Thailand
KEY CONTACTS
Jutharat Anuktanakul
Jutharat Anuktanakul TEL+66-2-009-5000 Ext. 3324
jutharat.a@mhm-global.com
 
Pranat Laohapairoj
Pranat Laohapairoj TEL+66-2-009-5000 Ext. 3324
pranat.l@mhm-global.com
Chandler MHM Limited
36th Floor, Sathorn Square Office Tower
98 North Sathorn Road Silom, Bangrak, Bangkok 10500
Thailand
www.chandlermhm.com

Sections 50 and 57 of the Trade Competition Act B.E. 2561 (“Act”), along with the Act’s similarly- worded superseded predecessor (the Trade Competition Act B.E. 2542), impose a blanket prohibition against exclusivity. This is currently supplemented by a broad, yet somewhat unspecified, set of qualifications. As a result, there is uncertainty in the market as to what is exempted from this blanket prohibition.

On 29 May 2020, the Office of Trade Competition Commission (“OTCC”) for the first time published details of the famous M-150 case, i.e. its historical prosecution of the M-150 Company Limited for enforcing exclusivity against its buyers under the Act’s predecessor. This had long been a point of discussion for industrial operators, lawyers, and academics alike, as all had understood, to a large extent, that the case was about exclusivity imposed on some distributors.

However, no one was able to effectively pinpoint, or even guess, the boundaries of lawful exclusivity, or when exclusivity might be acceptable for and deemed exempted by the OTCC. This was for a number of reasons:

  1. lack of available facts, precedent cases and the confidential nature of the M-150 case itself; and
  2. there are numerous types of relationships between the brand owners and distributors in Thailand, each with a unique set of facts, relationship characteristics, commercial justifications, and circumstances.

The release of the M-150 case details has shed light on this and enables us to reasonably narrow down the field and therefore reduce confusion. Based on the facts recently released by the OTCC, we can summarize the issues as follows:

  • M-150 had exclusivity with the primary distributors supported by a written agreement, whereby the distributors could not deal with competing products of other manufacturers. This arrangement was not subject to prosecution as the condition was in writing.
  • The distributorship of a primary distributor was terminated following a written exclusivity provision having been breached after a warning was ignored. This also was not prosecuted.
  • Exclusivity was enforced against the sub-distributors who did not have any written agreement with M-150, which rendered M-150 liable under the law. This was because the exclusivity was not in writing and was deemed as unfair, among other factors.

Besides the primary issue of exclusivity, the publication of the M-150 case details also shed light on other minor provisions of the Act. It is possible that prosecutions may not be brought in particular circumstances as outlined below.

  • Mandating of resale price may be acceptable if the lack of a mandated price will result in a distortion of the price structure in the market.
  • Products with a price difference of only 20% may be deemed to belong to two different markets if the products are largely not interchangeable from the consumers’ perspective.

However, regardless of the above it is not possible to simply conclude that a particular case of exclusivity, termination due to a breach of an exclusivity provision, or mandating of a resale price is exempt under the Act. In the same way we cannot assume that a minor price difference will place certain products in a different market under the Act.

If you would like to discuss the issues raised in this article further or related issues, please contact the authors listed in the right-hand column.

https://www.chandlermhm.com


This article is intended to highlight an overview of key issues for ease of understanding, and not for the provision of legal advice. If you have any questions about this newsletter, please contact your regular contact persons at Mori Hamada & Matsumoto or Chandler MHM Limited. If you should have any inquiries about the newsletter, or would like more information about Chandler MHM Limited, please contact bd@mhm-global.com.

Related Articles by Firm
Foreign Banks Allowed to Operate in Myanmar
After more than 50 years of banning, the Central Bank of Myanmar has issued the first final licenses allowing four foreign banks to operate in Myanmar.
Tanzanian Draft National Energy Policy of 2015
Highlights on the ongoing and upcoming industry developments with focus on the transition of the energy sector since the introduction of the Big Results Now! campaign
Mineral Rights Available in Tanzania
Overview of the mineral rights available in Tanzania, with specific focus on the various categories of mineral rights
The Legal Framework of the Aviation Sector in Tanzania
As attention turns to Tanzania’s trade and energy opportunities, the spotlight has fallen upon the nation’s infrastructure. This update focuses on the capabilities and issues of the Tanzanian aviation sector.
Oil price volatility - Offshore oil storage
Are there any legal concerns with tankers being used for floating storage?
Oil price volatility - risks and opportunities in 2015
While many companies can weather the oil price slide and volatility, some industry players face a real risk of insolvency.
India: Union Budget 2015
A bullet-point overview of changes in Direct Tax, Indirect Tax and Goods and Service Tax in India in light of Finance Minister Arun Jaitley’s first full-year Budget…
Prohibition against transfer of personal data outside Hong Kong
Section 33 of the Personal Data (Privacy) Ordinance (PDPO) prohibits the transfer of personal data to places outside Hong Kong, except in circumstances specified in the PDPO.
Security of payment under FIDIC contracts: more secure, for now
The High Court of Singapore recently handed down an important judgment in relation to the enforceability of Dispute Adjudication Board (DAB) decisions under the FIDIC forms of contract.
Insurance Laws (Amendment) Bill passed as Ordinance in India
The long-awaited Insurance Laws (Amendment) Bill has become a provisional law in India. The Bill amends the Insurance Act (1938), the General Insurance Business (Naturalisation) Act (1972), and the Insurance Regulatory and Development Act (1999).
SICC: now open for business
On Monday 5 January 2015, the Singapore International Commercial Court ("SICC") was officially opened...
Myanmar insurance update
Clyde & Co partner Michael Horn recently visited Myanmar's commercial capital Yangon and reports on the current state of the insurance market...
Launch of the online mining cadastre transactional portal
Plus, a summary of the key mineral rights available in Tanzania; and, a look at the manner in which mineral rights can be transferred.
Restrictions imposed on holders of mineral rights
This briefing looks at some of the restrictions imposed on holders of mineral rights in Tanzania by the Mining Act 2010
Draft local content policy for the oil & gas industry in Tanzania
The first draft of the long-awaited local content policy for the oil & gas industry in Tanzania has now been published by the Ministry of Energy and Minerals ...
Tanzania: Revocation of mining licences
The Tanzanian government recently announced the cancellation of a total of 174 mining licences. This mining update examines the key continuing obligations imposed by the Mining Act upon mining licence holders.
Mining Development Agreements
In this month’s mining briefing we look at Mining Development Agreements (MDAs) and the role that they play in the mining sector in Tanzania.
The Tanzanian railway system: current legal framework
The railway system of mainland Tanzania has a total track length of 3,676 kilometers (km) with two separate networks, run by two separate organisations ...
Related Articles
Are you ready for the global tax reform?
A brief discussion on how MNCs should respond to the OECD’s new measures relating to Automatic Exchange of Information and Transfer Pricing issues
Vietnam: Remarkable changes in the new Law on Enterprises
On June 17, 2020, the National Assembly officially passed a new Law on Enterprises to replace the current Law on Enterprises ...
Copyright and remote learning in the time of Covid-19
On August 15, 2020, Philippines’ President Rodrigo Duterte approved the recommendation of Department of Education Secretary Leonor Briones to defer the opening of classes from August 24, 2020 to October 5, 2020 in view of the Covid-19 pandemic ...
Related Articles by Jurisdiction
Leveling the playing field
Partner Douglas Mancill of Deacons (Price Sanond Prabhas & Wynne Limited) explains why the Thai government’s poor track record in arbitrated disputes, and its recent efforts to even the score, may go against international trends and potentially ...
More Investment Promotion for SMEs in Special Economic Zones in Thailand
The Board of Investment Promotion has established additional incentives for SMEs investing in SEZs to encourage investments in the border areas of Thailand.
Latest Articles
Are you ready for the global tax reform?
A brief discussion on how MNCs should respond to the OECD’s new measures relating to Automatic Exchange of Information and Transfer Pricing issues
Sanctions and Investigations Q&A
Asian-mena Counsel sought wise counsel on the key issues in these risk-heavy areas from those with expertise at leading International law firm Baker McKenzie, and two thought-leading GC’s ...
Anti-corruption compliance in India
In recent years, there has been a paradigm shift in how corporate India addresses corruption, according to Manjula Chawla, Chandni Chawla and Ashna Gupta, of Phoenix Legal ...