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The lotus position
Tesco in Thailand

Some months ago Britain's largest retailer, Tesco, attracted unfavourable publicity because of three defamation cases launched against critics in Thailand. Claims for damages totalling US$36 million were made in respect of three publications, and in one of the cases criminal defamation was also alleged.

Tesco's actions have drawn attention to a growing concern among the media all over the world - the use by big corporations of local libel laws in response to hostile comment. So are such companies justly protecting their reputation in a competitive market, or are they seeking to stifle legitimate debate about their activities?

The background to these cases is the rapid expansion in Thailand by a subsidiary of the British retail giant, Tesco, called Tesco Lotus.

As in other countries, the rise of out-of-town shopping has become a point of keen public discussion, largely because of the damaging effect it is widely supposed to have on local retailers. The Tesco moves also coincided with the passing in Thailand of the Retailing Act 2007, which seeks to safeguard the local market from being monopolised by superstores.

Here is a summary of the cases.

1. The main case in terms of the level of damages sought arose out of a newspaper interview in which the vice-secretary general of the Thai Chamber of Commerce, Jit Siratranont, was quoted as saying that 37% of Tesco's global sales took place in Thailand and that foreign retailers were using unfair methods to wipe out small Thai-owned shops. Jit subsequently said he had been misquoted as to the figure, which was 3.7%, and the paper (the Thai-language Manager Daily) acknowledged this with a correction the following day. Jit then repeated some of the comments he had made about Tesco at a seminar, and in addition questioned a reduction in Tesco's registered capital suggesting that Tesco was exporting profits and failing to invest in Thailand.
   
   Towards the end of 2007 Tesco sued Jit for approximately US$30 million and also claimed criminal defamation, for which the penalty can be up to two years in prison or a fine or both. The claim was based on Jit's comments at a seminar to inaugurate the Thai Retailers and Independent Business Operators Center of Thai People Against Foreign Retailers Association, and his interview with Manager Daily. It lost. In June this year a criminal court dismissed the defamation claim, finding that Jit had spoken "in good faith" and that what he had said was "fair comment". According to a report by ASTVManager, the media group which owns all the Manager titles and whose lawyers defended Jit, the court also dismissed the civil damages claim.


2. A part-time economics lecturer and contributor to Thai-language newspapers, Kamol Kamoltrakul, repeated the incorrect figure of 37% in Thai language daily, Krungthep Thurakij Newspaper on Monday 29 October 2007. He also said that "almost all of its [Tesco Lotus's] sales have been channelled back to its parent company" and that Tesco Lotus "did not pay taxes locally". Tesco, which is reported to have paid 1.2 billion baht (approximately US$36m) in taxes in 2006, sued Kamol for US$3m in damages. Kamol insists, like Jit, that his criticisms of the company were made in good faith and that it has not suffered unfairly as a result. The case is due to come to trial in October 2010 and the MLDI is underwriting Kamol's defence costs.


3. A reporter of 20 years' standing in the Thai-language daily Krungthep Thurakij, Mrs Nongnat Hanwilai, wrote an article which contained the following passage:
   
   "Jeff Adams, the big boss of Tesco Lotus, has made a firm announcement that he plans to invest in the building of 130 branches of Tesco Lotus of all models this year. This is shocking. Imagine: this means a new branch will open every three days on average. This is not a very appealing prospect. With each branch heavy construction goes on day and night, to the inconvenience of local people. Now it is planning to open a new branch on 5 February at a side road going to Tivanon. Hey! Tesco does not love the Thai people!"

Tesco Lotus issued proceedings against Mrs Nongnat, again seeking US$3 million in damages, but withdrew its claim after the paper published an apology for three consecutive days in January this year.

As elsewhere, with sufficient funds, it is easy to make a defamation claim, and in a country where the average gross annual income in 2005 was US$4,500 it requires a brave journalist or publication to stand up to a wealthy litigant, whether the latter is commercial or political. In the view of Bangkok media lawyer Sinfah Tunsarawuth, criminal defamation is "the main threat used by politicians... to silence their critics."

Peter Noorlander, legal director of the MLDI, questions Tesco's motives in responding so robustly to the criticisms made of it. "Tesco is not obliged to sue for a 100 million baht if it merely wants to defend its reputation. It could seek a different remedy, rather than suing for huge sums in damages," he said.

Tesco however maintains that it is only seeking an apology and a retraction and on that basis would settle out of court. Responding to the criticisms Sir Terry Leahy, chief executive of Tesco PLC has written that, "These cases are framed in a way appropriate under Thai law but I can assure you that what we want is simply an apology and a retraction of claims which were false, damaging and misleading. We are still hopeful that these apologies will be forthcoming and that the matters can be resolved by agreement, without the need to resort to the courts."

According to Noorlander the case nevertheless raises wider issues. Commenting on the increasing use of defamation law against media attacks in general, Noorlander said: "The odds are weighted against the defendant. It is easy, especially for large companies or powerful figures, to sue for defamation; but in countries like Thailand there are few with the resources to defend themselves, however strong their case. So the message seems to be: don't mess with us, it's not worth it."