As Toshiba, General Electric and Johnson & Johnson go their separate ways, Thailand’s large family conglomerates are building their sprawling business empires.

Charoen Pokphand, the country’s largest conglomerate with a massive presence in food, retail and telecommunications at home and in neighboring countries, recently said he plans to expand into preventive health care. , renewable energies and cryptocurrency.

CP’s expansion has made it one of the largest conglomerates in its region, a national champion with operations in Southeast Asia and China as well as a dominant presence in Thai life.

But the power of Thai conglomerates – not only CP but also rivals such as ThaiBev and Central Group – may have its drawbacks, according to some analysts who have blamed the kingdom’s high degree of economic concentration on a series of evils.

These range from crowding out small businesses and start-ups to a Thai regulatory approach that favors large companies over consumers. A recent landmark deal with a supermarket is proving to be a test for market dominance issues – and a test for its regulators.

Last year, CP paid $ 10.6 billion to buy Tesco stores in Thailand and Malaysia. Thailand’s largest acquisition ever brought Tesco back into the fold of CP, which founded it in 1994 before selling it during the Asian crisis. The group renamed the company under the name Lotus’s.

Prior to buying Tesco’s business, CP was already one of Thailand’s largest retailers, owner of the country’s 7-Eleven convenience stores and the Siam Makro hypermarket chain.

The acquisition was only narrowly approved by the Thai competition watchdog. In an unusually public criticism, the organization’s president, Sakon Varanyuwatana, expressed concern that he would give CP “almost total control” of the wholesale and retail market in more than half of the countries. 76 provinces of the kingdom. However, he was overthrown by his fellow commissioners.

“From my perspective, this transaction has had a very negative effect on consumers, suppliers and competition in Thailand,” says Witoon Lianchamroon, director of Biothai, a civil society group focused on agricultural issues.

A consumer protection group is suing the Thai Bureau of the Competition Commission over a bid to quash its approval of the Tesco Lotus merger, which they say will give CP dominance in the retail market, limit the consumer choice and will be detrimental to small retail businesses.

The watchdog set conditions on the acquisition, including prohibiting Lotus’s various retail companies from sharing supplier or pricing information, or undertaking any merger with a third-party retailer for three years.

But CP recently restructured the ownership of Makro and Lotus. As part of the move, Makro will take a 76% stake in Lotus parent company through the purchase of new company shares. This raised questions as to whether the move was at odds with the spirit of the conditions set by the Thai competition watchdog.

Pavida Pananond, professor of international business and global strategy at Thammasat Business School, explains that the combination of Makro and Lotus makes it more difficult to assess whether the conditions set by the watchdog have been met, such as non-exchange of marketing information at the operational level. .

When asked about the OTCC’s decision and whether restructuring its retail business had violated it, CP told the Financial Times that all of the transactions it has made in recent months amounted to to “essentially internal reorganizations of group companies in our various retail sales activities without any change in the controlling shareholders of the operating companies”.

“The decision of the OTCC referred to is linked to the acquisition in 2020 of the shares of Tesco PLC by the CP group,” the company said. “The group continues to comply with all CTO decisions.

Business criticism is rare in Thailand, especially in the national press. Yet the youth democracy movement that emerged last year has raised questions about economic concentration, among its many other issues.

CP and other conglomerates thwart the reviews – on the rare occasions they air – by claiming that they are major employers and, as such, key drivers of the Thai economy. What is indisputable is that they are at the very heart of how Thailand Inc does business.

Twitter: @JohnReedwrites