PCC okays SM acquisition of Goldilocks

Acquisition by SM Retail, Inc. of Goldilocks Bakeshop, Inc., the country’s largest bakeshop chain, can now proceed as the Philippine Competition Commission (PCC) accepted the commitments of the former to ensure competition in the cakes and pastries industry. (Photo: Goldilocks/Facebook)

MANILA — Acquisition by SM Retail, Inc. of Goldilocks Bakeshop, Inc., the country’s largest bakeshop chain, can now proceed as the Philippine Competition Commission (PCC) accepted the commitments of the former to ensure competition in the cakes and pastries industry.

The SM Group submitted voluntary commitments to the PCC after the Commission’s Mergers and Acquisitions Office (MAO) issued a Statement of Concerns (SOC) to the parties.

In the transaction, the PCC has seen competition issues in the deal, such as the possible unfair treatment of SM to Goldilocks’ competitors.

Under the deal, PCC’s MAO pointed out that the transaction might totally or partially foreclosed other players in cakes and pastries sector.

Total market foreclosure means other bakeshop chains are barred to do their business in SM malls, while partial market foreclosure would mean allowing other players to be tenants of the mall but their location would be in a competitive disadvantage compared to Goldilocks’ spot.

“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.

“Such discrimination or unfair treatment can come in the form of arbitrarily assigning competitor tenants 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,” Balisacan added.

The anti-trust body is also concerned that SM may share business information of Goldilocks’ competitors to the bakeshop chain since it has access to the sales of its tenants through point-of-sale (POS) system.

But the SM Group included in its voluntary commitment that it will give fair treatment to SM Mall tenants even if these are competitors of Goldilocks.

It also vowed not to disclose information of competing mall tenants to Goldilocks.

The PCC stressed that the SM Group is obliged to comply with its commitments and should be submitting reports to the Commission.

“Over a period of five years, the parties will be monitored periodically by a team of experts from PCC. Monitoring will also include random inspections,” the Commission noted.