The Trade Competition Commission (the "Commission") recently published a draft notification prescribing the guidelines regarding trade practices that could be considered unfair in the food delivery business mainly concerning the relationship between food delivery platforms and restaurants (the "Notification"). This draft notification is issued pursuant to Section 57 (Unfair Trade Practices) of the Trade Competition Act, B.E. 2560 (2017).
As online platforms have become part of our daily lives ranging from buying goods and ordering food online and having them delivered to our doorsteps, reserving hotels and cars online, to making e-payments for various types of transactions, the relevant regulators including the Commission have been active in governing these behaviors.
According to research, the estimated market value of food delivery businesses in Thailand is approximately THB 35 billion. A survey conducted on online behaviors by the Electronic Transactions Development Agency (ETDA) showed that 85% of the 376 respondents used online food delivery services. The food delivery business also involves many other players including restaurants, logistics services, bikers and also big data companies which analyze data for other marketing purposes. The major online food delivery operators maintain a list between 20,000 to 50,000 restaurants on their platforms. The rapid growth of this business coupled with the fact that there have been several consumer complaints against online food delivery businesses during the COVID-19 lockdown, the Commission has drafted this Notification to regulate and prevent unfair trade practice in this business.
Once effective, the Notification will be referred to as a guideline in analyzing and determining whether certain business practices between online food delivery service providers and restaurant business operators are considered an unfair trade practice by the Commission.
The Notification provides the definition of an "Online Food Delivery Service Provider" as a business operator providing the service of receiving food from a Restaurant Business Operator and delivering the food to a consumer whereby the food orders are received from consumers via electronic channels; and a "Restaurant Business Operator" is defined as a business operator selling, or producing for sale, food by using the delivery service of an Online Food Delivery Service Provider.
Mainly, the Notification prescribes the following practices of Online Food Delivery Service Providers as what may be considered detrimental to Restaurant Business Operators.
• Unfair economic benefits such as imposing unreasonable or discriminatory commission fees and collecting other unreasonable advertising fees or sales promotion fees.
• Unfair restrictions or obstructions such as requiring exclusive dealings and punishing those who fail to comply with such restrictions.
• Unfair use of market / superior bargaining power such as interfering with restaurants’ freedom to set prices, enforcing rate parity clauses, delaying payments, exercising refusal to deal, delisting, and unreasonably amending terms and conditions.
• Other unfair practices a catch-all provision.
An online public hearing on the draft notification has been initiated on 17 August 2020 and will be closed on 15 September 2020. Once the public hearing is closed, the Commission will consider the public opinions and suggestions and publish a report summarizing those together with its comments. We will closely monitor the status and keep you updated on the developments.