Regulator’s green light for hypermarket deal damages competitiveness
A recent decision by Thailand’s competition watchdog, the Office of Trade Competition Commission, to approve the $10.6 billion takeover by Charoen Pokphand Group of Tesco Lotus, a hypermarket chain, is a blow to investor confidence in the country. The decision raises alarming questions about the integrity of the OTCC — a supposedly reinvigorated reincarnation of a former regulator — and demonstrates the power of the country’s entrenched big-business oligarchy.
By ignoring the competition dynamics of modern retail sectors, the OTCC risks aggravating the concentration of the sector in the hands of three conglomerates — CP Group, Central Group and TCC Group, all run by billionaire family owners — and undermines confidence in Thailand’s overall business environment.
The OTCC ruled that CP Group’s acquisition of Tesco’s network of almost 2,000 hypermarkets and smaller format stores in Thailand will result in increased market power, but will not create a monopoly across the retailing sector.
Prior to the Tesco acquisition, CP Group already operated in most of the country’s key retail sectors, running nearly 12,000 7-Eleven convenience stores under license from 7-Eleven Inc, a U.S. subsidiary of Japan’s Seven & i Holdings