10 December 2020
Thailand’s Trade Competition Commission (TCC) has issued new rules governing business relations between food delivery platform operators and the restaurants operating through those platforms. The guidelines identify various arrangements, that are sometimes imposed upon restaurants by digital platforms, as unfair and damaging to restaurant operators, and restrict them accordingly.
This is the fourth time that the TCC has deemed it necessary to intervene in a specific industry by restricting certain unfair trade practices in accordance with the Trade Competition Act B.E. 2560 (2017) (TCA), and is indicative of the TCC’s greater drive to quell unfair practices using its powers under the TCA. It also shows their willingness to react quickly to new developments in the market—in this case, the substantial increase in restaurant operators selling their products through online platforms in recent months.
The Guidelines on Unfair Trade Practices between Digital Platform Operators for Food Delivery and Restaurants were published in the Government Gazette on November 23, 2020, and take effect on December 23, 2020.
Key Definitions
-
Digital platforms mean online services which establish a trade linkage between restaurant businesses, food deliverers, and consumers—in other words, applications or websites that allow consumers to use restaurants via food deliverers.
-
Digital platform operators for food delivery means the business operators that provide digital platform services, acting as an intermediary to accept the purchase order and deliver food between restaurant operators, food delivery service providers, and consumers; or between restaurant operators and consumers in accepting the purchase order for food. Put simply, they are the companies operating food delivery platforms.
Unfair Conduct
The main principle set forth in the TCC’s food delivery guidelines is that business conduct between food delivery platform operators and restaurant operators must respect the freedom of each party; must be fair, noncompulsory, and nondiscriminatory; and must not obstruct another party’s business operations. Relevant terms and conditions should be clear and made in writing, in accordance with usual, justifiable business conduct.
The guidelines’ list of conduct that could be deemed unfair under the TCA includes the following:
-
Unfairly demanding payments, remuneration, or other benefits, such as unjustified or discriminatory increases in commission fees or gross profit; unjustified requests for advertising fees or promotional expenses; and unjustified requests for other expenses, remuneration, or benefits had previously not been requested.
-
Setting trade practices that unfairly impede the operations of other businesses, such as by prohibiting restaurants from doing business with competing food delivery platform operators without justification.
-
Unfairly exploiting superior bargaining power, such as by forcing restaurants to sell the same type of food at the same price in all sale channels without justification.
-
Extending credit terms, terminating agreements, and excluding restaurants from the platform without justification.
Restaurant operators will now have the right to lodge a complaint against digital platform operators engaging in any of the unfair misconduct listed above.
Digital platform operators’ contractual terms, business conduct, and trade practices directed toward restaurant operators, whether orally or in writing, should be reassessed and adjusted, if necessary, to ensure full compliance with the TCC’s new food delivery guidelines. Prior to launching new products or initiatives, or modifying existing terms and conditions that could affect restaurant operators, prudent food delivery platform operators should consult legal counsel to ensure that they are compliant.
Non-compliance with the guidelines could incur a hefty fine—up to 10% of the operator’s annual revenue—plus a cease-and-desist order imposed by the TCC.
For further information, please contact:
Kobkit Thienpreecha, Partner, Tilleke & Gibbins
kobkit.t@tilleke.com
