Consumer sovereignty in the framework of social justice, economic equality and environmental balance, within and across borders

Thailand NLA Approves New Trade Competition Act

April 4, 2017

– On 24 March 2017, the draft Trade Competition Act, B.E. 2559 (2017) (the Act) was approved by the National Legislative Assembly (NLA), following consideration and recommendations by the Ad-Hoc Committee considering the Act. It is expected that the Act will become effective in August or September 2017 (90 days from the date of publication in the Government Gazette).

Key Dates Under the Act

  • The first Trade Competition Board must be appointed within 270 days from the date the new law comes into effect. The current Trade Competition Board will remain in position until the new board is appointed.
  • The Trade Competition Board must announce subordinate regulations under the new Trade Competition Act within 365 days after the law comes into effect. The subordinate announcements or regulations under the current law – the Trade Competition Act, B.E. 2542 (1999) (the 1999 Trade Competition Act) – will remain in force (to the extent that they do not contradict the new law) until the new regulations are announced.

Key Amendments Under the Act

  1. Independent status of the Office of the Trade Competition Commission, and a new structure and composition of the Trade Competition Board, to enhance independence and minimize political and business interference.
  2. Wider scope of power for the Trade Competition Board, including the power to consider and issue rulings, provide comments to the Cabinet and government authorities on public policies concerning trade competition, prescribe administrative penalties, and settle cases.
  3. Narrower exemptions for state-owned enterprises, only for activities backed by law or Cabinet resolution, for the purpose of national security and public benefit.
  4. Certain sectors (e.g. telecommunications and energy) that are regulated by specific legislation on trade competition will be exempted from the application of the Act.
  5. New concepts such as companies in the same group of control, and a settlement scheme comparable to the leniency scheme.
  6. Amendments to the merger control scheme to ensure that: (i) a merger that may result in a substantial reduction of competition must be reported within seven days from the date of the merger; and (ii) a merger that may result in a monopoly, or a dominant business operator, must obtain prior approval.
  7. Certain forms of joint conduct among competitors (e.g. price fixing, bid-rigging, or territorial allocation) will be caught under a specific provision (hardcore cartel). Business operators having a relationship in terms of control or policy could be exempted (with a guideline to be announced).
  8. The Act provides a set of exemptions for joint arrangements that are not “hardcore cartel”, including business operators that have a relationship in terms of control or policy, or for the purposes of efficiency or promoting techniques or economy, and those between franchisor and franchisee.
  9. A specific provision that prohibits contracts with offshore business operators that causes a monopoly or unfair trade restriction in Thailand, and substantially affects the economy and the benefits of consumers as a whole.
  10. Higher penalties, in the form of criminal penalty (imprisonment and fine) and administrative penalty (fine). Fines will be calculated based on the turnover of the business operator, at the rate of 10 percent of the turnover in the year of violation.

(By Jürgen Beninca and Michael Masling)