Progress on CP-Tesco deal

Progress on CP-Tesco deal

The Trade Competition Commission is likely to rule on the CP-Tesco deal next month.

According to Sakon Varunyuwatana, chairman of the Office of Trade Competition Commission (OTCC), his agency has made good progress in vetting the transaction, with an ad hoc committee established to consider the details.

In early March, CP acquired Tesco Lotus's Asia business in a deal worth US$10.6 billion, triggering concern over potential market dominance because CP already owns the country's 7-Eleven concession and Makro cash-and-carry stores, all of which operate in the same market sector.

CP filed documents for the group's deal to acquire 86.9% of Tesco's Thai operations and 100% of the British retailer's Malaysian business with the OTCC for consideration in July, but approval has stalled as more information has been requested.

CP resubmitted additional information earlier this week.

"We've already given a working guideline for the ad hoc committee to find a proper conclusion, particularly in the areas of the market size of CP after the merger with Tesco Lotus, shareholding structure, impact on similar or identical businesses, the effect on goods suppliers and consumers, as well as market dominance," Mr Sakon said.

According to Mr Sakon, the vetting committee has busied itself this month consulting related and affected parties such as representatives from CP Group, the Commerce Ministry and private companies such as small and medium-sized enterprises that could be hurt by the deal.

"The committee pledges to speed up the vetting as soon as possible," he said. "The outcome is likely by next month, which falls within the 90-day requirement for the OTCC to consider the acquisition deal and rule if it could lead to a monopoly or undue market dominance against consumer interests under the 2017 Trade Competition Act.

"The vetting committee and the office insist on carefully considering the deal in accordance with the scope of responsibilities, given that this deal is considered large-scale and vital to the country's overall retail market."

Somchai Pornrattanacharoen, president of the Thai Retailers and Wholesalers Association, speaking in his capacity as a vetting committee member, said he personally believes the deal should not be approved, since no country in the world lets a single business group control comprehensive businesses from production to retail, wholesale and modern trade.

"Currently we've started seeing direct express delivery services to buyers by some convenience stores," Mr Somchai said. "This practice has affected existing small-scale retail shops and may eventually lead some large retail groups to dominate the country's overall retail market."

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