On 5 October 2017, the new Trade Competition Act B.E. 2560 (2017) (the "New Act") came into effect. The New Act has repealed and replaced the Trade Competition Act B.E. 2542 (1999) (the "Previous Act") in its entirety. It aims to resolve delays and failures in enforcing the competition law in Thailand for the past 18 years.
What has changed?
The New Act covers the same general areas as the Previous Act, such as restrictions on the abuse of dominant positions, anti-competitive mergers, unfair trade practices, as well as restrictive agreements or practices among business operators. Key changes include the following:
- The introduction of an independent status for the Office of Trade Competition Commission (the "OTCC") and a new structure and composition for the Trade Competition Board. Under the New Act, the OTCC will be recognized as an independent agency, instead of a government agency or state enterprise. OTCC will comprise individuals without political and business ties, to minimize interference. It is believed that this change will enhance the enforcement of the trade competition law in Thailand significantly.
- The inclusion of state-owned enterprises into the ambit of the New Act. However, this excludes state-owned enterprise activities that are backed by the law or a Cabinet resolution, and were created to benefit national security and the public. Previously, state-owned enterprises are exempt from the restrictions under the Current Act.
- The amendments made to the merger control scheme, which now requires both a pre-merger approval and post-merger notification. Mergers that may result in a substantial reduction of competition must be reported within seven days from the date of the merger, while mergers that may result in a monopoly, or a dominant business operator, must obtain prior approval. Subordinated legislation will have to be issued to ensure the effectiveness of merger regulations.
- The Trade Competition Board is obliged to announce subordinate regulations — including merger control regulations — within 365 days after the law comes into effect. The subordinate announcements or regulations under the Previous Act, such as the criteria in defining dominant positions, will remain in force to the extent that they do not contradict the new law. This shall be the case until new regulations are announced.
- The introduction of new concepts, such as recognizing a group of companies as a single economic unit. Another concept is with regard to leniency program.
- The separation of provisions and liabilities for hardcore cartels and non-hardcore cartels.
- The introduction of high fines as administrative penalties.
In the next issue of our newsletters on this act, we will discuss the structure of the OTCC and the Trade Competition Commission in detail, as well as the potential impact of the new law. Watch this space for the second issue in the series: The New Tiger (with Teeth).