Tesco Lotus went too far with lawsuits

The Nation

Hypermart chain Tesco Lotus triggered outrage both in Thailand and abroad after it filed libel suits against its critics - two newspaper columnists and a member of the Thai Chamber of Commerce. Nongnart Harnvilai, a senior editor of the Thai-language business daily Krungthep Thurakij, faces a Bt100-million lawsuit over a gossip column she wrote. In the article, Nongnart questioned whether Tesco Lotus "loved" Thailand because it was planning to expand by 130 outlets throughout Thailand this year without caring about mom-and-pop retail stores that are unable to compete against the chain.

Another of the daily's columnists, Kamol Kamoltrakul, has also been served with a Bt100-million libel suit filed by Tesco Lotus over his criticisms of the UK-based hypermart's business. Meanwhile, Jit Siratranont, a former MP and now deputy general secretary of the Thai Chamber of Commerce, has also incurred the wrath of Tesco Lotus and faces a Bt1.1 billion lawsuit. Jit, the owner of a rice mill in Phetchaburi, has been campaigning for the plight of owners of local mom-and-pop shops.

Has Tesco Lotus gone too far with its libel suits against its critics? We think it has.

First, owners of mom-and-pop stores should have their voices heard. Whether their complaints are justified or not, they really are entitled to a channel through which they can discuss their predicament in the face of the rapid, unregulated expansion of modern-trade stores in Thailand.

Second, the critics of Tesco Lotus were simply doing their jobs. We may not all agree with their views, but the general public should be allowed to decide on the matter for themselves.

Third, instead of resorting to libel suits, Tesco Lotus should have created forums and channels through which it could have engaged in a dialogue with its critics, community leaders and owners of mom-and-pop shops. Reaching a mutual understanding on this difficult issue about the role of multinational modern-trade stores will not be easy. But at the end of the day, it is Tesco Lotus's job to do so since it has elected to do business in Thailand.

Fourth, the retail business sector in Thailand is now a free-for-all playing field. Governments over the past 10 years or so have been attempting to introduce a retail-business law to regulate the sector but to no avail. The previous Surayud government also could not push the legislation through, as it faced internal conflicts and attacks from the foreign investor community over its inward-looking economic policy.

To put the matter in perspective, all countries need a retail law to regulate and allow the orderly development and expansion of retail businesses. One can't just simply open a new bank or a bank branch without the approval of banking authorities, who have to weigh their decisions very carefully. Similarly, local authorities should also weigh their decisions on the expansion of new modern-trade stores by taking into account zoning issues, traffic and other factors. All countries have maintained their retail laws and regulated the business accordingly, rightly or wrongly.

The case of Tesco Lotus in Thailand is interesting. Like all other modern-trade stores, the chain has been welcomed by the Thai consumers, who do not issue any complaints at all. It has made consumer products and other goods readily available for Thai consumers at competitive prices. Otherwise it would not have survived or would not have made such handsome profits. The worldwide trend is that mom-and-pop stores are failing in increasing numbers and are threatened with extinction if they can't come up with new ways to compete. Coming up with a retail law that allows for the coexistence of modern-trade stores and mom-and-pop shops will be almost impossible.

To sum up, we really think that it was a mistake for Tesco Lotus to resort to lawsuits against its critics. It should have opted to open a dialogue with its critics and community leaders. Lastly, it should try to find a way to do business in balance with the growth of Thai communities and the Thai economy.