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Competition body okays SM acquisition of Goldilocks

The Philippine Competition Commission (PCC) has approved the acquisition by SM Retail Inc. of Goldilocks Bakeshop Inc. after the parties submitted their commitment to address potential competition issues in the transaction.
SM Retail is a subsidiary of SM Investments Corp. (SMIC), which through another subsidiary, SM Prime Holdings Inc. (SMPHI), develops, owns and operates shopping malls.
SMPHI operates close to 70 malls in the Philippines, while Goldilocks has a network of more than 500 stores, some of which operate in SM malls.
Post-merger, Goldilocks will become a subsidiary of SM Retail.
The voluntary commitment of the SM Group (composed of SM Retail, SMPHI and SMIC) comes after the PCC’s Mergers and Acquisitions Office (MAO) issued a statement of concerns (SoC) detailing the potential competition issues arising from the transaction.
After the MAO issued the SOC last Dec. 1, 2017, the SM Group submitted a comprehensive undertaking last Dec. 22, 2017 which undertaking was enhanced following a series of hearings and discussions.
The SM Group submitted an amended and final undertaking on Dec. 28 to address the identified competition concerns.
A major finding by the review undertaken by MAO is the possibility of partial or total foreclosure in the supply of retail space in SM malls to competitors of Goldilocks after its acquisition by the SM Group.
“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,” said PCC chairman Arsenio Balisacan.
Another major concern identified by MAO is the potential for the SM Group to share a competing mall tenant’s business information to Goldilocks, since the mall operator, through its point-of-sale (POS) system, has access to sales records of tenants. 

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