Somchai Pornrattanajaroen has been warning of the struggle independent businesses face in competing with Thailand’s rising retail giants since the 1980s. That was when Somchai first noticed glossy, air-conditioned convenience stores offering everything from snacks to bars of soap, opening on what seemed like every street corner. The slick operations, open for business 24-7 and offering rock bottom prices, may have been a hit with the customers, but Somchai knew that to local grocery stores they were an existential threat. And it wasn’t just the grocers who faced a problem. While grocers were facing off with the convenience stores, traditional fresh markets were facing a challenge by air-conditioned hypermarkets promising the lowest prices and freshest produce. Chinese spenders offer hope amid wreckage of Phuket’s tourism industry Even Somchai, a wholesaler, felt the squeeze, as chain wholesale centres began to emerge, connecting customers directly with products straight from manufacturers at the lowest possible cost. Today, Somchai says, the picture facing smaller players is worse than ever. Competition has driven many out of the market and prohibited many others from joining in the first place. While Somchai, 67, has himself survived by branching out to distribute Thai goods in neighbouring countries, he is not optimistic for his fellow small traders. If anything, he says, things are about to get worse. Somchai is among the many critics of the decision by Thailand’s competition watchdog, the Office of Trade Competition Commission, to give the go-ahead to the US$10.6 billion takeover by Charoen Pokphand (CP) Group of the hypermarket chain Tesco Lotus. Critics say the deal, expected to be finalised this week, is just the latest example of how competition is diminishing in Thailand’s increasingly monopolistic retail sector. Or as Somchai puts it, “Poor people cannot stop rich people.” CP Group, Thailand’s largest conglomerate, already owns around 12,000 7-Eleven convenience stores, about 130 branches of cash-and-carry wholesale store Makro and some 400 branches of the hypermarket chain CP Freshmart. The company is also a major food producer and distributor, which means it controls its own supply chains. Thai protesters to take a break, return ‘with more intensity’ next year The acquisition would give CP control over 70 per cent of Thailand’s 994 billion baht (US$33 billion) modern grocery store market, according to local media. It would also grant CP Group the operation of about 2,000 Tesco stores in Thailand and 74 branches in Malaysia. The group already operates 70 “Lotus” stores and two shopping malls in China. In October 2019, a CP-led consortium which includes China Railway Construction Corporation, also signed a concession to build high-speed rail routes connecting three airports, part of the Eastern Economic Corridor infrastructure project. CP Group is owned by the Chearavanont family, one of three billionaire families to control the lion’s share of Thailand’s retail sector, along with the Sirivadhanabhakdi family, who own over 1,300 retail stores including Big C Supercenter, Big C Market and Mini Big C and the Chirathivat family, who run more than 1,200 stores under the Tops, FamilyMart and Matsumoto Kiyoshi brands. CONTROVERSY BREWING Tesco, a British supermarket chain, said on December 9 that it expected the takeover to be completed “on or around December 18”. The deal has been stirring controversy since March, amid an increasingly bitter debate over Thailand’s widening wealth gap. Thailand’s trade regulating body, the Office of Trade Competition Commission (OTCC), cleared the deal last month under various conditions. These included a ban on further mergers or acquisitions in the modern trade sector for the next three years; a prohibition on the merged entities from sharing trade secrets; and a requirement for the company to maintain contracts with its current distributors and suppliers for two years. But critics say the OTCC was too lenient and did not put sufficient weight on the merger’s effect on both small traders and consumers. Can Thailand save its rice bowl, or will India and China eat it for lunch? Sirikanya Tansakun, an opposition MP from the Move Forward party, said there had been a lack of consultation and this led to the OTCC overlooking technical aspects of the merger. “Stakeholders like competitors, suppliers and consumers were not represented on the OTCC,” she said. Sirikanya said it was not only small retailers who would be affected. “Consumers, especially in rural areas of Thailand where there is scant access to retail stores, cannot be guaranteed fair pricing if the stores don’t have a national pricing policy,” she said. The MP referred to how Singapore had fined Grab and Uber US$9.5 million for their 2018 merger as an example of how regulators could prevent monopolies. Sirikanya, a member of the parliament committee on economic development, said the OTCC needed to clarify why it had accepted the deal would create “considerable market dominance” for the company, but not represent a monopoly. In March, CP Group said the acquisition would support small and medium enterprises (SMEs) and suppliers of agriculture products by expanding distribution channels. However, Sirikanya said CP Group would be able to demand high “entrance fees” from suppliers simply because there were fewer competitors in the market. “Overall, [the deal] creates an economic gap between major and small businesses. The trade regulator also loses credibility as it is viewed by society as not being able to create and oversee a fair trade competition,” Sirikanya said. For people like Somchai, the waving through of the CP Group deal is part of a familiar national story. “The grass roots businesses don’t have the support they need because every Thai government focuses all its efforts on firms with major capital to pour money [into the system], offering tax rebates and other favourable measures,” said Somchai. “Those on the lower rung are not subject to the same treatment. We need a new rule to coexist in society,” he said. CP Group has yet to answer critics who accuse it of seeking a monopoly and declined to comment when approached by the South China Morning Post .