhi, Mar 12 (PTI) The National Company Law Appellate Tribunal (NCLAT) on Thursday dismissed a petition filed by traders' body CAIT against CCI approval to Walmart's USD 16-billion acquisition of Flipkart.

A two-member bench of the appellate tribunal headed by Justice S J Mukhopadhaya said CAIT failed to establish its allegations against the Competition Commission of India (CCI) order granting approval for Walmart-Flipkart deal.

The appellate tribunal observed that CCI "specifically and rightly" came to a finding, in absence of any evidence on record, that the proposed combination is not resulting in elimination of any major player in the relevant market.

The NCLAT also observed that CAIT had failed to show that any major player in the relevant market will be eliminated due to combination of Walmart and Flipkart.

It also pointed out that Flipkart was not even made party by CAIT in its plea.

"At this stage it is to be noted that though the allegation has been made against Flipkart but Flipkart has not been impleaded as a party to the appeal. In such circumstances no specific finding can be given against Flipkart in the present appeal," said NCLAT.

"We find no merit in this appeal. It is accordingly dismissed," it added.

The CCI on August 8, 2018 had approved US retail giant Walmart's acquisition of Flipkart. This was later challenged by CAIT before NCLAT, which after completing its hearing had reserved its order in January last year.

CAIT had alleged that Walmart would have effective control over Flipkart's e-commerce platform and the web of preferential sellers and in such a situation, it would definitely sell its inventory on Flipkart.com or through a web of associated preferred sellers.

Rejecting the allegations, NCLAT said, "Presently 2nd Respondent (Walmart) is not engaged in any online market place business for B2C sales. Based on these, it has been further submitted that there is no vertical overlap between the businesses of the parties."

"CCI specifically and rightly came to a finding in absence of any evidence on record that the proposed combination is not resulting in elimination of any major player in the relevant market. The appellant has failed to show that any major player in the relevant market will be eliminated due to combination in question," it said.

"On the other hand, the Flipkart marketplace platform will remain under the operation of 2nd Respondent (Walmart), thus not only preserving a successful ecommerce platform but also enhancing the financial strength of the platform. The aforesaid fact has been discussed in detail while dealing with the third party representation including the objection raised by the appellant," it added.

Commenting on the outcome, CAIT said it would study the judgement and decide its future course of action.

"We have heard that NCLAT has rejected our contentions on Walmart Flipkart deal. We shall study the order as and when it's available and our lawyers will decide future course of action. However, it appears that material facts of the deal as to why it's objectionable has not been considered and no opportunity was given for hearing," CAIT Secretary General Praveen Khandelwal said.

On August 18, 2018, Walmart announced that it has completed acquisition of 77 per cent stake in Flipkart. The deal size was put at USD 16 billion.

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