You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

June 10, 2016

Proposed Amendments to Thailand’s Trade Competition Act

Subscribe to Updates
Bangkok Post, Corporate Counsellor Column

Recently, the Cabinet passed a resolution that amends Thailand’s Trade Competition Act B.E. 2542 (1999). The draft amended law has since been submitted to the National Legislative Assembly for further consideration. Businesses should be aware of and prepare for the major changes ahead, as the newly proposed law may become effective at the end of this year.

The Office of Thai Trade Competition Commission (OTCC) is the main enforcer of Thailand’s Trade Competition Act. Overall, the Act aims to regulate fair competition among business operators in the following key areas:

  • Unlawful exercise of market dominance;
  • A merger which may form a monopoly, causing unfair competition;
  • Collusion which forms a monopoly, restricting competition; and
  • Catch-all unfair trade practices.

The amended Trade Competition Act introduces more stringent and extensive provisions as well as higher penalties for violations. The Act, as currently drafted, will introduce the following key amendments:

The definition of “Business Operator” will be broadened.  Under the draft, “Business Operator” now includes affiliate companies as well as group companies. If a company within a company group engages in anticompetitive practices, the OTCC would focus its investigation on the entire group of companies, not only the individual company.

Violations committed outside Thailand are punishable.  Any violations of the Act which are committed outside of Thailand, whether partly or fully, that have an anticompetitive effect on Thailand would be punishable in Thailand. As a result, companies that previously relied on territorial divides to engage in anticompetitive behavior from overseas which have an anticompetitive effect on Thailand could now be subject to punishment in Thailand.

OTCC must be notified of certain merger activities.  The OTCC will be notified of merger activities that may cause a substantive reduction in competition prior to the merger, and the relevant financial statements will be continuously filed at the OTCC for it to monitor the effect of the merger for three consecutive years.

Criminal penalties will be adjusted.  There will be criminal penalties for certain violations of the Act. A fine may amount to 20 percent of a company’s revenue in the year of the violation. This has the potential to result in significantly higher fines. If there is a violation of the OTCC’s order, administrative sanctions may be imposed and the OTCC will determine the fine.

The OTCC, at its discretion, may decrease the fines imposed on business operators that are not the main actors in collusion or restriction of competition causing severe impact to the market, if they cooperate with the OTCC to provide substantial evidence of the violation.

State enterprises will be subject to the Act.  Under the current Act, state enterprises were immune from the provisions of the Act. Under the amended Act, however, they will not be immune unless they fall within exceptions that are granted to state enterprises in the fields of national security, public benefit, common interest, and public utility.

State enterprises that are subject to the Act and engage in anticompetitive practices may incur both criminal and civil penalties. This is because the private sector would be competing with these state enterprises.

The definition of “Market Dominant Operator” will be reviewed periodically. Under the existing Trade Competition Act, the criteria to be classified as a “Market Dominant Operator” (MDO) are as follows:

  • Any Business Operator in any particular goods or services market which has a market share in the previous year of 50 percent or more and has a sales turnover of at least THB 1 billion; or
  • Any Business Operator falling within the top three Business Operators in any particular goods or services market which together have a market share in the previous year of 75 percent and sales turnover of at least THB 1 billion (unless one of these three Business Operators has a market share in the previous year of lower than 10 percent or sales turnover of less than THB 1 billion).

Under the draft law, this longstanding definition of “Market Dominant Operator” (MDO) will be reviewed and revised at least once every five years. The OTCC is empowered to determine the criteria to be classified as an MDO.

If a Business Operator is classified as an MDO, its obligations and scrutiny under the Act would be higher. For example, Section 25 of the Act, which prohibits unreasonably fixing or maintaining purchase or sale prices of goods or fees for services, only applies to MDOs. Business Operators should therefore keep abreast of the Act’s amendments to determine whether or not they are classified as an MDO, as they may be subject to more provisions.

Companies face much heftier fines for violations of Thailand’s Trade Competition Act. Business owners should therefore ensure that they fully understand and comply with the amended Act. The OTCC is undergoing structural reform to increase its impartiality and independence in terms of personnel. The prospect of an increased budget for the OTCC is also on the horizon, which will enable the OTCC to more effectively enforce trade competition laws and regulations in Thailand.

Download Full Article
Related Professionals

Practices

Antitrust and Competition

Customs and International Trade

Location

RELATED INSIGHTS​ 

March 10, 2021
Attorneys from Tilleke & Gibbins’ office in Hanoi have written the Vietnam chapter for Getting the Deal Through – Licensing 2021, a comparative guide to licensing law and practice in 18 countries around the world. Licensing 2021 provides an overview of a wide range of licensing relationships, including licensing of copyrights, trademarks, and patents; software licenses; technology transfer agreements; and franchise agreements. The book also addresses issues of royalties and other payments, taxes, competition law, and termination of licensing relationships. The Vietnam chapter was authored by Linh Thi Mai Nguyen, Son Thai Hoang, and Chi Lan Dang of Tilleke & Gibbins’ trademark team, along with corporate and commercial attorney Tu Ngoc Trinh, who has extensive experience in franchising and competition law. The Vietnam chapter is available below as a PDF. Tilleke & Gibbins also contributed the Thailand chapter to Licensing 2021. To browse all 18 jurisdictions covered by the guide, please visit the Getting the Deal Through website.
Read More
March 2, 2021
Thailand’s long-awaited new Trade Competition Act B.E. 2560 (2017) (TCA) came into effect on October 5, 2017, and the legislation’s extensive reforms of both substantive and procedural rules from the preceding version of the law have been both effective and revolutionizing. Significantly, the TCA lays out an efficient structure for the Trade Competition Commission (TCC) and grants independence to its administrative office, the Office of Trade Competition Commission (OTCC). Consequently, enforcement of this law—which had been almost absent in the past 20 years—is picking up pace. This article will examine the ongoing developments under this law in recent years, and will highlight its current application by discussing some of the TCC’s latest guidelines. TCC: A Developer-Regulator Since its establishment in 2018, the TCC has proven that its role and responsibilities are beyond those of a conventional regulator and law enforcer. The OTCC, with the support of its ad hoc subcommittees, have been actively monitoring the conduct of business operators and the level of competition in various markets and sectors, and the commission is well recognized for its publicizing of the TCA and establishment of new regulations under the law. Through various channels and platforms, a series of regulations, reports on market conditions, press releases, rulings, and precautionary statements have been published, and the TCC’s spokesperson often appears in the media to educate the public. To streamline the exchange of information and collaboration, the TCC and the OTCC have entered into an MOU with six sectoral regulators, including the Securities and Exchange Commission of Thailand, the Office of Insurance Commission, and others. The TCC has also exercised its pre-emptive power to prevent suspicious trade practices and transactions. Prohibitive warnings have been issued against potential infringement, such as unfair trade practices by food delivery platform operators and a proposed merger by
Read More
February 23, 2021
As many are already aware, following the change of government in Myanmar on February 1, 2021, a draft Cyber Security Law was proposed which attracted widespread criticism. However, less attention has been paid to significant amendments to two existing laws, some of which have a similar effect to parts of the draft Cyber Security Law. In other words, while the draft Cyber Security Law has not progressed further and is under public scrutiny, significant elements of it have found their way into law in Myanmar by other routes. Because these amendments are already law, it is very important that individuals and businesses in Myanmar understand their implications. Amendments to the Law Protecting the Privacy and Security of Citizens The Law Protecting the Privacy and Security of Citizens (2017), or the “Privacy Law,” was amended on February 13, 2021, less than two weeks after the military government came into power. These amendments chiefly address the power of the government to conduct searches, seizures, and arrests; to extend detention without judicial oversight; and to carry out broad surveillance and investigation activities that could intrude on individual privacy. The amendments accomplish this by suspending various sections of the Privacy Law for as long as the State Administration Council (the military body now governing Myanmar) is in power. The suspended sections include the following: Section 5: Search, seizure, and arrest without civilian observation The relevant part of Section 5 of the Privacy Law states, “The responsible authorities shall … when acting in accordance with existing law, not enter into a person’s residence or a room used as a residence, or a building, compound or building in a compound, for the purpose of search, seizure, or arrest, unless accompanied by minimum of two witnesses who should comprise Ward or Village Tract Administrators…”. The suspension
Read More
February 22, 2021
Following the recent imposition of sanctions on Myanmar individuals and companies by the US, the UK and Canada have now imposed new sanctions. As with the US sanctions, these new measures impact UK and Canadian citizens and companies, and non-UK and non-Canadian companies and citizens with interests in those jurisdictions. The EU has indicated that it is planning to issue similar sanctions in the near future. New UK Sanctions In addition to the 16 individuals already sanctioned by the UK government, on February 18, 2021, the UK government announced that three individuals have been sanctioned for serious human rights violations and are now subject to asset freezes and travel bans. The full list of Myanmar individuals and companies sanctioned by the UK is available on the website of the Office of Financial Sanctions Implementation. Breaches of UK financial sanctions are criminal offences punishable in the UK by up to 7 years imprisonment and heavy fines. New Canadian Sanctions Also on February 18, timed to coincide with the UK sanctions, new Canadian sanctions were imposed on nine individuals. As with the UK, Canada already had a number of individuals in the Myanmar military on its sanctions list, and the new additions bring the total number of individuals sanctioned by Canada to 54. All assets of these individuals in Canada are now frozen, and they are banned from travelling to Canada. Canadian businesses or entities may not do business with any of the 54 individuals. Full details of the impact of the sanctions are available on the Government of Canada’s website, as is a database of the Myanmar individuals and companies subject to them. Breach of Canadian sanctions carries with it up to 5 years’ imprisonment in Canada and/or a large fine. Other Countries The EU is reportedly drawing up sanctions
Read More