This effectively helps CP Retail Development Co Ltd under CP Group own Tesco Lotus’s assets worth Bt338.44 billion in the two countries.
A news source from Malaysia reported that the MTCC stipulated that CP must increase the ratio its SME partners to at least 10 per cent for 5 years, and must help promote local entrepreneurs in overseas market expansion. The commission has also allowed CP to hire foreign low-skill labourers at a maximum 15 per cent of its workforce.
According to a CP All report submitted to the Stock Exchange of Thailand on March 9, the acquisition of Tesco Lotus in Malaysia will let CP Group own 46 hypermarkets, 13 supermarkets, 9 retail shops and 56 rental retail spaces under Tesco Lotus in Malaysia. CP All jointly invested in the deal at 40 per cent.
The OTCC held a meeting on Wednesday to address concerns highlighted by a minority of its commissioners who voted against the acquisition as this could lead to a monopoly or unfair market dominance. The commission voted 4:3 in favour of the US$10-billion (Bt302.5 billion) takeover deal.
During the meeting, OTCC spokesman and minority group leader Santichai Sarathawanphaet pointed out that the commissioners who voted against the deal had four concerns:
1) The acquisition could affect Thailand’s economy as it could lead to monopoly, unfair market dominance and socio-economic disparity, as CP is already the largest manufacturer of agricultural and consumer products that are vital to daily life, while the acquired party holds a large market share in wholesale and retail modern trade.
2) The acquisition could result in an obstacle for new entrepreneurs to enter the market, while other businesses would need to adjust their strategies and lower their costs and selling price to remain in the market. Those who cannot adjust will be forced to quit, most of which are likely to be SMEs, which will result in consumers having fewer product choices.
3) As the biggest player in the market, CP will have more bargaining power against suppliers of products and raw materials while SME manufacturers will be at a disadvantage when negotiating trade terms with suppliers.
4) The acquisition will result in fewer number of competitors, and in the long term consumers will have limited choices of products and prices, whereas CP will have the power to set its own prices in accordance with its needs and policies.
Santichai said the commissioners who voted against the acquisition do not seek to oppose the majority vote after the decision was made but only need to notify the public of their concerns.
“CP will have 60 days to appeal to the Administrative Court in case it disagrees with any part of the OTCC’s resolution or conditions,” he added.
Published : November 12, 2020
By : THE NATION