Q&A: merger notification and clearance in Thailand

Notification and clearance timetable

What are the deadlines for filing? Are there sanctions for not filing and are they applied in practice?

If a pre-merger filing is required, the business operator must receive approval from the Trade Competition Commission (TCC) before the completion of the merger. If the business operator fails to do so, the business operator will be subject to:

• an administrative sanction – a fine not exceeding 0.5 per cent of the total value of the merger transaction; and
• a civil claim – any person who suffers damage from a violation of pre-merger filing regulations by a business operator may claim for damages.

If a company is subject to an administrative fine, a director, manager or any person responsible for ensuring that the company complies with the merger control legislation is also subject to the same fine.

In addition, the TCC may order a business operator to suspend, cease or vary the merger if it has sufficient evidence to believe that the business operator is in violation of the pre-merger filing requirement.

The merging parties must notify the TCC within seven days of the completion of the merger. If a business operator fails to do so, the business operator will be subject to an administrative sanction, which is a fine not exceeding 200,000 baht, and a daily fine not exceeding 10,000 baht throughout the period of the violation.

If a company is subject to an administrative fine, a director, manager or any person responsible for ensuring that the company complies with merger control legislation is also subject to the same fine.

There is currently no precedent in which the TCC has held business operators to be in violation of the pre-merger filing obligations. There have been two cases in which the TCC has held that business operators had failed to comply with the post-merger notification requirements. The business operators, as well as their management, were fined.

Which parties are responsible for filing and are filing fees required?

While not set out explicitly in law, the following has been taken from informal consultation with the Office of the TCC:

• amalgamations: the merging entities are jointly responsible for any pre-merger filings, and the new entity resulting from the merger is responsible for any post-merger notifications;
• asset acquisitions: the acquirer of the assets is responsible (for both pre-merger filings and post-merger notifications); and
• share acquisitions: the acquirer of the shares is responsible (for both pre-merger filings and post-merger notifications).

There is a filing fee of 250,000 baht for pre-merger filings. There is no filing fee for post-merger notifications.

What are the waiting periods and does implementation of the transaction have to be suspended prior to clearance?

For pre-merger filings, the TCC must consider an application for clearance of the merger within 90 days of the submission of the complete application. If a decision cannot reasonably be made within 90 days, the TCC may extend the period by up to 15 days. A transaction cannot be closed until clearance has been obtained.

What are the possible sanctions involved in closing or integrating the activities of the merging businesses before clearance and are they applied in practice?

If a business operator is required to obtain permission from the TCC before conducting a merger but fails to do so, the business operator will be subject to:

• an administrative sanction – a fine not exceeding 0.5 per cent of the total value of the merger transaction; and
• a civil claim – any person who suffers damage from a violation of pre-merger filing regulations by a business operator may claim for damages.

If a company is subject to an administrative fine, a director, manager or any person responsible for ensuring that the company complies with the merger control legislation is subject to the same.

In addition, the TCC may order a business operator to suspend, cease or vary the merger if it has sufficient evidence to believe that the business operator is in violation of the pre-merger filing requirement.

There are no precedent cases.

Are sanctions applied in cases involving closing before clearance in foreign-to-foreign mergers?

Sanctions apply to foreign-to-foreign mergers that fall within the jurisdiction of the Trade Competition Act BE 2560 (2017) (TCA). There is no precedent for the imposition of sanctions in foreign-to-foreign transactions.

What solutions might be acceptable to permit closing before clearance in a foreign-to-foreign merger?

While the authorities have not provided an official statement in support of this, we think that it is possible to put in place either hold-separate or ring-fencing arrangements, or both, to allow merging parties to close a transaction outside Thailand, if this can be done without implementing the merger in Thailand. The Office of the TCC should be consulted in advance.

Are there any special merger control rules applicable to public takeover bids?

There are no special merger control rules that apply to public takeover bids. Where public takeovers fall within the definition of a ‘merger’ under the TCA, the parties have to comply with the merger control provisions; the parties can, however, provide that merger control clearance is a condition precedent to the public takeover bid.

What is the level of detail required in the preparation of a filing, and are there sanctions for supplying wrong or missing information?

The documents to be submitted are:

1. the application form;
2. the merger plan and the implementation timeline;
3. details of the merging parties and the target company, which must at a minimum include the shareholding structure, voting rights, sales turnover and market shares of the parties and the target company; and
4. studies and analyses in respect of the merger transaction.

Regarding point (4), the studies and analyses must comprise:

• studies and analyses relating to business-related necessity and benefit in the promotion of business, damage to the economy and consumer benefits as a whole;
• analysis of the shareholding structure and controlling power of the merging parties, for the purpose of ascertaining the relationship in policy or directive power before and after the merger; and
• analysis of the markets for the products or services relevant to the merging parties, for the purpose of ascertaining the effects arising from the merger, which must at a minimum include:
• • the market structure before and after the merger transaction;
  • the market scope;
  • the market share of each of the merging parties before and after the merger transaction;
  • the sales turnover of each of the merging parties before and after the merger transaction;
  • the effect on the economy or consumers as a whole and other effects on competition in the market (if any);
  • efficiencies in the market after the merger transaction; and
  • the effect of the merger transaction in respect of:
    • market concentration, market entry and expansion, taking into consideration-relevant factors, such as government laws and regulations, logistical costs, access to patent rights of existing technologies, and access to raw materials or other resources necessary for production;
    • non-coordinated effects (ie, effects as a result of each of the merged entities gaining profit by increasing prices or a reduction in the quality of the product as a result of a reduction in competition); and
    • coordinated effects (ie, effects as a result of business operators’ tendency to jointly increase prices after a merger transaction).

The documents to be submitted are:

• the notification form;
• a copy of the documents, which is submitted to:
  • the Ministry of Commerce, in the case of an amalgamation; or
  • the Securities and Exchange Commission, in the case of a share acquisition by tender offer;
• a copy of the definitive documents relating to the share or asset acquisition (eg, share purchase agreement and appraisal report);
• a copy of the minutes of the executive committee meeting or shareholders’ meeting at which the merger transaction is approved of each of the merging parties, or documents evidencing the parties’ intention to enter into the merger transaction;
• other particulars in respect of the merger transaction;
• annual meeting reports and audited financial statements for the previous three years of each of the merging parties;
• a copy of the list of shareholders of each of the merging parties before and after the merger transaction; and
• power of attorney (if any) authorising agents (eg, lawyers) to handle the filing.

On 1 February 2022, the TCC released a new post-merger notification form, which requires more detailed information to be included in the notification form. Parties are now required to include market definition analyses, the market share figures of the transaction parties (and their competitors in the relevant market), detailed revenue breakdowns of goods and services provided and more extensive information relating to entities within the same single economic unit as the acquirer and target.

All information and documents submitted to the TCC must be in hard copy in the Thai language or translated into the Thai language.

Business operators that intentionally provide false or misleading information to the TCC may be subject to criminal penalties under the Criminal Code for the submission of false information to government officials.

In addition, approval of a pre-merger filing can be revoked by the TCC if it becomes aware of such false or misleading information. Furthermore, any person whose rights or interests are adversely affected by the approval of the TCC may file a case with the Administrative Court for revocation of the approval.

What are the typical steps and different phases of the investigation?

For pre-merger filing, the process starts when the relevant business operators submit an application to the Office of the TCC. The Office of the TCC will verify the completeness of the application and forward the completed application to the TCC within seven days of the date of receipt of the application.

The TCC may require additional information from business operators conducting a merger by issuing a letter requesting information or inviting the applicant to offer clarification. The TCC may also serve notices of invitation on relevant business operators or third parties to offer opinions and information to assist the consideration of the transaction.

For post-merger notifications, there is no description of how the TCC and the Office of TCC investigate a post-merger notification; however, they have the authority to request additional information and clarification. They may also serve notices of invitation on relevant business operators or third parties to offer opinions and information to assist the consideration of the transaction.

Pre-consultation is not required before submission of an application for a pre-merger filing or post-merger notification; however, the Office of the TCC recommends that the parties carry out pre-consultation with officers for a pre-merger filing. There is no formal process for pre-consultation.

What is the statutory timetable for clearance? Can it be speeded up?

For pre-merger filings, the TCC must complete the consideration of a pre-merger filing within 90 days of submission. When a decision cannot reasonably be made within 90 days, the TCC may extend the period of consideration by up to 15 additional days.

There is no provision in the TCA that allows the pre-merger approval process to be expedited. In practice, the TCC generally takes a significant portion of the 90 days and tends to issue decisions relatively close to the end of this statutory period.

For post-merger notifications, there is no statutory timetable for the TCC to verify the notification. In practice, the TCC may take anywhere from three to eight months from receipt of the notification to provide an acknowledgement.