On August 08, 2018, CCI approved the proposed acquisition of 51% to 77% of outstanding shares of Flipkart Private Limited (‘Flipkart’) by Wal-Mart International Holdings, Inc. (‘Walmart’).[1] Walmart, which is part of the Walmart group, is present in India through its indirect wholly-owned subsidiary Walmart India Private Limited (‘Walmart India’). Flipkart, on the other hand, is principally an investment holding company incorporated in Singapore with presence in India. Walmart and Flipkart are together referred to as ‘Parties.’ Walmart India is engaged in wholesale cash and carry of goods (‘B2B Sales’) operating: (i) 20 B2B Sales stores spread across nine states in India; and (ii) a B2B e-commerce platform. Both operate on a ‘members-only’ model. While Flipkart is also present in B2B Sales, unlike Walmart India, it (i) operates a marketplace based e-commerce platforms (B2C Sales); and (ii) other ancillary services such as payment gateway, unified payment interface, advertising services, information technology product related issues, etc.. CCI noted that the presence of both Walmart India and Flipkart in overall B2B Sales or in any narrower segment was insufficient to raise competition concerns. The combined market share of the Parties was less than 5%, with Walmart India’s market share being less than 0.5%. CCI also considered a narrower B2B Sales market on the basis of vertical segmentation. While Flipkart was relatively strong in the mobile and electronic market, Walmart’s operations in this segment were insignificant. Operations of Walmart focused on groceries whereas Flipkart was not present in this market. While both were present in the market for lifestyle products, the combined value of both Parties’ was low and relatively insignificant in comparison to the size of the markets. CCI did not distinguish between organized and unorganized B2B Sales as the market was found to be competitive on account of larger players such as Reliance Retail, Metro Cash and Carry, Amazon wholesale etc.. In terms of the vertical overlap, CCI noted that both Walmart India and Flipkart were restricted under the foreign direct investment (‘FDI’) policy from participating in B2C Sales. In any event, it was noted that, while Flipkart offered online marketplace platform to facilitate B2C Sales, Walmart was not engaged in any such services. Accordingly, no vertical overlap existed. CCI’s order records that it had received representations against this transaction from traders and retailers relating to: (i) allegations of predatory pricing; (ii) concerns over compliance of FDI norms; (iii) concerns over preferential treatment to specified sellers in Flipkart’s online marketplaces and (iv) concerns over impact of the transaction on employment, entrepreneurship, and retailing among other things. CCI noted that the majority of concerns raised had no nexus with competition law and were beyond CCI’s jurisdiction. Against allegations of deep discounting and preferential treatment to select sellers that were within CCI’s domain, CCI observed that Flipkart’s discounting practice and preferential treatment to some of its retailers was not specific to, and did not result from the proposed combination under review. Clarifying the scope of regulation under Sections 5 and 6 of the Act, CCI opined these practices were unrelated to the proposed combination although CCI may examine these concerns under Sections 3(4) and 4 of the Act. The retailers and traders have now appealed CCI’s decision before NCLAT. NCLAT has directed Walmart and Flipkart to provide details of their business models in the relevant markets in India. [1] Combination Registration No. C-2018/05/571