Anti-trust Body Issues Guidelines on SM-Goldilocks Deal

The Philippine Competition Commission (PCC) said it has issued a Statement of Concerns (SOC) to the parties involved in the planned acquisition of Goldilocks Bakeshop, Inc., the country’s largest bakeshop chain, by Sy-led SM Investments Corp. (SMIC).

In a media briefing Tuesday, PCC Commissioner Stella Luz Quimbo, said the anti-trust body issued SOC last week and the parties are due to comment by December 14.

“The potential concern has to do with how SM will relate with the competitors of Goldilocks, for example, Red Ribbon and other bakeries,” Quimbo said.

She added that the PCC has pointed out in its SOC all its concerns regarding the deal such as SM’s ability to foreclose Goldilocks’ competitors and the incentive, particularly in terms of increasing profits, when it totally or partially foreclosed other players in the cakes and pastries sector with SM’s planned acquisition of the bakeshop chain.

In this case, 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.

Last August, SMIC told the Philippine Stock Exchange that the company has preliminary discussion with Goldilocks for “possible equity investment, joint venture, or other cooperation agreement”.
But it noted that the deal is still pending and subject to the approval of the PCC.

“They are well-aware of what we think what could be the competition problems,” said Quimbo.

“And we have also provided guidance on how they can proceed; meaning, providing them specific guidelines on the kind of commitments they can propose and what are the acceptable to the PCC,” the Commissioner added.

Quimbo said that the involved parties could provide PCC with comments on the SOC, which the Commission would take into consideration when it would finally decide on the deal whether to approve it or to approve it with conditions.

She also said the companies could submit voluntary commitments in which PCC has provided certain guidelines.