The sale of Tesco assets in Asia, which are potentially valued at up to $10 billion, may be threatened by competition regulations in Thailand.
Competition regulations in Thailand could potentially threaten the sale of Tesco assets in Asia, particularly in Malaysia and Thailand where the supermarket chain has almost 2,000 stores. Three Thai groups are currently looking to purchase these stores.
According to Thailand's Office of Trade Competition Commission, the country's new anti-competition body, the winning bidder for the Tesco assets could own over half of the supermarkets in the country.
Sakon Varanyuwatana, chairman of the commission, said: "The size of this bid and its scale means that potentially whoever ends up buying the Tesco assets could end up having more than 50% of the convenience, supermarket and hypermarket retail landscape."
The country's fair competition rules state that if a merger gives a company more than half of the total market share, it must seek the country's fair trade commission's permission. If it fails to do so, it could be fined with not more than 0.5% of the merger's transaction value.
The anti-competition rules could mean Tesco may not fetch the price it seeks for the Asian stores.
The three groups that have expressed interest in acquiring the Tesco assets are major retailers in Thailand, which could potentially result to varying degrees of market monopoly. These retail groups are CP Group, the Central Group and the TCC Group.
According to a 2018 report by Euromonitor, Tesco's stores in Thailand, where majority of the Asian stores are, comprise 28% of the country's grocery market. These stores operate under the Tesco Lotus brand.
The Thai stores are valued between $6 billion and $8 billion.
Sakon said that bids would have to be submitted to the Thai anti-competition office at the same time.
He emphasized: "Any bidder would have to get approval from us first to ensure that they have done the due diligence and analysed what impact their purchase would have on the retail landscape in their sector and to ensure that it doesn't lead to a monopoly or is anti-competitive."
