New Trade Competition Act now effective in Thailand
Thailand’s new Trade Competition Act B.E. 2560 (2017) (the “Act”) came into effect on 5th October 2017 and affects business operators of all types and sizes.
Antitrust legislation in Thailand under the old Act had been criticized for being ‘a tiger without teeth’; during the entire 18-year period of the law being in effect, not a single case had been prosecuted. The new Act is intended to be more effective, especially in terms of enforceability.
Under the new Act, the following changes have been introduced:
(1) Where previously the Office of the Thai Competition Commission (the “OTCC”) operated under the Thai Ministry of Commerce, the OTCC is now independent with its own budget, buildings, direction, and workforce. Measures are now in place to vet OTCC personnel to ensure that no one has political or business ties. Ex-law enforcement officers such as police, public prosecutors, and investigators are also being recruited. It is hoped that this new structure will significantly enhance the OTCC’s independence and enforcement capabilities and make bias and undue influence much more difficult to apply.
(2) The old Act contained numerous exceptions for state-owned companies, leaving room for unfair trade practices and abusive competition activities. Under the new Act, there are only narrow exceptions for state-owned enterprise activities that are backed by the law or a Cabinet resolution, which must be strictly for the benefit of, inter alia, the public interest and national security.
(3) M&A regulations have also been amended. Under the old Act, provisions regarding the control and restriction of mergers were largely unenforceable due to a lack of detail in the regulations and the absence of specific criteria. Now, a merger is clearly defined and may require both pre-merger approval (in the case of a merger that may cause a monopoly or result in a dominant market position) and a post-merger notification regarding the outcome of the merger within seven (7) days of the date of the merger (in the case of a merger that may substantially reduce market competition).
(4) The new Act contains precise definitions, such as “Business Operator with a Dominant Position of Market Power”, and distinguishes between “hardcore cartels” (i.e. agreements between competitors within the same market) and “non-hardcore cartels” (i.e. arrangements of competitors in different markets), thus enhancing legal certainty in the antitrust legislation. Also, Thailand’s Trade Competition Board is obliged to announce subordinate regulations within one (1) year of the law coming into effect. Until such time, the subordinate regulations announced under the old Act—such as the criteria used to define dominant market positions—shall remain in force, as far as they do not contradict the new legislation.
(5) Criminal and administrative penalties have increased under the new Act, such that offenders may now be fined twenty (20) times the annual revenue of the company, up from the previous maximum of THB 6 Million, per offense. The new Act empowers the OTCC to impose administrative fines independently and to urge the public prosecutor to take action against competitors when criminal sanctions are being sought. If the public prosecutor refuses to take action, then the OTCC is entitled to request the Attorney General to consider the case and, where appropriate, submit an order for further prosecution. If the Attorney General opines that there is insufficient evidence, then the Attorney General shall notify the OTCC and set up a joint working group in order to gain additional evidence to enable further prosecution. Such measures make it more difficult for offenders to escape punishment, and are likely to have a deterrent effect on competitors.
(6) Class actions can now be filed by consumer groups under Thailand’s new consumer litigation procedures, with punitive damages of up to 500% of actual damages – a new concept in Thailand, but one well-established in the US.
In summary, where the old Act was widely considered as a ‘paper tiger’, the new Act provides a legal framework for the OTCC to become more actively involved and more effective in combating anti-competitive practices in Thailand. Also, there is now greater alignment between Thai legislation and competition laws in the EU, Japan, Singapore, South Korea and the US, making the country a more level playing field especially for start-ups and SMEs.
For more information, please contact Mr. Andreas C. Richter at: [email protected].