New Delhi (Sputnik) — American retail giant Walmart's dream of expansion in India — one of the world's largest markets — has encountered a legal hurdle with the Confederation of All India Traders (CAIT) filing an objection to its $16 billion acquisition deal with India's biggest e-commerce player, Flipkart.
CAIT has over seven million members and has strong political links. The traders' body approached the country's competition watchdog on Monday, claiming that the Walmart-Flipkart deal would create unfair competition and result in predatory pricing.
"The CAIT has strongly objected the merger of two companies as Walmart which is world's largest retailer will create an unfair competition and uneven level playing field and will indulge in predatory pricing, deep discounts, and loss funding," CAIT claimed in its petition.
"The deal is bound to circumvent established laws and Foreign Direct Investment (FDI) policy of the government since the ultimate object of Walmart is to enter the retail trade of the country and in the absence of any policy on e-commerce or retail trade, it would be easy for Walmart to reach out to retail market, which otherwise it cannot enter due to FDI policy," Praveen Khandelwal, general secretary of CAIT, told Sputnik.
After 19 months of negotiations, Walmart struck a $16 billion deal earlier this month with Flipkart, which controls approximately 39% India's e-commerce market. In announcing the deal, Walmart had warned its shareholders that the purchase would reduce its net income by at least $750 million this year and by more than double that amount next year.