Thailand - Trade Competition Commission Imposes Its First Penalty.
Legal News & Analysis - Asia Pacific - Thailand - Competition & Antitrust
23 August, 2019
The Trade Competition Commission has imposed fines in three competition cases passed to it by the previous Commission under the Department of Internal Trade, the Ministry of Commerce. The fines, totaling slightly over a staggering Baht 12 million, marked the Commission's first enforcement action after its establishment as an independent state agency in 2017.
Two of the three cases were cases against Thai business giants that made headlines eight years ago. Let's take a look at how the Commission delivered its ruling on these cases.
(1) The energy drink manufacturer that bullied its distributors
The Commission appointed a sub-committee to look into the manufacturer's conduct from October 2011 to July 2012, which included prohibiting its distributors from selling energy drinks of its competitors and refusing to supply to distributors that failed to comply with its prohibition. The sub-committee concluded the manufacturer had abused its dominant position and restricted competition under the 1999 Trade Competition Act. The manufacturer, with its market share of over 50% and sales turnover over Baht one billion, is dominant in the energy drink market.
Abuse of dominant position carries criminal penalties under both the 1999 Trade Competition Act and the 2017 Trade Competition Act. The Commission, therefore, submitted the case to the public prosecutor in February this year. Nonetheless, the Commission arrived at the settlement with the manufacturer and imposed a fine of Baht 6 million on the company, and Baht 6 million on the company's director.
(2) Coupon war of the hypermarkets
The hypermarket operator was found to have engaged in an unfair trade practice when it advertised in 2011 that shoppers could turn in the coupons from the competing hypermarket at twice the coupon value.
Though the Commission ruled against the hypermarket operator for violation of section 29 of the 1999 Act (an equivalent of section 57 under the current Act), no fine was imposed. This is because section 29 carries criminal penalties while section 57 carries an administrative penalty. Because the 1999 Act has been repealed, the Commission could not impose the criminal penalties that were then available. Nor could it impose an administrative penalty under the 2017 Act because doing so would be to retroactively penalize a person for an offense that was committed before the law came into force. This principle of non-retroactivity has been confirmed by the Council of State, the authoritative body for legislative interpretation.
(3) Agriculture wholesalers stopping others from trading with producers
In the final case, the Commission found that agriculture wholesalers who stopped others from purchasing goods from farmers in Chiang Mai Province, Thailand and Mae Hong Son Province, Thailand had engaged in an unfair trade practice in violation of section 57 of the 2019 Act. This case is less complex than the other two cases because the offense was committed between September to October 2017. The Commission fined the wholesalers Baht 25,000. The fine was based on the sales turnover of the wholesalers and was reduced because the wholesalers had cooperated with the investigation.
The Commission revealed that approximately 50 complaints have been submitted to the Office of the Trade Competition Commission to date. The cases are currently under investigation by ad-hoc working groups.
The new Trade Competition Commission has proven to be very active since its establishment in 2017. More enforcement can be expected.
For further information, please contact:
Pornapa Luengwattanakit Partner, Baker McKenzie