Walmart faces major India test over unit Flipkart’s legal spat with startup

Widespread opposition over Walmart’s acquisition of Fliplart has prompted changes in India’s e-commerce investment rules. (AFP)
Updated 04 June 2019

Walmart faces major India test over unit Flipkart’s legal spat with startup

  • GOQii sued Flipkart last month in a Mumbai court, alleging its devices were discounted by around 70 percent to the retail price
  • GOQii is a seller of smartwatch-type health devices

NEW DELHI: An Indian startup’s legal challenge against a Walmart unit claiming losses caused by sharp discounting of its products is winning support from other online sellers, in what is shaping as a key test of how the giant retailer operates in the country.
The legal tussle between GOQii, a seller of smartwatch-type health devices, and Walmart’s Flipkart unit, comes just months after India imposed stricter rules for foreign investment in e-commerce that were aimed at deterring such sharp discounts.
GOQii sued Flipkart last month in a Mumbai court, alleging its devices were discounted by around 70 percent to the retail price, much more than the two sides had agreed to, legal documents related to the case showed.
The case will next be heard on Friday. Flipkart has denied any wrongdoing, saying it was not responsible for any discounts which are only determined by third-party companies which sell on the e-commerce website.
The legal spat has brought to the fore concerns long raised by small traders and a right-wing group close to Prime Minister Narendra Modi’s ruling party. They say companies such as Flipkart and deeply discount some products by burning billions of dollars to lure customers onto their sites in the expectation that they will also buy other goods.
“It will set a precedent if the final decision goes against Flipkart for predatory pricing,” said Salman Waris, a partner at TechLegis Advocates & Solicitors.
“Small traders’ associations and other startups may take other marketplaces adopting deep discounting strategy to court.”
The GOQii case could snowball. The All India Online Vendors Association told Reuters in a statement it plans to file a plea to join GOQii’s case against Flipkart on behalf of 3,500 online sellers it represents.
Flipkart said in a statement it takes legal compliance seriously and was compliant with Indian law. “We are engaged with the supplier to come to a swift resolution,” it said.
With a 19 percent market share, GOQii was the second-biggest player in India’s so-called wearables market last year, data from industry tracker IDC in December showed. The market is dominated by China’s Xiaomi, with Samsung a small player.
GOQii’s dispute with Flipkart centers around two of its wearables devices that allow users to track exercise measurements, such as the number of steps walked, or heart rates.
GOQii’s Chief Executive Vishal Gondal told Reuters the firm signed an agreement in September with a Flipkart unit, allowing it to sell the two GOQii devices at a price not below 1,999 rupees and 1,499 rupees, after discounts.
But GOQii last month found Flipkart’s website showed the devices on sale for 999 rupees and 699 rupees. The company wrote to Flipkart, saying it was giving “unauthorized” discounts and resorting to “predatory pricing,” violating the agreement, its legal notice showed.
Flipkart was just a business-to-business wholesale venture which sells good to re-sellers, its law firm, Shardul Amarchand Mangaldas, said in its response that was seen by Reuters.
That’s central to how Flipkart operates — as India prohibits foreign e-commerce firms from stocking and selling their own inventory on its websites, their wholesale units purchase goods in bulk and sell them to re-sellers. Those re-sellers use Flipkart’s own website to sell some of those goods to customers.
Flipkart does not control or influence prices which were determined by such re-sellers, the law firm said, adding that it reserves “the right to institute actions for defamation, both civil and criminal.”
GOQii’s Gondal, however, said he was in possession of WhatsApp messages and emails from Flipkart’s employees that show the company was aware and involved in discounting products on its website. He declined to share those with Reuters, citing the ongoing court case.
Gondal said about 500,000 device orders were canceled after GOQii’s other customers accused the startup of cheating them when they saw cheaper prices on Flipkart. The company was also assessing monetary damages it plans to seek from court.
“It’s a matter of survival. It’s not easy to take on a multi-billion-dollar company,” Gondal said.
In interim relief, the court has ordered the sellers, who are also party to the case, to remove the wearable devices from the Flipkart platform.
India’s new foreign investment rules introduced in February were troubling for Flipkart and Amazon as they barred companies from selling products via firms in which they have an equity interest and stopped them from pushing their sellers to sell exclusively on their websites.
The policy was aimed at deterring deep discounts and helping small traders, but it shocked Walmart as it had just months ago closed its biggest deal by investing $16 billion in Flipkart.
Swadeshi Jagran Manch (SJM), the economic wing of the Rashtriya Swayamsevak Sangh, the ideological parent of Modi’s ruling party, said on Tuesday the government must investigate online discounts.
“We are standing behind any small trader, businesses who suffer online,” said Ashwani MaHajjan, SJM’s co-convenor, adding it would discuss GOQii’s legal case against Flipkart with government officials.

Oil recoups losses as OPEC, US Fed see robust economy

Updated 14 November 2019

Oil recoups losses as OPEC, US Fed see robust economy

  • US-China trade deal will help remove ‘dark cloud’ over oil, says Barkindo

LONDON: Oil prices reversed early losses on Wednesday after the Organization of the Petroleum Exporting Countries (OPEC) said it saw no signs of global recession and rival US shale oil production could grow by much less than expected in 2020.

Also supporting prices were comments by US Federal Reserve Chair Jerome Powell, who said the US economy would see a “sustained expansion” with the full impact of recent interest rate cuts still to be felt.

Brent crude futures stood roughly flat at around $62 per barrel by 1450 GMT, having fallen by over 1 percent earlier in the day. US West Texas Intermediate crude was at $56 per barrel, up 20 cents or 0.4 percent.

“The baseline outlook remains favorable,” Powell said.

OPEC Secretary-General Mohammad Barkindo said global economic fundamentals remained strong and that he was still confident that the US and China would reach a trade deal.

“It will almost remove that dark cloud that had engulfed the global economy,” Barkindo said, adding it was too early to discuss the output policy of OPEC’s December meeting.


  • US oil production likely to grow by just 0.3-0.4 million barrels per day next year — or less than half of previous expectations.
  • The prospects for ‘US crude exports had turned bleak after shipping rates jumped last month.’

He also said some US companies were now saying US oil production would grow by just 0.3-0.4 million barrels per day next year — or less than half of previous expectations — reducing the risk of an oil glut next year.

US President Donald Trump said on Tuesday Washington and Beijing were close to finalizing a trade deal, but he fell short of providing a date or venue for the signing ceremony.

“The expectations of an inventory build in the US and uncertainty over the OPEC+ strategy on output cuts and US/China trade deal are weighing on oil prices,” said analysts at ING, including the head of commodity strategy Warren Patterson.

In the US, crude oil inventories were forecast to have risen for a third straight week last week, while refined products inventories likely declined, a preliminary Reuters poll showed on Tuesday.

ANZ analysts said the prospects for US crude exports had turned bleak after shipping rates jumped last month.