The Trade Competition Commission (TCC) has ruled in favour of the CP-Tesco acquisition deal but imposed certain conditions, including a three-year ban on an acquisition in the same sector, in a bid to cushion any impacts that the transaction may cause.
Somsak Kiatchailak, secretary-general of the Office of the TCC (OTCC), said the acquisition by CP Group will increase its market dominance, but the deal will not constitute a monopoly.
A commission majority also thought the deal could significantly reduce competition in the sector but would not cause adverse impacts on the economy or the interests of consumers at large.
The approval came after months of scrutiny by the TCC whose role is to curb monopolies and ensure fair trade competition.
Under a 2017 law, proposed mergers that could lead to market dominance or a monopoly must be reviewed by the OTCC. Dominance is defined as having a market share of over 50%, or 75% when combined with two peers.
CP's move in early March to acquire Tesco Lotus's Asia business in a deal worth US$10.6 billion triggered concern over potential market dominance. Under the deal, CP would acquire 86.9% of Tesco's Thai operations and 100% of the UK retailer's Malaysian business. As CP already owns the country's 7-Eleven concession and Makro cash-and-carry stores, all of which operate in the same market sector, the CP-Tesco deal is seen as strengthening CP's position in the modern trade sector.
However, the commission has imposed seven measures and conditions for CP to follow to alleviate impacts that might harm competition.
Among them is a three-year ban on another acquisition in the modern trade sector, excluding e-commerce.
CP All, the retail subsidiary of CP, and Ek-Chai Distribution System, which operates Tesco Lotus Express, are also required to increase sale volumes of agricultural and community products supplied by SMEs or Otop products by at least 10% of the previous year for five consecutive years.