Panpilai Issariyapruit

Thailand enacted a Thai Trade Competition Act in 1999 (“TCA”), which contains the major substantive provisions found in most other competition laws, including an abuse of market dominance provisions in Section 25, merger control provisions in Section 26, and collusive practice provisions in Section 27. Besides a few horizontal restrictions, such as price fixing, quantity fixing, and bid rigging, other restrictive practices are governed by a rule of reason. In addition to civil compensation, the law imposes criminal penalties for violations.

The TCA mainly applies to the private sector, with exemptions for state enterprises, agricultural and other co-operatives, central and regional government agencies, and various other businesses which are to be covered by ministerial regulation.

Certain provisions of the TCA, namely those that concern abuse of dominance and mergers, were not immediately enforceable once the law took effect.  Instead, the TCA required that the Trade Competition Commission ("TCC"), which is composed of four bureaucrats and, at most, twelve “trade competition experts” (consisting of the Minister of Commerce, one politician, the chairs the TCC and individuals from the private sector) to propose a threshold market share, sales figure, or some combination of both, to define when an enterprise is "dominant", or whether a planned merger would need to submit a pre-merger notification.  To date, TCC has set threshold figures determining when a business operator is considered to have a “dominant” market position (and which figures have since been approved by the Thai Cabinet), however, it has not has yet established any further guidance on what characteristics of a planned merger would require the submission of a pre-merger notification (meaning mergers and acquisitions essentially remain unregulated).

Some of the more important provisions of the TCA are summarized below:

Section 25 imposes various restrictions on “market-dominating business operators”.  According to the Notification of the Trade Competition Committee dated 18 January 2007, a “market-dominating business operator” is defined so as to include:

(i) a business operator who holds at least 50 percent of the market share for a particular product or service and has sales revenues of over one billion Thai Baht in the past year; or

(ii) the largest three business operators who together hold at least 75 percent of the market share for a particular product or service and have sales revenues of over one billion Thai Baht in the past year (excluding those business operators with less than 10 percent of the market share or less than one billion Thai Baht in sales revenues over the past year).

Thai law, however, provides little guidance on what constitutes a single "market" for purposes of determining whether or not a business operator exceeds the above thresholds for determining “market share” for a particular product or service.

“Market dominating business operators” are prohibited from engaging in the following activities under Section 25:

(1)     unfairly fixing or keeping buying or selling prices of goods or services;

(2)     unfairly setting conditions in a manner to force, directly, or indirectly, other business operators who are their customers to restrict their services, production, purchase, or distribution of goods, or their opportunity to choose the purchase or sale of goods, the obtaining or providing of services or the procuring of credits from other business operators;

(3)     unreasonably suspending, reducing, or limiting services, production, purchase, distribution, delivery and import, destroying or damaging goods in order to make their supply less than market demands; or

(4)     unreasonably intervening other persons’ business operations.

Section 26 prohibits mergers and acquisition that result in a monopoly of a given market or otherwise create an environment of unfair competition.  However, the details of what would constitute a violation of this section have not yet been provided by the TCC.

Section 27 prohibits any conduct which results in a market monopoly, reduction of competition, or restriction of market competition.  A violation of the prohibitions in this section are deemed to occur if: (i) two or more business operators agree to coordinate their activities through an agreement or otherwise; (ii) the agreement must result in a conduct or practice of monopolizing, reducing or limiting competition; and (iii) their conduct falls within one or more of the activities as enumerated under subsections 1 through 10 of Section 27 (although activities under subsections 5 through 10 may be engaged in on a temporary basis following submission of an application in the form set out under Section 35 to the TCC, which form has already been established).  The form, rules, procedures or conditions under Section 35 have already been set out by the Committee or published in the Government Gazette as they apply to Section 27.

Section 28 prohibits any conduct which would deny customers in Thailand the opportunity to buy products or services from a business operator outside of Thailand.

Section 29 is a controversial catch-all provision aimed at restricting "unfair practices" by any business operator that would adversely affect other business operators.  Although the TCC has issued guidelines as to what constitutes “unfair practices”, this provision has been considered controversial and subject to criticism.

Penalties

Any “business operator” who violates Sections 25 to 29 is subject to imprisonment for a term not exceeding three years, a fine not exceeding six million Thai Baht, or both.  In the case of a repeated offense, the penalties can be doubled according to Section 51 of the TCA.  These penalties can be imposed on a managing director, managing partner, or other person responsible for the operation of the juristic person committing the offense.

Also, the TCC has authority to order a business operator who violates Sections 25 to 29 to suspend, cease or vary those trade practices which violate the TCA.  Any person who fails to comply with such order shall be liable to imprisonment for a term of one year to three years, a fine of two million to six million Thai Baht, or both, as well as a daily fine not exceeding fifty thousand Baht throughout the period of such violation.