Flipkart-Walmart Deal: CAIT Fears Predatory Pricing by Walmart

Continuing its protest against the $16-billion (roughly Rs.1.07 lakh crores) Flipkart-Walmart deal, the Confederation of All India Traders (CAIT) on Friday wrote to commerce minister Suresh Prabhu expressing concerns that Walmart might adopt predatory pricing and deep discounting, which will kill the trade.

In its second letter to Prabhu, the traders' lobby referred to Walmart as "the US version of The East India Company", and also asked for a thorough investigation of the Walmart-Flipkart deal.

"Walmart is nothing but a US version of The East India Company which conquered the country," CAIT said in the letter, adding, "It is highly regretted that some of the people for just merely earning the profit have sold major chunk of commerce to Walmart."

CAIT also feared that Walmart will penetrate the retail trade through e-commerce, and indulge in predatory pricing, and deep discounting, thereby creating an uneven playing field for others.

"It will source globally the cheapest material and will dump in the country to wipe out the competition. As of now, no rule or law exists which can put restrictions on such practices of any company," the letter said.

Apprehending that the deal is bound to circumvent established laws and FDI policy of the government, the body asked the minister for a thorough investigation. "The ultimate object of Walmart is to enter the retail trade of the country," it said, adding, "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."

It further said that since the matter also relates to data security, controlling entire chain from inventory to end-consumer which will turn out to be a monopoly, a peculiar situation will arise which could be to the disadvantage to brick and mortar shops and economy.

The world's biggest brick-and-mortar retailer, Walmart, on May 9 said it has agreed to purchase around 77 percent stake in India's largest online retailer, Flipkart, for $16 billion.