The Office of the Trade Competition Commission (OTCC) has recently opened a public hearing on the draft new unfair trade practice (section 57) guideline which will replace the current guideline once it becomes effective. The draft new guideline revises certain defined terms and provides more details on acts that may constitute an offense under section 57 of the Competition Act.
The key changes under the draft guideline are summarized below.
- “Market Power” means the ability to determine the price, quantity, or operating conditions of the market. Currently, market power is defined as the power and ability to determine the direction or conditions of the market.
- Increased costs and expenses, loss of business opportunity, and reputational damage are added to the examples of economic loss (which already include loss of opportunities and loss of market value).
- A de minimis threshold of 10% of the turnover is introduced into the determination of superior bargaining power.
- The following actions have been added to the list of acts that could be considered unfair trade practices if carried out without justification:
- fixing terms for storage and distribution of goods;
- requiring another firm to purchase or sell more or less products than it would otherwise purchase or sell;
- imposing trade conditions that are not included in the contract (e.g. price adjustment or imposing unrealistic quality assessment criteria);
- imposing sales or performance targets;
- refusing to deal with another firm.
In 2018, the OTCC issued the Notification of the Trade Competition Commission on Guideline for Considering Actions Causing Damage to Other Business Operators B.E. 2561 (2018), which applies to business operators in all industries, of all sizes, and levels in the value chain. So far, the majority of complaints to the OTCC have been on unfair trade practices, and we have seen the OTCC most active in enforcing the law in this area. Unfair trade practices will likely remain under the OTCC’s spotlight, especially during the economic recession due to the COVID-19 pandemic.
The unfair trade practice guideline is one of the many section 57 guidelines. To date, the OTCC has issued several sector- and conduct- specific guidelines under section 57, such as food delivery platforms, franchise businesses, middlemen in fruit supply chain, and credit terms for SMEs.