Walmart – Flipkart Acquisition

Walmart: Walmart Inc (earlier known as Walmart Stores Inc), an American multinational retail
corporation operated a chain of hypermarkets, discount stores and grocery stores. Founded by
Sam Walton in Bentonville, Arkansas, in 1962 and incorporated in 1969, it managed 11,718
stores and clubs in 28 countries under different names as on January 2018. With global revenue
of US$500 billion in 2017, Walmart was reckoned as the world’s largest company. Globally, it
employed 2.3 million persons; this made Walmart the largest private employer. It is family
controlled but publicly owned company. Sam Walton’s heirs own more than 50 per cent of the
company’s shares through a holding company, ‘Walton Enterprises’ and through individual
holdings. The stocks of the company are traded at New York Stock Exchange since 1972. During
2018, Gregory Penner was Chairman and Carl Douglas McMillon was President and CEO.

Flipkart: Flipkart’s contribution margin is positive and continues to expand, top Walmart
executives said in an earnings call on February 21. The US retail major, which owns Flipkart, also
said that the Indian e-commerce marketplace is benefitting from investments in infrastructure
made in the last three years and riding on India’s strong economic prospects.
One of the highlights of Walmart in the quarter ending January (Q4) was that its international
business saw operating income drop 72 percent in constant currency terms to $300 million,
primarily due to the re-organisation of Flipkart and PhonePe as separate businesses.

DEEs (Developing and Emerging Economies) face numerous challenges when seeking to
regulate cross-border mergers, including:
• Lack of resources: Merger control is a very resource-intensive process. Many competition
authorities in DEEs lack the human and financial resources as well as sufficient expertise in law
and economics, to carry out the necessary tasks.
• Inadequate legal framework: An effective merger control regime requires a comprehensive
mechanism for merger regulation. However, many DEEs provide only basic provisions in the
law, which are inadequate for efficiently controlling mergers.
• Absence of a proper competition culture: Many DEEs are subject to heavy state control and
planning, and private forces have therefore not been allowed to play a serious role in the
market place. Competition is consequently not regarded as an economic process.
• Difficult transition towards a market-based economy; Competition can only be a meaningful
process if a market-based economy is established. However, this can be particularly difficult in
DEEs with planned, centralised economies.
• Importance of industrial policy: DEEs place heavy reliance on industrial policy considerations,
and they dominate economic decision-making and policy-formulation processes. Competition
related considerations such as merger control can therefore be overshadowed.
• Implementation issues: Implementing a merger control regime in DEEs can be extremely slow
and time-consuming, especially when implementing a competition law regime is not ranked
highly on the agenda of governments.
• The role of foreign direct investments (FDI): FDI is of key economic and political importance,
enabling DEEs to secure their integration into the global economy. Governments may therefore
be wary of implementing an effective mechanism for regulating cross-border mergers, in case
this discourages FDI.