FRIDAY, March 29, 2024
nationthailand

Commission delays decision on CP-Tesco merger for another 15 days

Commission delays decision on CP-Tesco merger for another 15 days

The Office of Trade Competition Commission (OTCC) has deferred for 15 days a decision on the proposed merger of a subsidiary of Charoen Pokphand (CP) Group with Tesco Thailand, amid worries of giving the company monopolistic control over the retail market.

CP had acquired Tesco Thailand and Tesco Malaysia in a $10.6-billion deal early this year.
A decision on the merger request of a Charoen Pokphand subsidiary was due on Thursday when the 90-day period after the request ended. However, the law permits the commission to delay its decision by 15 days after the end of 90 days.
CP Group, one of Thailand’s largest business conglomerates, had filed a document with the OTCC, seeking permission to merge its retail business with Ek-Chai Distribution System Co Ltd, the operator of Tesco Lotus.
The OTCC was strengthened when it became independent under new laws in 2017, with the power to block the creation of monopolies.
OTCC chairman Sakon Waranyuwattana said that the committee held a meeting and resolved to delay the decision for another 15 days as allowed by law. The meeting took time to consider all relevant information including the market structure, shareholders, business plan and the period of action relevant to the entity seeking merger of businesses, the impact on consumers and the competition. He said the meeting was unable to come to a conclusion and resolved to seek more time.
Under Thailand's antitrust rules, an individual entity having a market share of over 50 per cent in the previous year, or 75 per cent in aggregate when combined with two other competitors is deemed a monopoly.
CP Group subsidiary CP All currently has a 64 per cent stake in over 11,500 7-Eleven stores, and also runs the Siam Makro stores.
Tesco Lotus has close to 2,000 stores in Thailand.
“The meeting considered reports from the subcommittee, which has quite a lot of details. It would take time to carefully consider those before voting. Therefore, we have set a meeting for consideration of the issue on November 2," said Sakon.
The outcome would certainly be revealed in mid-November as required by law. He said the outcome could leave some people satisfied and some dissatisfied. He accepted that because of the importance of the case, society was very interested. Therefore, the committee must be careful and consider all factors in accordance with the rules prescribed by the law. Moreover, related businesses are listed on the Stock Exchange of Thailand, so any decision would have an effect on the share prices as well.
The meeting on November 2 may see a voting by members summarising the resolutions of the merger request.
One committee shall have one vote. In the event of a tie, the chairman of the meeting shall have a casting vote. The results of the consideration can be decided in three ways:
▪︎The merger is allowed as requested.
▪︎A conditional merger is allowed.
▪︎The merger is not allowed.
The law requires the commission to consider the needs of the business, benefits for business promotion, low damage to the economy and not affect the interests of consumers as a whole, he said.

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