Since Thai merger control regulations came into force in December 2018, the country’s competition authorities have begun to step up their enforcement against misconduct. And last year saw the efforts cranked up a notch.
The year 2020 was an eventful year for competition law in Thailand: four public hearings took place, three industry-specific regulations focused on unfair practices were delivered, and after the publishing of a merger control manual, two pre-closing merger approvals were handed out, resulting in one landmark case leading to remedies.
Weighing up the year just past, Pranat Laohapairoj and Jutharat Anuktanakul, partners at Chandler MHM say it was nothing short of “impactful.”
“2020 was a good year because the Office of Trade Competition Commission (OTCC) released many case precedents, many of which are useful for practitioners as they narrow down many formerly unclear fields into more manageable schemes,” Pranat and Jutharat say.
This will have an impact “on many operators,” the lawyers add, noting that some conduct previously considered questionable are now considered safer to undertake, “while others that were previously thought to be in the safe zone are now more questionable.”
Kobkit Thienpreecha, partner and director of Tilleke & Gibbins’ corporate and commercial group, notes that there are active developments in a range of different areas of competition law that will continue to have an impact throughout 2021.
These include the publication of new regulations and an increase in the number of merger control filings, Kobkit says. Meanwhile, the surge in enforcement against misconduct has “put many businesses on high alert.”
“The Office of Trade Competition Commission published 21 cases determined by the commission in 2019 and 2020, most of which relate to abuse of market dominance and unfair trade practices (although none have yet been ruled to be cartel arrangements). Although there were only a few cases in which penalties were imposed, the companies that received fines or cease-and-desist orders were household names, including a large energy drink manufacturer, modern trade businesses, and a car supplier. As a result, the regulations are very much in the public eye,” Kobkit adds.
For businesses, the latest developments are a lot to digest, and lawyers say it’s important to understand what regulations mean for individual operations, as well as the market as a whole.
“As the abuse of market dominance provision applies to businesses with annual revenue of THB 1 billion, and the merger control obligations only have to be considered in the event of a merger or acquisition transaction, many market operators feel the that the developments don’t really affect them,” Kobkit says.
But he feels it is important to under the picture in full.
“General business operators should be aware that the unfair trade practices provision has the potential to impact all market operators and govern several different types of conduct and arrangements with trade partners and competitors,” Kobkit adds.
GUIDELINES INTRODUCED
Additionally, the Trade Competition Commission (TCC) has launched four industry-specific guidelines, covering modern trade, franchise businesses, fruit trading, and—most recently— food delivery, and these are guidelines that operators will need to acquaint themselves with.
“Operators in those industries should actively conduct compliance checks by reviewing their agreements, terms and conditions, trade practices, promotion schemes and marketing campaigns, and other activities. Those in other industries should pay close attention to other industry-specific guidelines as they emerge, as more are very likely to follow,” Kobkit says.
Pranat and Jutharat of Chandler MHM agree that businesses need to stay up-to-date with the latest developments.
“Operators need to constantly monitor new supplementary regulations and case releases in order to ensure nothing that they currently do will skirt the current interpretation of the law,” the lawyers say.
Of course, lawyers are also playing an important role during this time, helping clients to navigate the challenges, and assisting with additional requirements.
“In addition to representing clients on filing merger control applications and notifications with the OTCC, and in other TCA hearings, lawyers have a responsibility to help educate the public, encourage compliance, and contribute to the development of the law at public consultations,” says Kobkit of Tilleke.
“With the Trade Competition Act still relatively new in Thailand, having come into effect in 2017, our expert anti-trust and competition lawyers have been helping to educate business operators and enhance their compliance by distributing articles, client alerts on new regulations and guidelines, public seminars, private workshops and training, etc., and by actively contributing to draft regulations and guidelines. With market insight and clientele in the retail and technology industries, our team was also retained by several leading market players to advise on the TCC’s recent guidelines on franchise operators and food delivery services,” Kobkit adds.
Pranat and Jutharat meanwhile call on lawyers to step up and be proactive.
“Due to these supplementary regulations and case releases, practitioners must morph from ones of passive onlookers to active assistants who provide constant warning and updates to their clients, regardless of the clients’ request for legal update,” they say.
“Besides usual enforcement against misconduct, the focus of the law and authority for 2020 seemed to be for clarification, and we expect this trend to continue, as there are still many areas and provisions that are less than clear on paper and the OTCC understands the needs to clarify these.”
—Pranat Laohapairoj and Jutharat Anuktanakul, Chandler MHM
While 2020 was a year of developments, the lawyers say that a large part of these guidelines were intended to provide greater clarity for the market.
“Besides usual enforcement against misconduct, the focus of the law and authority for 2020 seemed to be for clarification, and we expect this trend to continue, as there are still many areas and provisions that are less than clear on paper and the OTCC understands the needs to clarify these,” Pranat and Jutharat say.
FURTHER DEVELOPMENTS EXPECTED
On the regulatory side of things, further developments are expected ahead to provide more clarity and consistency.
“We expect additional supplements to be issued for specific industries that have been brought into question,” Pranat and Jutharat say, noting “the main regulation itself can be generically applied towards any industry”.
Kobkit agrees that further guidelines are likely to focus on specific industries.
“The TCC continues to put forward stimulus initiatives for SMEs and operators in the agricultural sector—two cornerstones of Thailand’s economy—both to provide COVID-19 relief and to protect from unfair trade practices of large firms with superior bargaining power. Pending draft guidelines on credit terms for SMEs aim to shield them from unfair credit-trading conditions and prolonged credit terms imposed by the large corporations,” he suggests.
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