Thailand - Antitrust & Competition Guide 2016

Legal News & Analysis - Asia Pacific - Thailand – Competition & Antitrust

21 April, 2016

 

General

 

What is the main piece of legislation of general application which regulates anti-competitive behavior? What are the main prohibitions in the legislation?

 

The Trade Competition Act, B.E. 2542 (1999) (TCA). The TCA covers three key prohibitions: abuse of dominant position; anti-competitive joint conduct; and merger control (which has not yet come into effect due to the absence of relevant subordinate legislation).

 

Additionally, the TCA also includes a “catch all” provision that prohibits any anti-competitive conduct that results in destruction to, damage to, hindrance of, obstruction of, or limitation of the business operations of others, or which may prevent others from engaging in business operations, or that may cause others to cease their business operations.

 

Which regulator is responsible for administering and enforcing competition laws?

 

The Office of the Trade Competition Commission (OTCC).

 

Are there any exclusions from the competition legislation of general application? Are there any sector-specific competition laws or regulations?

 

Yes. Certain organizations and bodies (such as central or provincial or local administration, state enterprises, and cooperatives) are not subject to the TCA.

 

In Thailand, certain industries are regulated by sector-specific rules on merger control, such as telecommunication and energy.

 

Does the competition legislation apply extraterritorially to persons, behaviour or action outside the jurisdiction?

 

The TCA does not expressly allow extra-territorial application and it is therefore unclear if the TCA would apply to persons, behaviour or action outside Thailand. However, according to the general law principle under the Thai Penal Code, an offence committed outside Thailand in certain circumstances can be penalized in Thailand.

 

Note, Thailand is currently in the process of reforming the TCA and one of the proposed changes will be to expressly provide for extra- territorial application of the TCA where the outcome has effect in Thailand.

 

What penalties and liabilities may be imposed for a breach of the competition law?

 

The maximum criminal penalties for a violation of the TCA are nes of up to THB 6 million and/ or imprisonment for up to three years. These penalties can apply to both companies and individuals. Only the OTCC can bring criminal legal action in court.

 

The injured party may only le a criminal complaint with the OTCC 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 before the court to seek compensatory damages from the business operator.

 

Prohibition on anti-competitive agreements

 

What kinds of agreement or conduct is illegal under the prohibition?

 

The TCA prohibits any business operator from acting jointly with another business operator (or other business operators) to undertake trade practices that will create a monopoly, or which will reduce or limit competition regarding any goods or services.

 

What types of agreements or conduct are illegal by object? And which are illegal only if they are significantly anti-competitive in effect?

 

Certain joint conduct is strictly prohibited, while other joint conduct can be carried out for a certain period of time with prior permission. Strictly prohibited joint conduct includes agreements on selling or purchase prices, agreements on limitation of quantity, and bid rigging.

 

Examples of joint conduct that can be carried out with prior permission include agreements to divide a market, agreements to reduce quality of goods, and appointment of a sole distributor. 

 

Is there regulation of vertical agreements and if so, what type of vertical restraints or provisions in such agreements are typically examined?

 

Yes. The TCA also regulates agreements between operators at a different level (i.e. vertical agreements).

 

Vertical restraints which are typically examined may include refusal to sell, exclusivity obligations and exclusive distributorships.

 

Is resale price maintenance allowed? Are recommended resale prices or maximum resale prices permitted?

 

Resale price maintenance can be anti-competitive if the operator has a dominant position. For operators not holding dominant positions, such conduct would be permissible unless it causes destruction or damage to other operators.

 

Recommended resale price and maximum resale price are permissible so long as they are not de-facto resale price maintenance.

 

Are there any defences or relief from liability provided by the legislation?

 

Yes. Generally, Thailand applies the rule of reason in determining whether certain conduct violates the TCA. If a business operator can justify the purpose and the effect of the conduct, it is arguable that the conduct does not violate the TCA.

 

Is there a leniency regime? If there is, please describe the extent of and process in seeking leniency?

 

No.

 

Abuse of Dominance or Market Power

 

How is “dominance” or “market power” determined? Is there a market share test?

 

Dominance is determined by both market share and turnover. A business operator holding a dominant position means:

 

(a) any business operator with a market share of 50% or more, and sales of Baht 1 billion or more in the previous year; or

(b) any top three business operators with a combined market share of 75% or more, and combined sales of Baht 1 billion or more in the previous year (all three business operators will be classi ed as dominant players unless one or more individually had a market share of less than 10% or a sales volume of less than Baht 1 billion in the previous year). 

 

What type of conduct constitutes abuse of dominance or abuse of market power?

 

Conduct that would constitute abuse of dominance includes:

 

(a) unfairly fixing or maintaining prices,

(b) imposing unfair conditions on customers,

(c) limiting output to be lower than market demand without reasonable cause, and 

(d) interfering with the operation of other business operators without reasonable cause.

 

Are there any defences or relief from liability or exclusions applicable for abusive conduct?

 

No.

 

Merger Control

 

Is there a merger control regime? What is considered a “merger”?

 

No. The merger control regime under the TCA has not been implemented.

 

Is the merger noti cation a mandatory or voluntary process?

 

N/A

 

When must the merger be noti ed to the regulator?

 

N/A

 

What are the ling thresholds and are there any exemptions from noti cation requirements?

 

N/A

 

Please provide a brief description of the merger clearance process and the typical timeline for merger clearance.

 

N/A

 

What are the consequences of failing to notify the regulator when required?

 

N/A 

 

 

For further information, please contact:

 

H. Henry Chang, Baker & McKenzie

henry.chang@bakermckenzie.com