Competition Policy/Law

Thai government has policies that provide free and fair competition, consumer protection, and antimonopoly practice, including deregulate unnecessary rules and laws. Private businesses are allowed to conduct activities with free and fair competition in Thai region.

As past few years, business competition was under the regulation of the Price Fixing and Anti-Monopoly Act of 1979, hereinafter "the PFA", that was aimed at benefit of consumer protection and stimulate the competition climate.

Since rapidly economic expansion under the free market in last decade, many big firms have build up market power and it was hard for SME and new entrepreneurs to compete in the market. The PFA was not suitable the current economic system, therefore the PFA has been replaced by the Act since April 1999. The Act is primarily aimed at stimulate the competition in the markets which promote economic efficiency and maximize economic welfare. Eventually, consumers benefit through more efficient pricing and increased choice in the products and services offered.

Summary of the Act

The scope of the Act and exemption

The Act applies to all business operators and business activities in Thailand with the exception of government agencies, state enterprises, cooperative or group related to agriculture or farmer, and certain business operators prescribed by the Ministerial Regulation.

The main provision of the Act

The principle of the Act is emphasized on business control. The antimonopoly behaviors are defined as following manners.
Section 25, a business operator having market domination shall not conduct in any of the following manners;

1. unreasonably fixing or maintain purchasing or selling prices of goods or services;
2. unreasonably fixing compulsory conditions, directly or indirectly, requiring other business operators who are its customers to restrict services, production, purchase or distribution of
   goods, or restrict opportunities in purchasing or selling goods, receiving or providing services or obtaining credits from other business operators;
3. suspending, reducing or restricting services, production, purchase, distribution, deliveries or importation without justifiable reasons, destroying or causing damage to goods in order to reduce the quantity to be lower than the market demand;
4. intervening in the operation of other business operator without justifiable reason.

According to the definition of market domination, the criteria to determine market domination is based on market share and yearly sale volume in the market of any certain good or service. However, the criteria to determine market domination is under the process of the TCC's consideration prior to propose to Cabinet's approval and published in the Government Gazette.

Section 26, a business operator shall not carry out business merger which may result in monopoly or unfair competition as prescribed and published in the Government Gazette by the TCC unless the TCC's permission is obtained.

The publication by the TCC concerning business merger shall specify the minimum amount of market share, sale volume, capital, shares or assets in respect of which the merger of business is governed thereby.

The merger of business concerning section 26 shall include:

1. a merger made by a producer with another producer, by a distributor with another distributor, by a producer with a distributor, or by a service provider with another service provider, which has the effect of maintaining the status of one business and terminating the status of the other business or creating a new business;
2. a purchase of the whole or part of assets of another business with a view to controlling business administration policies, administration and management;
3. a purchase of the whole or part of shares of another business with a view to controlling business administration policies, administration and management.

If business operators meet or exceed the thresholds of merge, they may apply to the TCC to obtain permission to merge. However, the thresholds of merge are under the process of the TCC's consideration before published in the Government Gazette.
Section 27, any business operator shall not enter into an agreement with another business operator to do any act amounting to monopoly, reduction or restriction of competition in the market of any particular goods or services as the following manners:

1. fixing the sales price of goods or services as single price or as agreed or restrict the sale volume of goods or services;
2. fixing the purchase price of goods or services as single price or as agreed or as restrict the sale volume of goods or services;
3. Entering into an agreement to have market domination or control;
4. fixing an agreements or condition in a collusive manner in order to enable one party to win a bid or tender for the goods or services or in order to prevent one party from participating in a bid or tender for the goods or services ;
5. fixing geographical area in which each business operator may distribute or restrict the distribution of goods or services therein or fixing customers to whom each business operator may sell goods or provide services to the exclusion of other business operators from competition in the distribution of such goods or services;
6. fixing geographical area in which each business operator may purchase goods or services or fixing persons from whom business operators may purchase goods or services;
7. fixing the quantity of goods or services which or to which each business operator may manufacture, purchase, distribute, or provide services with a view to restricting the quantity to be that lower than market demand;
8. reducing the quality of goods or services to a level below previous of production, distribution or provision, whether the distribution is made at the same or at higher price ;
9. appointing or entrusting any person as a sole distribution or provider of the same category of goods or services;
10. fixing conditions or procedures in connection with the purchase or distribution of goods or services in order to ensure the uniform or agreed practice.

In the case where it is commercial necessary that the acts under 27(5) through 27(10) be undertaken within a particular period of time, the business operator shall submit to the TCC under section 35 an application for permission.

Section 28, a business operator who has business relation with business operators outside Thai region, whether it is on contractual basis or through policies, partnership, shareholding or any other similar form, shall not carry out any act in order that a person residing in Thai region and intending to purchase goods or services for personal consumption will have restricted opportunities to purchase goods or services directly from business operators outside Thai region.
Section 29, a business operator shall not carry out any act which is not free and fair competition and has the effect of destroying, impairing, obstructing, impeding, or restricting business operation of other business operators or preventing other persons from carrying out business or causing their cessation of business.

Penalties

The violation of section 25, 26, 27, 28, and 29 shall be punishable by imprisonment of up to 3 years and/or fine of up to 6 million Baht. In case of the repeated violation of the Act, the violator shall be liable to the double penalty.