Thailand: Insight Into The New Trade Competition Act

Last Updated: 26 February 2018
Article by Pornapa Thaicharoen and Ampika Kumar

The Trade Competition Act aims to resolve delays and failures in enforcing the competition law in Thailand for the past 18 years.

AN OVERVIEW

On 5 October 2017, the new Trade Competition Act B.E. 2560 (2017) (the New Act) came into effect. The New Act has repealed and replaced the Trade Competition Act B.E. 2542 (1999) (the Previous Act) in its entirety. It aims to resolve delays and failures in enforcing the competition law in Thailand for the past 18 years.

What has changed?

The New Act covers the same general areas as the Previous Act, such as restrictions on the abuse of dominant positions, anti-competitive mergers, unfair trade practices, as well as restrictive agreements or practices among business operators. Key changes include the following:

  • The introduction of an independent status for the Office of Trade Competition Commission (the "OTCC") and a new structure and composition for the Trade Competition Board. Under the New Act, the OTCC will be recognized as an independent agency, instead of a government agency or state enterprise. OTCC will comprise individuals without political and business ties, to minimize interference. It is believed that this change will enhance the enforcement of the trade competition law in Thailand significantly.
  • The inclusion of state-owned enterprises into the ambit of the New Act. However, this excludes state-owned enterprise activities that are backed by the law or a Cabinet resolution, and were created to benefit national security and the public. Previously, state-owned enterprises are exempt from the restrictions under the Current Act.
  • The amendments made to the merger control scheme, which now requires both a pre-merger approval and post-merger notification. Mergers that may result in a substantial reduction of competition must be reported within seven days from the date of the merger, while mergers that may result in a monopoly, or a dominant business operator, must obtain prior approval. Subordinated legislation will have to be issued to ensure the effectiveness of merger regulations.
  • The Trade Competition Board is obliged to announce subordinate regulations — including merger control regulations — within 365 days after the law comes into effect. The subordinate announcements or regulations under the Previous Act, such as the criteria in defining dominant positions, will remain in force to the extent that they do not contradict the new law. This shall be the case until new regulations are announced.
  • The introduction of new concepts, such as recognizing a group of companies as a single economic unit. Another concept is with regard to leniency program.
  • The separation of provisions and liabilities for hardcore cartels and non-hardcore cartels.
  • The introduction of high fines as administrative penalties.

In the next issue of our newsletters on this act, we will discuss the structure of the OTCC and the Trade Competition Commission in detail, as well as the potential impact of the new law.

THE NEW TIGER (WITH TEETH)

The new Trade Competition Act, which came into effect on 5 October 2017 (the New Act), boasts greater enforceability of competition law in Thailand, especially with a major change in the Trade Competition Board (the Board). But the real question is: can greater enforceability be achieved?

In Volume 2 of the New Trade Competition Act, we will take you through the Board's structure and composition under the New Act.

Old Board vs New Board

What could be achieved with this new Board?

Independence

  • Being its own separate entity and having budgetary responsibility means that the Board will have more independence in conducting reviews and processing complaints from the public. The Board no longer has to rely on the Department of Internal Trade to function.

Absence of political and business influence

  • Perhaps the most apparent of all changes, the members of the new Board cannot be political, business, or governmental figures. The criteria for selecting the members of the old Board inherently led to the members having either personal, political or business ties with giant corporates, which normally would be entities that the very Act intended to regulate.

Efficiency

  • With only the ability to send a request to the public prosecutor for prosecution, it is not surprising that none of the alleged anti-competition cases, under the Old Act, ever made it before a court. The New Act promises greater authority of the New Board, particularly, that it may impose substantial administrative fines at its discretion. The Board may also request the Attorney-General, in addition to the public prosecutor, to file a criminal case.

Transparency

  • The New Act prescribes that the Board gives the public and stakeholders a forum to provide their opinions, with regard to any regulation it will issue.

Will the new structure lead to greater enforceability?

The structure, composition, and powers of the New Board seem promising and it is expected that greater efficiency and transparency can be achieved with this change. However, whether or not this new Act will indeed be a tiger with teeth, as it sets out to be, will also depend on several other matters including the subordinated legislations to be passed under this New Act.

In the next volume of this series, we will discuss whether market dominance is necessarily a bad thing. Stay tuned.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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