Main features of the law
- Prohibition on restrictive agreements, concerted practices, abuses of a dominant position and unfair trade practices
- Merger control regime
- Wide investigation powers
- Criminal and administrative sanctions
- Limited enforcement action to date outside of unfair trade practices and merger control
(a) Main rules
The Trade Competition Act B.E. 2560 (2017) (the Act) is administered by the Trade Competition Commission (the TCC), which is itself assisted by an administrative office (formerly the Office of the Trade Competition Commission, whose English name was recently – and somewhat confusingly – changed to the Trade Competition Commission of Thailand, the TCCT). The Act prevents restrictions of competition. In particular, the Act:
- prohibits joint actions between business operators which monopolise, reduce or restrict competition (anticompetitive agreements and practices) (Sections 54 and 55 of the Act);
- prohibits the abuse of a dominant position (Section 50 of the Act);
- regulates mergers which may cause a monopoly, result in a dominant position or substantially reduce competition (Section 51 of the Act); and
- prohibits unfair trade practices (Section 57 of the Act).
Anticompetitive agreements and practices
The Act prohibits joint actions (including written or verbal agreements, whether legally enforceable or not, decisions of industry associations and concerted practices) between business operators which monopolise, reduce or restrict competition. The Act distinguishes on the one hand joint actions between business operators competing with each other in the same market which cause “serious damage to competition” (i.e. hardcore horizontal agreements and practices), and on the other hand joint actions between business operators in the same or different market (as the case may be) which cause “damage to competition” (i.e. non-hardcore horizontal and vertical agreements and practices respectively).
Consistent with international practice, anticompetitive agreements and practices by business operators within a single economic entity are considered to be intragroup and shall not be caught by the prohibitions on anticompetitive agreements. Any two or more business operators that are under the same controlling interest will be considered to form a single economic entity. Pursuant to the TCC’s Notification on Rules for the Assessment of Undertakings under Common Policy Relations or Common Controlling Interests (2018) (the Rules for the Assessment of Undertakings under Common Policy Relations or Common Controlling Interests), a common controlling interest will exist where a business operator owns more than 50 per cent of the shares of another operator, or controls the majority of its voting shares, or has the right to appoint at least half of its directors.
The Act (Section 54, as supplemented by the TCC’s Notification on Guidelines for the Assessment of Collective Practices by Undertakings that are Monopolization, Competition Reduction, or Competition Restriction in Market (2018) (the Guidelines on Restrictive Joint Actions)) stipulates the following specific prohibition against hardcore horizontal agreements and practices between competing business operators in the same market, which are subject to criminal penalties:
- directly or indirectly fixing purchasing or selling price, or any trading conditions that affect the price of goods or services (i.e. price fixing);
- limiting the quantity of goods or services that each business operator will produce, purchase, sell or provide (i.e. quantity limitation);
- knowingly establishing an agreement or conditions for a business operator to win an auction or not to enter an auction of goods or services (i.e. bid-rigging); and
- allocating geographical areas in which each business operator will sell, or limit the sale or purchase of goods or services or allocating of any purchasers or sellers that each business operator will be able to sell to, or purchase goods or services from under the condition that other business operators shall not purchase or sell those goods or services (i.e. market allocation).
The Act (Section 55, as supplemented by the Guidelines on Restrictive Joint Actions) prohibits the following non-hardcore restrictive joint actions between business operators whether in the same or different market (as the case may be, i.e. either horizontal or vertical agreements or practices), which are subject to administrative sanctions:
- price fixing, quantity limitation and market allocation by business operators which are not competitors in the same market (i.e. vertical restrictive agreements such as resale price maintenance conduct);
- reducing the quality of goods or services to a condition lower than that previously manufactured, sold or provided in the same market;
- appointing or assigning sole distributorship of a product or services in the same market;
- setting conditions or practices relating to the purchase or sales of products or services in the same market; and
- entering into other anti-competitive joint agreements in manners as may be prescribed by the TCC (to date the TCC has not designated any other joint agreements that may be anticompetitive).
Non-hardcore joint actions may benefit from exemptions on several grounds (under Section 56 of the Act) as follows:
- if it can be shown that such arrangements are necessary for the purpose of developing production, distribution of goods, and the promotion of technical or economic progress;
- if such arrangement is in the pattern of contracts between business operators of different levels, in which one side grants the right in goods or services, trademarks, business operational methods, or business operation support, and the other side is granted rights, with a duty to pay charges, fees, or other remunerations for the rights granted e.g. franchise agreement or authorized dealer agreement etc.; and
- the agreement types or forms as may be further prescribed by the ministerial regulation on the TCC’s advice,
provided, however that, such non-hardcore joint actions as aforementioned shall:
- not create a restriction that exceeds what is necessary to achieve the purposes of such joint actions and the benefit from the purposes of this exception shall be proportionate to the adverse consequences of restriction on competition in the market;
- not lead to a monopoly or cause a significant restriction on competition in the market (i.e. the joining business operators must have a combined market share of less than 10 percent); and
- take into account the impact on the consumers in terms of price, quality, quantity or choice of products or services.
Abuses of a dominant position
The Act (Section 50, as supplemented by the TCC’s Notification on Guidelines for the Assessment of Practices by an Undertaking with Dominant Position (2018)) prohibits a business operator from abusing its dominant position by engaging in the following conduct:
- setting unfair purchasing or selling prices (e.g. predatory pricing, pricing below cost, price discrimination, margin squeeze, excessive pricing or otherwise maintaining purchasing or selling prices without justifiable reasons);
- imposing unfair conditions on trading partners which limit (i) the service, production, purchase or sale of the product; (ii) the opportunity to purchase or sell products, receive or provide services; or (iii) the opportunity to procure loans from other business operators (e.g. fidelity discounts, exclusive dealing, quantity forcing, tying arrangement, resale price maintenance, refusal to supply);
- suspending, reducing, or limiting service provision, production, sale, delivery, or import without justifiable reasons, or destroying or causing damage to goods in order to reduce the quantity to be lower than market demand; or
- intervening in others’ business operation without justifiable reasons.
According to the TCC’s Notification on Criteria for being an Undertaking with Dominant Position (2020), a business operator is deemed to have a dominant position when:
- the business operator has 50 per cent or more market share in the relevant market, and with sales of one billion baht (approx. US$30 million) or more in the past year; or
- the three largest business operators have a combined market share of more than 75 per cent, and each has sales of one billion baht (approx. US$30 million) or more and a market share of 10 percent or more in the past year.
- The calculation of market share and sales of a business operator shall include market share and sales from other business operators within a single economic entity per the Rules for the Assessment of Undertakings under Common Policy Relations or Common Controlling Interests.
The Act (Sections 51 to 53, as supplemented by the TCC’s Notification on Rules, Procedures, and Conditions for Merger Approval (2018) and the TCC’s Notification on Rules, Procedures, and Conditions for Notification of Merger Transaction (2018)) implements a dual merger control regime:
- (1) Post-merger notification is required for mergers that may cause a substantial reduction of competition in a particular market. The acquirer or the surviving entities (as the case may be) must notify the merger to the TCC after closing in relation to transactions where the value of sales achieved by any of the merging parties or the value of their combined sales reaches one billion baht (approx. US$30 million) or more in the relevant market, and which do not cause a monopoly or result in a dominant position. A post-merger notification must be filed within seven days after the completion of the transaction.
- (2) Pre-merger clearance is required to be obtained by the acquirer or the merging parties from the TCC when a merger may result in a monopoly or a dominant position (as these notions are defined in the TCC’s Notification on Criteria for being an undertaking with a dominant position (2020)). The TCC has 90 days (extendable by 15 days) from the receipt of such filing to issue a decision, and may impose any conditions for clearance. Parties who disagree with the decision of the TCC may appeal to the Administrative Court within 60 days from the receipt of the decision.
Prohibition of unfair trade practices
The prohibited practices (under Section 57 of the Act, as supplemented by the TCC’s Notification on Guidelines for the Assessment of Unfair Trade Practices (2022)) include:
- (1) unfair obstruction of business operations;
- (2) abuses of a superior market or bargaining power (which, arguably, is a lower standard than “abuses of a dominant position”);
- (3) imposing unfair trading conditions; and
- (4) any other practices to be determined by the TCC.
Infringements of the Act can attract both administrative and criminal sanctions. Throughout 2021, the TCC had imposed several administrative fines but had not attempted to seek criminal penalties.
In respect of non-hardcore arrangements, unfair trade practices and agreements with offshore operators, administrative sanctions may be imposed by the TCC (see Section 82 of the Act). Fines of up to 10 per cent of the annual turnover in the year of the infringement may be imposed. If the offence is committed in the first year of the business, the administrative sanction will not be more than one million baht (approx. US$30,000).
Administrative sanctions can also be imposed on violation of the merger control provisions (see Sections 80 and 81 of the Act):
- (i)violation of post-merger notification requirement: an administrative fine of not more than two hundred thousand baht (approx. US$6,000) and a further fine of not more than ten thousand baht (approx. US$300) per day for the period the violation occurred; and
- (ii) violation of pre-merger clearance requirement: an administrative fine of not more than 0.5 per cent of the merger transaction value.
Criminal sanctions will only apply to hardcore horizontal arrangements or abuses of a dominant position (see Section 72 of the Act). The maximum criminal sanction is two years’ imprisonment or a fine of 10 per cent of the annual turnover in the year of the offence, or both. If the offence is committed in the first year of the business, the imprisonment sanction remains the same but a fine will not be more than one million baht (approx. US$30,000).
(c) Extraterritorial effect
Consistent with competition law regimes elsewhere, an agreement made or a conduct that occurred in a foreign country will be caught by the Act as long as it affects the Thai market. The Act (Section 58) also expressly prohibits agreements between domestic and offshore operators which could create a monopoly or unfair trade restrictions and cause severe damage to the Thai economy and consumer as a whole.
(a) Public and private enforcement
The competition authority responsible for enforcing the Act is the TCC, as well as the TCCT, its administrative office.
The TCC has the power to investigate, issue orders and decisions and impose administrative sanctions against parties involved in anticompetitive agreements, abusive practices, unfair trade practices or unreasonable offshore agreements. It also has power to investigate, approve and reject mergers and acquisitions as well as imposing administrative sanctions on failing to notify reportable transactions.
For criminal sanctions, the TCC shall refer the case to the public prosecutor for prosecution before the Intellectual Property and International Trade Court. If the district public prosecutor issues a non-prosecution order, the TCC may request the case to be further considered by the Attorney General.
The Act (Article 69) provides that a third party who suffered damages as a result of infringement of the Act shall have the right to file a civil action for damages against the infringer before the Intellectual Property and International Trade Court. The Consumer Protection Commission or other associations recognised under the law on consumer protection may file class action on behalf of consumers or members of the associations. The Act requires that such action be filed within one year from the date the person suffering damages knows or should have known the cause of such damage.
There is no recognition of leniency in the Act or any implementing regulations.
(c) Investigation powers
The TCC has broad investigation powers under the Act, similar to those of police officers under the Thai Criminal Procedure Code. It can issue subpoenas requesting any persons to provide both oral and written information, and conduct raids on premises of the business operators or other relevant persons to search and seize evidence for examination (see Section 63 of the Act).
Sanctions for non-compliance with the TCC’s investigations can lead to a maximum imprisonment of one year and a maximum fine of 20,000 baht (approx. US$650) (see Sections 73 and 74 of the Act).
Recent enforcement trends
Throughout 2021, the TCC published 29 cases on its website. Among the decisions, there were only three decisions where the TCC ordered an administrative fine against the offenders, while the TCC found in the remaining 25 decisions that there were no violations of the Act. The total amount of administrative fines ordered by the TCC was of around 4.8 million baht (approx. US$160,000).
In terms of merger control, 8 decisions of the TCC were published on its website in 2021. The TCC approved all transactions without conditions, including 6 cases that were notified post-merger and 2 cases that were notified pre-merger.
Trade Competition Act B.E. 2560 (2017)
Trade Competition Commission / Trade Competition Commission of Thailand
5th floor, Car Parking 5th floor Building(BC), The Government Complex,
120 Chaeng Wattana Road, Thungsong-hong Sub-district,
Laksi District, Bangkok 10210
Tel: +66 2199 5400
Members of the Trade Competition Commission: Professor Sakon Varanyuwatana (Chair), Mr. Krisda Piampongsant (Vice Chairman), Mr. Santichai Santawanpas (Spokesman), Mr. Somchart Sroythong, Mr. Somkiat Tankrittiwat, Pattama Teanravisitsagool and Mr. Raksakecha Chaechai.
Secretary-General of the Trade Competition Commission: Mr. Somsak Kiatchailak
Members of the Trade Competition Commission
- Professor Sakon Varanyuwatana (Chair)
- Mr Krisda Piampongsant (Vice Chairman)
- Mr Santichai Santawanpas (Spokesman)
- Mr Somchart Sroythong
- Mr Somkiat Tankrittiwat
- Pattama Teanravisitsagool
- Mr Raksakecha Chaechai
Secretary-General of the Trade Competition Commission