PCC cites major concerns in approving SM-Goldilocks acquisition deal

The Philippine Competition Commission has approved the acquisition of Goldilocks Bakeshop by SM Retail Inc.

The antitrust commission, however, cited major concerns and placed conditions on SM Retail to avoid anti-competitive behavior in relation to the Goldilocks transaction.

The SM Group which includes SM Retail, SM Prime Holdings Inc. (SMPHI) and SM Investment Corp. (SMIC) has submitted an amended and final comprehensive undertaking on December 28 to address the competition issues after the PCC Mergers and Acquisition Office (MAO) issued a statement of concerns last December 1.

After the SM Group submitted a voluntary commitment, MAO found that there was the “possibility of partial or total foreclosure” in the supply of retail space to competitors of Goldilocks in SM Malls after the acquisition.

“While selection of tenants in a mall is market-driven and based on consumer preferences, a mall operator should not be allowed to discriminate mall tenants and lease applicants, especially those that compete with stores owned by the mall itself,” PCC chairman Arsenio Balisacan said in a statement on Tuesday.

“Such discrimination or unfair treatment can come in the form of arbitrarily competitor tenant to disadvantageous locations or unfavorable lease terms, which amounts to partial foreclosure. It can also come in the form of giving less favorable lease terms or completely refuse them lease space in the mall, which amounts to total foreclosure,” he said.

The MAO also raised another major issue which is access of the SM Group to a competing tenant’s business information since the mall operator has access to sales records of tenants through its point-of-sale (POS) system.

“Every mall-goer knows that location is important, while every businessman knows that data informs business strategy. In this transaction, what we want is fair opportunities for big and small players,” Balisacan said.

SMPHI has committed that competitors of Goldilocks will be given fair treatment on their lease as stated in the company’s voluntary commitment which the PCC approved in a decision issued on December 29.

The company also committed to maintain an “information firewall” and will not give Goldilocks access to competing tenants’ information including “sales data captured by the POS system of SMPHI tenants, whether referring to consolidated sales, product category level or stock keeping unit (SKU) level information, such as prices or quantities sold.”

Such commitment to data protection will ensure that Goldilocks “will not be able to use sales data or information of its competitors to its advantage.”

Balisacan said the commitment to the voluntary undertakings by SM is “proof that PCC and the business community can work together to promote a culture of competition.”

The parties will be monitored including random inspections periodically over five years by a team of experts as they are obliged to comply with the commitment and to submit reports to the commission.

The SM Group committed to promptly address violations or deficiencies discovered by the monitoring team during their inspection, otherwise SM will be subjected to fines, additional remedies and other measures once any of the conditions are breached.

The PCC is mandated to review mergers and acquisition that meet the P1 billion threshold in line with the Philippine Competition Act to ensure that deals do not harm the interest of consumers.

A total of 142 merger filings by local and international companies with a transactional value of P2.171 trillion have been received by PCC to date, including 38 merger filings that involve global deals. —Marlly Rome Bondoc/VDS, GMA News