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Sakda Thanitcul, Aug 17, 2015
Thailand was the first ASEAN nation to enact a trade competition law on the initiative of the Ministry of Commerce in 1991, during Anant Panyarachoon’s government. This law was not forced on Thailand by the International Monetary Fund or any other country. The Trade Competition Act BE 2542 (1999) is a development from the Excessive Trade Profiteering Act BE 2490 (1947), which has been amended from time to time.
In the old days, price control was imposed at the end-user price point, i.e. the retail price. Subsequently, the wholesale price was also made subject to price control. However, once Thailand’s trading system developed, many market structures became oligopolies and monopolies. As a result, the retailer would distribute goods based on the prices determined by their originators, which caused the consumers to purchase goods at a high price at all times. This solution to the high price of the goods was thus unsuccessful. As a result, the Excessive Trade Profiteering Act BE 2490 (1947) was replaced by the Price Control and Monopoly Prevention Act BE 2522 (1979) to prevent business operators from monopolizing, e.g. by reducing the goods supplied in order to cause a shortage of goods and then hiking up the price of such goods thereafter.
In 1991, during Anant Panyarachoon’s Government, problems arose in relation to the trade competition law. For example, certain large-sized automobile manufacturers stopped the import of their own-brand vehicles. The question then was whether or not such an act was an exercise of monopolistic power. As a result, there were more debates on the issue of free trade.This prompted the Department of Internal Trade to issue an order to appoint a Working Committee on the Drafting of the Trade Competition Law in the year 1991. This Working Committee spent many years before it completed the drafting of such a Bill. The Trade Competition Bill was submitted for the Cabinet’s consideration many times before it was finally approved. Thereafter, this Bill was forwarded to the Parliament.
However, before this Bill passed the required readings, the Parliament was dissolved. In the year 1998, during Chavalit Yongjaiyuth’s government (Tom Yum Kung Economic Crisis), the Bill was again forwarded to the Parliament for its deliberation. However, Parliament again was dissolved before the Bill was passed.
The process restarted in 1998, during Chuan Leekpai’s government. Section 87 of the Constitution of the Kingdom of Thailand BE 2540 (1997), which was in effect at the time, required the State to support the free economic system by reliance on a fair market supervision mechanism. This caused Chuan Leekpai’s government to expedite the passing of the law through the Parliament. Moreover, in the year 1999, the Trade Competition Law was passed into law and the Price Control and Monopoly Prevention Act BE 2522 (1979) was repealed.
The Chairman of the Working Committee on the Drafting of the 1999 Trade Competition Law used the trade competition laws of South Korea and Germany as models in drafting Thailand’s Trade Competition Bill as they were (i) well-drafted and (ii) suited to Thailand economic conditions.Thailand constitutes a small sized market, with only a few firms in many markets. For example, such markets as the soap, detergent, vegetable oil, and instant noodle industries had only about 8-15 market players. Oligopolistic markets, which had around 2-6 market players, included the cement, beer, soda, mirrors, and glass industries. Therefore, it was felt appropriate to control business operators with market power or dominant market operators.
The 1999 Law was based on the principle that any person with monopolistic power or market dominance, who can control the price and supply of the goods in any particular goods market, does not necessarily violate the law. However, there is a violation of the law when such market power is exercised in an unlawful manner that causes damage.
The Trade Competition Bill was submitted to Parliament for its deliberation in 1998. During the process of consideration by the Senate Committee, many amendments to the provisions of the Ministry of Commerce’s proposed Bill were suggested, including the addition of Section 30 to empower the Trade Competition Commission to issue an order instructing a business operator having a market dominance, with market share of over 75 percent, to suspend, cease, or change that market share. As a result, the Trade Competition Act is a law that both controls market behavior and market structure.
