Bangkok — The $10 billion question now sits with a regulator few outside Thailand had heard of until this week.
On Friday, the Office of Trade Competition Commission effectively froze the sale of Tesco’s Thai and Malaysian stores. The move came as a surprise only to those who had not been watching the 2017 Trade Competition Act. That law, passed after decades of weak antitrust enforcement, gave the OTCC teeth. Now it is using them.
The auction had been humming along. Three Thai conglomerates — Charoen Pokphand Group, Central Group, and TCC Group — were the last bidders standing. Tesco’s roughly 2,000 stores in Thailand and Malaysia were expected to fetch up to $10 billion. A deal seemed close.
Then the OTCC spoke. Chairman Sakon Varanyuwatana told reporters the agency would scrutinize any purchase. He said the commission has the power to prohibit a merger if it believes a monopoly would result. That is not an idle threat. The law allows fines of up to 0.5 percent of the transaction value for violations.
The math is brutal for the bidders. Tesco’s Thai operations alone hold about 28 percent of the country’s supermarket, hypermarket and convenience-store sales, according to Euromonitor data. Any of the three shortlisted buyers already controls a major retail network. Combine the two, and the 50 percent market-share threshold set by the 2017 act is almost certain to be breached.
Consider CP Group. It already runs the 7-Eleven master franchise in Thailand, operating more than 12,000 convenience stores. Adding Tesco’s hypermarkets and supermarkets would give it a grip on both the convenience and big-box segments that no competitor could match. Central Group owns department stores, electronics chains, and food retailers. TCC Group, controlled by billionaire Charoen Sirivadhanabhakdi, holds breweries, hotels, and its own retail assets.
The 2017 Trade Competition Act was designed precisely for this scenario. It replaced a toothless 1999 law that critics said let big business do as it pleased. Under the new rules, parties must file a merger notification if the deal value tops 1 billion baht — about $33 million — or if the buyer will hold at least 25 percent of a market already dominated by a few players. Tesco’s Thai business alone clears that bar easily. The three bidders would likely clear it too, given their existing holdings.
So the auction is paused. The OTCC will wait until a preferred bidder is named. Then it will review. The regulator could approve the deal with conditions, block it outright, or demand divestitures. No one knows which way it will go.
What is clear is that Thailand’s antitrust watchdog is no longer a paper tiger. The 2017 law gave it real power. The Tesco case is the first major test of that power. The outcome will signal to every conglomerate in Southeast Asia whether the era of unchecked retail consolidation is over.
The bidders are not talking. Tesco is not talking. The OTCC has said what it needed to say. Now the clock is running, and the fine — 0.5 percent of a $10 billion deal — is a number that focuses the mind.
