The Trade Competition Act in Thailand: How to Navigate Modern Market Rules and Avoid Sanctions

How Trade Competition Act in Thailand reform the Outdated Framework?

Limitations of the 1999 Law 

The need to revise the Trade Competition Act stemmed from structural weaknesses in the 1999 law. It lacked enforceability and independence as the regulatory body operated under the Ministry of Commerce. This compromised transparency and believability. Additionally, the old law failed to fully represent the escalating intricacy of globalized markets, digital platforms, and the emergence of dominant multinational entities.

Objectives of the new Trade Competition Act in Thailand 

The new Trade Competition Act in Thailand aims to address these difficulties by forming an autonomous professional Trade Competition Commission with complete investigatory, adjudicative, and regulatory authority. The primary goal of reforming the act is to promote fair competition, reduce abuse of market dominance, and prevent monopolistic practices that could harm customers or small market players. The law’s extraterritorial reach also governs overseas corporations whose conduct impacts competition within Thailand’s market.

Scope of Application of the Trade Competition Act in Thailand 

The Trade Competition Act in Thailand applies comprehensively to all business operators engaged in commercial activities within the Kingdom. This includes both Thai and foreign corporations as long as their conduct affects market dynamics in Thailand. The legislation defines a business operator as anyone or any entity involved in manufacturing, distribution, or importation of goods and services for commercial purposes.

Certain exemptions apply. The Trade Competition Act in Thailand does not control the conduct of government agencies operating under legal mandates if such activities are crucial to public interests, national security, or supplying public utilities. Similarly, state enterprises and cooperatives acting within the confines of sector-specific regulations are exempt. Industries otherwise regulated by specific competition-related laws, like telecommunications or energy, fall outside the scope of the general Trade Competition Act in Thailand.

Unfair Trade Practices and Prohibited Conduct under the Trade Competition Act in Thailand 

Abuse of a dominant position 

The strict prohibitions outlined in Section 50 of the Trade Competition Act in Thailand aim to promote fair play in the marketplace. When a company wields significant market power due to high market share and revenues, it is deemed to occupy a dominant position triggering heightened scrutiny of its commercial dealings. In such situations, the law considers whether entities are intertwined through ownership or coordinated decision making.

Once a firm establishes dominance, certain aggressive practices become off limits. Unfair pricing such as predatory lowballing or excessive highballing intended to freeze out rivals or take advantage of consumers crosses the line. Additionally, dominant companies should not attach strings like exclusivity requirements or package deals that curb trading partners’ freedom of choice. Similarly banned is the artificial thinning of supply chains through intentionally holding back output or discarding inventory to manufacture scarcity. The law also frowns upon unjustified meddling in how other businesses operate. These constraints serve to stop dominant businesses from leveraging structural advantages in anticompetitive ways that distort competition or block market access.

Anti-Competitive Mergers and Acquisitions 

Sections 51 through 53 of the Trade Competition Act in Thailand lay out a regulatory process for mergers and acquisitions that risks substantially reducing competition. A key distinction is drawn between combinations that merely warrant post-event notification versus those requiring pre-approval due to likely effects on industry structure.

Companies must notify the Commission within seven days of finalizing a merger meeting the financial and market share qualifications spelled out in subordinate rules. In cases where a merger may birth a monopoly or strengthen an already dominant position, advance permission from the Commission is mandatory before any integration or deal closing can occur.

The Commission meticulously examines all proposed mergers based on their potential economic consequences, consumer welfare implications, and probability of severe damage to competition. The assessment takes into account barriers to entry, the combined market share of the merged entity, buyer leverage, and accessibility of substitutes. Where fitting, the Commission may sanction a merger with prerequisites—such as divesting assets or undertaking behavioral modifications—or may outright reject approval.

Violations of these obligations result in administrative penalties, which can include fines up to 0.5% of the transaction value, and the Commission maintains the power to revoke earlier granted approvals if post-merger conduct deviates from agreed terms.

Collusion and Cartel Behavior 

Sections 54 and 55 of the Trade Competition Act in Thailand prohibit collusion among competitors that leads to reduced competition. Horizontal agreements—those between firms at the same level of the supply chain—are presumed illegal when they involve price-fixing, output restrictions, market division, or bid-rigging. These practices eliminate competitive rivalry and are per se violations under Thai law.

While not inherently illegal, vertical agreements are closely scrutinized when they serve to limit inter-brand competition. Section 55 extends the prohibition to collusive behaviors between non-competing entities where such arrangements could reduce market efficiency or obstruct trade.

Examples of cartel behavior include pacts to limit production quantities, fixing resale prices for distributors, or coordinating bids in public procurement processes. The law does not require proof of actual harm; the mere existence of such agreements may be enough to trigger liability.

However, the Trade Competition Act in Thailand provides certain exceptions. Agreements with efficiency justifications—such as those improving manufacture, technological innovation, or benefiting consumers—may be allowed if they meet strict standards and are not excessively restrictive.

Unfair Trade Practices 

This provision addresses residual conduct that lacks market dominance or collusion yet still constitutes unfair business dealings. It aims to preserve baseline commercial fairness.

Prohibited acts include exploiting bargaining power through one-sided contracts or coercing smaller partners. Unreasonable terms, credit conditions, or deliberate obstruction of supplies or distribution may fall under this. It ensures businesses don’t abuse advantages against competition.

Notifications further define “unfairness,” adapting the law to new practices and realities. Digital platforms and e-commerce encounter increasing scrutiny here for algorithm biases or unjust access barriers.

Extraterritorial Application 

A major update introduced extraterritorial jurisdiction. Thai operators cannot partner with foreign entities when agreements produce monopolization or unjust restrictions in Thailand.

Even if executed entirely outside Thailand, agreements still fall under the Trade Competition Act in Thailand if anti-competitive effects emerge locally. For example, price-fixing between manufacturers resulting in inflated consumer costs would apply despite originating elsewhere.

The provision strengthens Thailand’s capabilities in regulating international trade practices and participating in cross-border enforcement cooperation. It also aligns Thai competition law more closely with established global standards set by jurisdictions like the European Union and United States.

The inclusion of extraterritorial jurisdiction demonstrates Thailand’s determination to maintain fair competition regardless of where anti-competitive conduct originates geographically and to prevent regulatory arbitrage by multinational corporations.