Merger rings alarm bells

Merger rings alarm bells

The news of the amalgamation of True Corporation Plc (True) and Total Access Communication (DTAC) should ring alarm bells about the downsides of unchecked capitalism.

Despite the mega-merger news creating bullish sentiment for telecom stocks, critics warned the deal could lead to unfair trade practices and market dominance, which will ultimately affect consumers.

Such warnings deserve to be listened to. Indeed, Thai consumers have had plenty of previous bad experiences with telecom operators.

Two decades ago, the telecom market in the country was controlled by two major service providers that brazenly dictated both prices and services, leaving consumers very limited in their choices.

The outcome of market dominance is one that is far-reaching; it's not just a consumer issue. Somkiat Tangkitvanich, president of the Thailand Development Research Institute (TDRI), warned that when two major operators dominate the market, the revenue from telecom concessions will not be as lucrative as in past years due to there only being two players being involved in the bidding process which can result in consumers paying more elsewhere, ie in tax, as revenue from telecom concessions diminish.

A bigger question about the True-DTAC deal is what the authorities will do if the outcome of the amalgamation violates the Trade Competition Act 2017 as the combined market share of the two parties will exceed 50%. The mega-merger will then become a test case for state regulatory bodies, showing whether they can keep business in check when needed.

As the news of the mega-merger made headlines, state regulatory bodies have so far been mostly quiet.

The Office of Trade Competition, which oversees the Trade Competition Act, passed the buck by saying the deal should be under the supervision of the National Broadcasting Telecommunications Commission (NBTC), the state regulatory body overseeing telecom concessions.

But the NBTC is reported to not have the authority to deal with share swap arrangements as carried out by CP and Telenor, the parent companies of True and DTAC.

Without a clear response from the regulatory body, consumer protection groups spearheaded by the Thailand Consumers Council this week vowed to petition the NBTC, the Trade Competition Commission (TCC) and the Stock Exchange of Thailand (SET) and even the cabinet if need be.

The action by consumer groups again shows the shortcomings of state regulatory bodies in dealing with questionable business actions related to mergers and acquisitions.

Another glaring example was Tesco's acquisition by CP Retail which increased Charoen Pokphand Group's dominance in the market.

A few years ago, the TCC approved the CP-Tesco deal despite concerns it would reduce competition in the retail sector. TCC said the deal would not result in a monopoly but that hasn't stopped consumer groups from asking the Administrative Court earlier this year to rule against the TCC's decision.

If state regulators worked harder and showed concern in protecting the interests of consumers, then consumer groups would not have to sweat over these issues at all. Hopefully, this time around state regulators will do better when handling the True-DTAC mega-merger.

State regulatory bodies especially the NBTC, TCC and SET need to communicate with the public and explain what they will do to make this deal good and fair for all. The public is watching. They should not be let down.


Bangkok Post editorial column

These editorials represent Bangkok Post thoughts about current issues and situations.

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