Back to Antitrust and Competition Around the World
By Pornapa Thaicharoen, Ampika Kumar, Narumol Chinawong and Sutattee Kanchanapisoot (Baker McKenzie Bangkok) The statutory basis of antitrust law in Thailand is the Trade Competition Act B.E. 2542 (1999) (Trade Competition Act) and it is generally applicable to any type of business operation.
1. Overview of competition laws
The Trade Competition Act provides two types of restrictive trade practices: restrictive trade practices not eligible for permission and restrictive trade practices eligible for permission. Restrictive trade practices that are not eligible for permission include abuse of dominant position, joint price fixing and certain forms of joint conduct by two or more business operators. Restrictive trade practices that are eligible for permission include mergers that may result in a monopoly or unfair competition, as well as certain other restrictive joint practices.
2. Enforcement and administration
The Trade Competition Commission (Commission) is responsible for the administration and enforcement of the Trade Competition Act.
3. Anti-competitive arrangements and other conduct
Restrictive trade practices not eligible for permission
3.1 Abuse of dominant position
The Trade Competition Act prohibits business operators from abusing a dominant position. According to the Trade Competition Act, the term “dominant position” refers to any one or more business operators who enjoy a market share and a sales turnover in excess of those prescribed by the Commission with the Cabinet’s approval. Under the Notification of the Commission on the Criteria for Determining Dominant Position, which was announced and came into effect in February 2007, business operators will be considered to hold a dominant position if the business satisfies one of the following characteristics:
- individually holding a market share of at least 50 percent and having a sales volume of at least THB1 billion in the previous year; or
- being one of the top three business operators, with a collective market share of at least 75 percent and a sales volume of at least THB1 billion in the previous year (unless the individual business operator in question had a market share of less than 10 percent or a sales volume of less than THB1 billion in the previous year).
It is not per se illegal for business operators to hold a dominant position in the market. However, business operators having a dominant position will be prohibited from engaging in the following trade practices:
- unfairly fixing or maintaining price levels for the purchase or sale of goods or services;
- imposing unfair conditions, directly or indirectly, on its customers (being other business operators) to limit their services, manufacture, purchase or sale of goods; or to limit their opportunities to make choices in purchasing or selling goods or in receiving or providing services or in obtaining credit from other business operators;
- ceasing, reducing or limiting services, manufacture, purchases, sales, delivery, or imports into the Kingdom, of goods without reasonable cause, or causing destruction or damage to goods in order to reduce their quantities lower than the market demand; or
- interfering with the business operations of others without reasonable cause.
In addition, under the Trade Competition Act, if a business operator with a dominant position has a market share exceeding 75 percent, the Commission may exercise its powers to order the operator to cease, withhold or change its market share by complying with such criteria, procedures, conditions and time periods as are laid down by the Commission.
3.2 Restrictive trade practices jointly undertaken by two or more business operators
The Trade Competition Act prohibits any business operator from acting jointly with another business operator to undertake any trade practices that will create a monopoly or that will reduce or limit competition in respect of any goods or services. These include any of the following:
- fixing the sales prices of goods or services at the same level, or as agreed between them, or limiting the sales quantity of goods or services;
- fixing the purchase prices of goods or services at the same level, or as agreed between them, or limiting the quantity of goods or services to be purchased by them;
- concluding a joint agreement to control or manipulate a market; or
- attempting to fix an agreement or a condition to enable one party to succeed in a bid or auction of goods or services, or to allow one party not to compete in the bid or auction.
3.3 Restrictive trade practices jointly undertaken with overseas business operators
The Trade Competition Act prohibits any business operator who has a business relationship with an overseas business operator (whether by way of contract, policy, partnership, shareholding or other comparable relationship) from undertaking any action to cause others wishing to purchase goods or services for their own consumption or limited opportunities in purchasing the goods or services directly from overseas operators.
3.4 Other restrictive practices
The Trade Competition Act prohibits any business operator from doing anything which is not part of free and fair competition that may result in destruction, damage, hindrance, obstruction, or limitation to the business operations of others, or that may prevent others from engaging in, or that may cause others to cease, their business operations. This provision is very broad and is regarded as a “catch-all” provision under the Trade Competition Act.
Restrictive trade practices eligible for permission
3.5 Mergers and acquisitions
See “Mergers and acquisitions” section below.
3.6 Other restrictive trade practices
Under the Trade Competition Act, the following restrictive trade practices, where deemed commercially necessary, may be undertaken upon obtaining prior permission from the Commission:
- allocating a territory in which each business operator may sell or restrict the sale of goods or services or assigning types of customers to whom each business operator may sell goods or services without competition from other business operators;
- allocating a territory in which each business operator may purchase or restrict the purchase of goods or services or assigning types of suppliers from whom each business operator may purchase goods or services;
- limiting the quantities of goods or services (to be produced, purchased, sold or provided by each business operator) to below market demand;
- reducing the quality of goods or services to below that previously manufactured, sold or provided, at the original or higher price;
- appointing any person to be the sole distributor of any goods or services; and
- imposing conditions or procedures for the sale or purchase of goods or services in order to cause the same to be performed in the same manner or as agreed upon.
4. Mergers and acquisitions
The Trade Competition Act prohibits any business operator from effecting a merger which may result in a monopoly or unfair competition as prescribed by the Commission in the Government Gazette, without pre-merger permission from the Commission. Mergers are defined to include, amongst other things:
- a merger between two or more manufacturers, sellers or service providers, causing one business to be terminated or causing the two businesses to be merged into a new business;
- an acquisition of the whole or part of another business’ assets in order to control business policy, administration or management; or
- an acquisition of the whole or part of another business’ shares in order to control business policy, administration or management.
The merger notification thresholds have not yet been issued. Merger filings are not required until the thresholds have been set. Please see the “Reform” section for more information about the merger notification thresholds.
5. Penalties and liabilities
The maximum criminal penalties for a violation of the Trade Competition Act are fines of up to THB6 million and/or imprisonment for up to three years. These penalties can apply to both companies and individuals. Only the Commission can bring criminal legal action against the violators to court. The injured party may only file a criminal complaint with the Commission to investigate and prosecute the criminal case with the courts. If a business operator illicitly engages in a restrictive trade practice that injures another, the injured party may bring civil legal action to court to seek compensatory damages from the business operator.
6. Extraterritorial application
The Trade Competition Act applies not only to the restrictive trade practices mentioned above, which are wholly or partially committed in Thailand, but also to the commission outside Thailand that has consequences within the country, i.e.,
- the consequence of the commission will occur in Thailand;
- the resulting consequence, by the nature of the commission, should occur in Thailand; or
- the consequence could be foreseen to occur in Thailand.
7. Reform
Revised threshold of dominant business operators
In October 2014, the Commission approved the revised threshold of dominant business operators as proposed by the Sub-Committee, which will supersede the Notification of the Commission on the Criteria for Determining Dominant Position which has been effective since February 2007. The revised threshold will later be proposed to the Cabinet for approval prior to promulgation. The revised threshold, as approved by the Commission, can be compared to the current threshold as follows: Business operators will be considered to hold a dominant position if the business satisfies one of the following characteristics:
| Current Threshold | Revised Threshold |
|---|---|
| (a) individually holding a market share of at least 50 percent and having a sales volume of at least THB1 billion in the previous year; or | (a) individually holding a market share of at least 30 percent and having a sales volume of at least THB500 million in the previous year; or |
| (b) being one of the top three business operators, with a collective market share of at least 75 percent and a sales volume of at least THB1 billion in the previous year (unless the individual business operator in question had a market share of less than 10 percent or a sales volume of less than THB1 billion in the previous year). | (b) being one of the top three business operators, with a collective market share of at least 75 percent and a sales volume of at least THB500 million in the previous year (unless the individual business operator in question had a market share of less than 10 percent or a sales volume of less than THB500 million in the previous year). |
Threshold for merger filing
As mentioned above, a merger is one of the restrictive trade practices which may be subject to the filing requirements. There has been ongoing consideration regarding the merger control threshold. The proposed merger control threshold will be based on market share and the amount of shares purchased or acquired, as follows:
- any business operator with a market share of at least 30 percent and a volume of at least sales/income in the past year of THB2 billion for any product or service market, whether before or after the merger or integration; or
- the purchase or acquisition of voting shares, whether all at once or over time, of at least 25 percent (for public companies) or 50 percent (for private companies), whereby the business operator has individual or combined market share of at least 30 percent and volume of sales/income in the past year of at least THB2 billion in any product or service market.
The Commission has approved such threshold and assigned the sub-committee to further study this, and to set the format of the merger filing forms and relevant guideline. [wpdm_package id=’4258′]