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July 13, 2017

Thailand: New Trade Competition Act to Take Effect in October 2017

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Thailand’s new Trade Competition Act B.E. 2560 (2017) (TCA) was published in the Government Gazette  on July 7 and will come into force 90 days later on October 5. The new TCA will likely lead to many significant changes, including expanding the powers of the Office of Trade Competition Commission (OTCC) and making the OTCC independent from the government. Other important provisions in the new TCA are set out below.

Defining market-dominant business operator

The new TCA will provide a more detailed definition of a business operator with market dominance. This change will require the OTCC to set criteria to identify a market-dominant operator, such as market share and turnover, and to review the definition of such an operator at least once every three years.

Merger control

The new TCA will provide a dual merger control system:

  • Pre-merger approval. Any merger that may result in a possible monopoly or market dominance requires prior approval from the OTCC. The new TCA also sets out criteria for the OTCC to consider while reviewing applications, and sets out a timeframe and procedures for rejection or approval of applications.
  • Post-merger notification. Any merger resulting in significant reduction of competition must be reported to the OTCC within seven days from the date of the merger.

Anticompetitive agreements

The new TCA will distinguish between anticompetitive agreements within the same market (“hardcore cartels”) and anticompetitive agreements in any market (“non-hardcore cartels”). Both types of anticompetitive agreements may be exempted from the provisions of the new TCA if they have a relationship “in policy or control.” The criteria for such a relationship will be clarified further in OTCC regulations.

Unfair trade practices, and penalties and sanctions

In addition, the new TCA clarifies the scope of unfair trade practices, as follows:

  • Intervening in the business operations of other operators without reasonable grounds.
  • Unfairly fixing the price levels of goods or services.
  • Unfairly setting conditions that limit the ability or opportunity of other operators to conduct manufacturing, trade in goods or services, or procure credit.
  • Suspending, reducing, or limiting the provision of goods or services, or causing damages to goods, with the intention of reducing market supply to be below demand.

Penalties and sanctions will now be calculated as a percentage of the turnover of a business in the year the offense was committed, or, in the case of a merger violating the provisions of the new TCA, a percentage of the value of the merger. This may cause penalties to be higher than the fixed maximum fine under current law in certain circumstances.

Notifications and regulations issued under the current TCA will remain in force unless they conflict with the provisions of the new law, or until new regulations are issued to replace or repeal them.

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