Drink firm faces suit after probe

July 25, 2016

- The Trade Competition Board is set to file a lawsuit against a leading energy drink company after an investigation found it had used unfair trade practices by prohibiting retail outlets from selling competitors’ products.

According to Santichai Santawanpas, a member of the Trade Competition Board, the board’s meeting, chaired by Commerce Minister Apiradi Tantraporn, recently endorsed a proposal to consult the Attorney-General’s Office on legal action against one energy drink maker that has the highest market share and market dominance, as stated by the Trade Competition Act 1999.

Mr. Santichai did not mention the name of that producer, but it was widely understood to be Osotspa Co., the country’s oldest consumer goods conglomerate and maker of M-100 and M-150.

M-100 and M-150 command the highest market share (57.7%), followed by Carabao Daeng (21.1%) and Krating Daeng (16.3%).

According to market research company AC Nielsen, Thailand’s energy drink industry was worth 21.4 billion baht as of May 30.

For the first five months of the year, the market is estimated to have shrunk by 2-3% to 21.40 billion baht, mainly due to the country’s economic slowdown, the widespread drought and lacklustre consumer spending.

Osotspa offered no comment when questioned by a Bangkok Post reporter on the matter.

According to Mr. Santichai, after the probe, done at the request of one unnamed competitor, the market leader was found to have clearly exercised unfair practices by prohibiting retail outlets from selling competitors’ drinks, lest they be cut off from Osotspa products.

Such practices, which unduly restrict consumer choice, are a breach of Sections 25 and 29 of the Trade Competition Act of 1999.

Violators can face three years in prison, a 6-million-baht fine or both.

But Mr. Santichai said it would now be left to the prosecutor’s discretion as to whether to move ahead with the case.

The current Trade Competition Act defines market domination as a market share in the previous year of at least 50% and annual sales of at least 1 billion baht.

Since the act came into force in 1999, 85 cases have been filed with the Office of the Thai Trade Competition Commission for vetting, but no case has proceeded to reach a ruling in those 17 years.

One case was submitted to prosecutors but was dropped because the Attorney-General’s Office found insufficient evidence to take it up against the alleged offender.

In a related development, according to Wiboonlasana Ruamraksa, director-general of the Internal Trade Department, the Commerce Ministry is scheduled to submit draft amendments to the Trade Competition Act for cabinet approval tomorrow.

Once approved, the draft would later be submitted to the National Legislative Council for final endorsement and announced in the Royal Gazette as law.

The whole process will take more than three months and will be announced as law by the end of this year, she said.

Ms. Wiboonlasana said the government believes the draft amendments will prevent unfair trade practices, ensure fair competition and attract more.

The salient points are improving the words “entrepreneur or business operator” to cover a company or partnership under the same group.

It also empowers the board to announce the term “market domination” to take into account factors such as market structure, which includes the number of players, positioning, concentration and obstacles to access, access to manufacturing bases and distribution channels, natural resources and infrastructure, investment, and networking.

(By Phusadee Arunmas & Pitsinee Jitpleecheep)

Leave a Reply