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Published on December 27, 2007

Tesco Lotus and Big C have refused to comply with the Commerce Ministry's proposal to regulate modern retail expansion in the absence of the country's first retail and wholesale business law.

The ministry yesterday called for a meeting with retailers and suppliers to seek agreement on temporary regulations to end the conflicts between big and small players. While other retail giants agreed with the proposal, Tesco Lotus and Big C were the only two to find fault with some of the regulations.

They said the rules must be changed, as some details were too suffocating for chains wishing to expand.

Under the ministry's draft memorandum of understanding (MoU), giant retail outlets -hypermarkets, supercentres, discount stores and cash-and-carry stores - must be located at least 12 kilometres from a city centre and serve a population of 100,000.

Supermarkets must be 5km away from a city centre with a population greater than 50,000.

Hypermarkets, supercentres, discount stores, cash-and-carry stores and supermarkets would be limited to a maximum of 12 hours of operation a day.

Discount convenience stores or express shops must be at least 500 metres from a market with a population of more than 1,000. The operation is limited to 15 hours.

Convenience stores will not be limited by distance or operating hours but must have a market of more than 3,000 consumers.

The other participants - Cencar, the operator of Carrefour, Siam Makro and CP All, the operator of 7-Eleven - all accepted the draft regulations.

The ministry allowed all firms to decide again whether they would consent to the agreement. The signing ceremony is scheduled for the middle of next month.

Yangyong Phuangrach, director-general of the ministry's Internal Trade Department, said all retailers should respond positively to the regulations since that would lead to better understanding between small and large operators.

"Only Tesco and Big C seemed to oppose the regulations. The ministry would give another two weeks for their final consideration, hoping that both of them would acknowledge the agreement," he said.

The MoU aims to create a fair framework for big and small retailers as well as suppliers after the retail business bill failed to be passed into law in the current government's term.

Any violators of the agreement would be subject to the Trade Competition Act and punishment under the retail guidelines. However, if all stand by the MoU, retail giants would be expected not to break the agreement. That should reduce the friction between large and small operators, Yangyong said.

"If retail giants comply with the regulations, small retailers must halt their protests against large enterprises," he said, adding that suppliers should also treat both retail giants and small operators with fair practices.

Petchanet Pratruangkrai

The Nation