28 June, 2018
The Trade Competition Commission (the Commission) recently published draft notifications, which are to become supplementary regulations to the Trade Competition Act, B.E. 2560 (2017) (the Act), pursuant to sections 17(2) and 17(3) of the Act which authorizes the Commission to issue subordinated legislation to implement the Act and impose guidelines on businesses to maintain free and fair competition. An online public hearing on the draft notifications has been held since 24 May 2018, and will be closed on 22 June 2018.
The draft notifications contain guidelines for the enforcement of the relevant provisions in the Act, i.e. by giving clearer definitions and explanations on certain terms, and stipulating thresholds for finding fault of the alleged perpetrator.
The draft notifications will supplement the following provisions of the Act.
Defining the "market" (section 5)
The draft notification spells out the relevant elements for establishing a "market", including demand suitability, supply suitability, and potential competition, and explains in detail the considerations for each of those elements. The draft also authorizes the Commission to set up a sub-committee to review the extent of the "market" if it sees fit.
Abusing dominant position in the market (section 50)
The draft notification prescribes the conducts which, if performed by an operator with a dominant position in the market, will constitute an abuse of that dominant position, such as predatory pricing, price discriminating, excessive pricing, margin squeezing, and engaging in discounts and rebate schemes, as well as explaining relevant elements that the Commission will look at in order to determine if a particular conduct is deemed a violation.
Assessing businesses which have either a "policy relationship" or a "commanding power" (i.e. determining Single Economic Unit) (sections 51, 54 and 56)
The draft notification defines the terms "policy relationship" and "commanding power", and stipulates that business operators found to have either of the foregoing shall be deemed to have the status of a single economic unit, between which there is no competition.
Cooperating with other business operators in order to monopolize, restrict or reduce competition (sections 54, 55 and 56)
The draft notification quantifies "reduction in competition" and "restriction on competition", which are used for assessing whether cooperation between business operators constitute a cartel. The draft notification also elaborates on the conducts which are considered to have serious adverse impacts on competition, such as limiting quantities, bid-rigging, and manipulating market allocation; and conducts which are considered to have negative impacts on competition, such as colluding to lower quality of products, assigning any one entity to the be sole distributor of a product.
Engaging in any other activities which restricts or reduces competition (section 57)
The draft notification sets out the threshold for assessing "superior bargaining power" and "superior market power", and specifies the types of activities which amount to unfairly using such bargaining or market power, such as price-fixing, supply restricting, and engaging in tacit collusions.
Entering into a contract with a business operator overseas without justification, and causing a monopoly or unfair restriction on trade (section 58)
The draft notification defines the terms "monopoly" and "restriction on trade", and sets out a guideline for reviewing whether a conduct is unfair or is without justification. The guideline includes measures that are both quantitative (e.g. substantial adverse effect on the macro-economy) and qualitative (e.g. inability to explain the reasons behind the business operators entering into such contract).
Once the public hearing is closed, the Commission will consider opinions and recommendations received and later publish a report summarizing such opinions, as well as its comments. This whole process is expected to be completed soon. Once the notifications take effect, the relevant provisions of the Act will have full force and applicability, following which we expect to see more robust enforcement of trade competition laws in Thailand.
For further information, please contact:
Pornapa Luengwattanakit Partner, Baker McKenzie
pornapa.luengwattanakit@bakermckenzie.com
