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Thai Competition Law – One year on

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18 October 2018

The preparation, advocacy and enforcement of the Thai Trade Competition Act B.E.  2560 (2017) (the Act) has been in full swing in the past year since it came into force on 5 October 2017. The first enforcement case has also been reported (see below). By way of update, we set out below the most notable developments:

28 May 2018:

A public hearing was held to consider 6 draft notifications relating to guidelines on the anti-competitive offences; market definition and market share; and the meaning of a single economic entity. We took an active part in the discussion with the authority. The public hearing period has since ended, but the said notifications are still under consideration by the drafting committee following comments received from the public.

17 August 2018:

The Office of the Trade Competition Commission (OTCC) issued its first (published) order against the operator of a food packing house for breach of the Act by entering into anticompetitive agreements with both their competitors and abuse of its bargaining power against its supplier. As far as we are aware, no fines have been imposed and the operators are reportedly cooperating and complying with the order. Key takeaways from this case:
 
– The OTCC will not hesitate to publish their decisions as soon as an order is issued.
 
– The OTCC collaborates with the Department of Special Investigation (DSI) in its on-site investigation, expanding
its resources and experience in dawn raids on companies.
 
– The Thai Trade Competition Commission (the Commission), at least during the initial period, may lean towards issuing orders for parties to cease anti-competitive conduct before imposing administrative fines or criminal sanctions.

4 September 2018:

The Cabinet approved the list of members of the new Commission. Members are former senior OTCC officials,
professors, academics, former diplomat, and former independent director of a public company.

5 September 2018:

A public hearing was held to consider six other draft notifications, including three notifications relating to merger control, one relating to dominance and two relating to investigative and enforcement powers of the Commission.  The period for the submission of public comments ended on 25 September 2018. Key points to note from the draft merger control rules are as follows:

 
(a) There is a transitional period exempting deals that has been signed or passed by shareholders’ resolution before the draft notification is effective. Those transactions will not be subject to merger filing requirements in Thailand. This allows operators some deal certainty for their on-going transactions.
 
(b) The Commission will focus on the effect of the transaction on the Thai market, but the rules will also apply to “foreignto-foreign” deals so long as the parties have sales and market share in Thailand that meets the notification thresholds in line with international practice.

(c) Whether various types of joint ventures would be captured is still unclear. The OTCC caveated that they could,
depending on impact to relevant market structure. This will need to be clarified.
(d) Pursuant to the draft notifications and clarifications received in the public hearing, and subject to confirmation, the merger control thresholds are as follows:
(i) a filing would be required pre-closing each time that there is:
(A) a ‘consolidation’, being:

– an acquisition of shares or other convertible securities [resulting in the purchaser holding] up to 25% or more
of the total voting rights in a listed company;
– an acquisition of more than 50% voting shares in a non-listed company; or
– an asset acquisition of more than 50% of the total operating assets relevant to the normal course of
business of another business operator; and

(B) such acquisition may lead to dominance or monopoly in a relevant market.
Dominance and monopoly have been defined separately as follows:
Business operators with the following market share shall be business operators with market dominance:

(1) Any one business operator in a relevant product market or service market that has at least 50% market share in
the previous year and at least THB1 billion turnover in the previous year; or

(2) The top three business operators in a relevant product market or service market that has at least 75% market
share in aggregate in the previous year and at least THB1bn in the previous year.
The terms in sub-clause (2) shall not apply to any business operator that has less than 10% market share in the
previous year or less than THB1bn in the previous year.  The market share and turnover is calculated from the
market share of, and turnover generated by, the “Group” in aggregate in the relevant market.
“Monopoly” means the circumstance in which only one business operator in a relevant market that has the power
to freely control the price or volume of goods or services in the market and has turnover of THB1bn or more.
(ii) a filing would be required post-closing each time that, before or after such consolidation, a consolidating party
has turnover of THB1bn or more in any [relevant] market which does not cause a monopoly or create dominance in
the market.

5 October 2018:

This is the legal deadline for the Commission to issue notifications and other key secondary notifications such as
merger control implementing rules, market definition etc.  However, if the Commission is unable to meet this deadline, the Minister in charge must report the reason for the Cabinet to note, and the Commission may obtain an extension, which is likely to be granted given that further amendments will be required to address concerns and questions raised during the public hearing.

 

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