In brief: the key features of merger control legislation in Thailand

Legislation and jurisdiction

What is the relevant legislation and who enforces it?

Merger control in Thailand is generally governed by the Trade Competition Act BE 2560 (2017) (TCA) and the legislation and regulations issued under it.

The Trade Competition Commission (TCC) is in charge of issuing regulations on merger control, reviewing and making decisions on pre-merger filings and post-merger notifications, and imposing fines and sanctions (including the suspension, cessation or variation of mergers).

The TCC is in charge of the administrative functions of the TCC, such as monitoring business operators for violations of the TCA, receiving complaints in respect of alleged violations of the TCA and making recommendations to the TCC.

Disputes relating to an alleged offence under the TCA, civil claims for damages or appeals of administrative orders issued by the TCC are subject to the jurisdiction of the Intellectual Property and International Trade Court and the Administrative Court.

The application of the TCA also covers state-owned enterprises and public organisations, although exemptions exist for duties specified by law or cabinet resolutions for the enhancement of national security, public benefit or the provision of utilities.

The TCA does not apply to certain sectors and industries in which merger control is already regulated by specific legislation. Although the identity of those sectors and industries is subject to changes in the law (eg, the introduction of competition law-specific merger control regimes in a particular industry), the current position of the Office of the TCC is that those sectors and industries currently include those relating to telecommunications, broadcasting and television, and energy.

What kinds of mergers are caught?

Mergers that are subject to the jurisdiction of the TCA include:

• amalgamations;
• acquisitions of shares:
  • the acquisition of shares, warrants or other convertibles of 25 per cent or more of the total voting rights of a public company that is listed on the Stock Exchange of Thailand (SET) at the end of any day; or
  • the acquisition of more than 50 per cent of the total voting rights of a private company, an unlisted public company or a public company that is listed on a stock exchange other than the SET at the end of any day:
    • shares acquired by the spouse of a natural person are included in the number of shares being acquired; or
    • shares acquired by a natural person or a juristic person that holds more than 30 per cent of the voting rights of a juristic person and by a business operator belonging to the single economic unit (see below) are included in the number of shares being acquired; and
• the acquisition of more than 50 per cent of the total value of tangible assets or intangible assets (eg, leasehold rights or intellectual property rights) of another business operator relating or connected to the ordinary business operations of that other business operator in the preceding financial year.

Mergers for the purpose of internal restructuring or reorganisation between business operators in the same business group that are recognised as a single economic unit are exempt from merger control (ie, pre-merger filings and post-merger notifications).

A single economic unit refers to business operators that have a relationship in policy or directive power, where:

• ‘relationship in policy’ means a relationship between two or more business operators whose guidelines, policies or procedures on management, administration or business operations are under the directive power of the same business operator; and
• ‘directive power’ means the power to control by any of the following means:
  1. holding shares with voting rights in a business operator of more than 50 per cent of the total voting rights in the business operator;
  2. having the power to control the majority of votes in a shareholders’ meeting of a business operator, either directly or indirectly;
  3. having the power to control the appointment or removal of at least half of all directors of a business operator, either directly or indirectly; or
  4. having the directive power under points (1) or (2) at every hierarchical level, starting from the directive power under points (1) or (2) up to the business operator that is at the ultimate level of command.

What types of joint ventures are caught?

The formation of a joint venture company is not currently regulated by the merger control provisions of the TCA; however, the creation of a joint venture by acquiring an existing business may be deemed an indirect acquisition of shares or assets of the target company and may potentially caught by the TCA (assuming that the change of control thresholds are met).

Is there a definition of ‘control’ and are minority and other interests less than control caught?

The definition of control is tied to the following quantitative thresholds:

• acquisitions of shares:
  • the acquisition of shares, warrants or other convertibles of 25 per cent or more of the total voting rights of a public company that is listed on the SET at the end of any day; or
  • the acquisition of more than 50 per cent of the total voting rights of a private company, an unlisted public company or a public company that is listed on a stock exchange other than the SET at the end of any day:
    • shares acquired by the spouse of a natural person are included in the number of shares being acquired; or
    • shares acquired by a natural person or a juristic person that holds more than 30 per cent of the voting rights of a juristic person and by a business operator belonging to the single economic unit (see below) are included in the number of shares being acquired; and
• the acquisition of more than 50 per cent of the total value of tangible assets or intangible assets (eg, leasehold rights or intellectual property rights) of another business operator relating or connected to the ordinary business operations of that other business operator in the preceding financial year.

Acquisitions of minority interests, even with veto rights, do not meet these thresholds and are not regulated by the TCA.

What are the jurisdictional thresholds for notification and are there circumstances in which transactions falling below these thresholds may be investigated?

Pre-merger filing is required for any merger that results in the creation of either:

• a monopoly – a situation where there is only one business operator in any given market that:
  • possesses absolute power over the determination of the price and supply of its products or services; and
  • has a sales turnover of at least 1 billion baht; or
• a business operator that has dominant market power, namely:
  • any single business operator that has a market share in the previous year of 50 per cent or more and a sales turnover of at least 1 billion baht; or
  • any top-three business operators that together have a market share in the previous year of 75 per cent or more and a sales turnover of at least 1 billion baht each (excluding any business operator that has a market share in the previous year of less than 10 per cent).

Post-merger notification is required for any merger in which the sales turnover of any one business operator, or the aggregate turnover of all business operators conducting a merger, amounts to 1 billion baht or more and that does not cause a monopoly or result in a business operator having dominant market power.

There are no circumstances where pre-merger filing or post-merger notification, as applicable, is required if the relevant thresholds are not met.

Is the filing mandatory or voluntary? If mandatory, do any exceptions exist?

Pre-merger filing and post-merger notification are mandatory. The only exceptions to mandatory filing are:

• mergers for the purposes of internal restructuring and reorganisation between business operators that are part of a single economic unit; and
• mergers that do not fall within the scope of application of the TCA.

Do foreign-to-foreign mergers have to be notified and is there a local effects or nexus test?

The merger control provisions apply to all economic activity that has an effect within Thailand. Foreign-to-foreign mergers require notification, but there is no specific local effects or nexus test set out under the law.

Notwithstanding this, the TCC has recently issued a decision requiring that both transaction parties to a merger (ie, the target and the acquirer) must have single economic units in Thailand for a foreign-to-foreign transaction to be notifiable.

Are there also rules on foreign investment, special sectors or other relevant approvals?

The Foreign Business Act BE 2542 (1999) (FBA) is the principal legislation that regulates foreign investment in Thailand and specifies that foreigners may not engage in certain types of business without the relevant approval from the competent Thai authority. Foreign investors must comply with the provisions of the FBA, as well as those of the TCA.

Certain sectors (eg, telecommunications, broadcasting and television, and energy) have specific legislation that governs mergers. The TCA does not apply to mergers in certain sectors, provided that the specific legislation governing mergers in the relevant sector addresses competition concerns.