The Political Economy of Competition Law: The Case of Thailand

In sum, competition law in Thailand played almost no role in enhancing the competitive environment in the domestic market during the past six years. Its implementation has been opaque, selective and arbitrary. Authorities do not investigate complaints properly and they make decisions without supporting evidence or reasoning. The 1999 Trade Competition Act has had a negligible impact on the trade practices of local enterprises and on the overall competition in the domestic market.

III. WHAT WENT WRONG?
The Thai case illustrates that many things can go wrong with the implementation of a competition law. The three contributing factors of this apparent failure are: (1) the existence of strong political intervention; (2) the lack of "due process" in the administration of the law; and (3) the absence of interest in and support for the competition law from non-government stakeholders, such as non-government organizations ("NGOs"), academics, and the media.

By design, the TCC is vulnerable to political intervention. The Minister of Commerce is the chairperson of the Commission and the Minister nominates while the Cabinet approves other commissioners. The Office of Trade Competition Commission relies entirely on the annual budget allocated by the government. Moreover, the closely interconnected relationship between politics and business exacerbates this lack of independence from the executive power, which leads to impartiality. Unfortunately, big businesses have always been the major source of campaign financing for all political parties in Thailand.³⁰ Recently, big businesses have entered directly into politics,³¹ entrenching their grip on the country's policy.

According to Nipon Poapongsakorn,³² political interventions and corporate lobbying-both explicitly and behind the scenes-occurred throughout the existence of the Trade Competition Act, in particular during the investigation periods. Perhaps the most blatant and damaging lobbying by big businesses was the delay in promulgating the dominance threshold that will make the provision on abuse of dominance enforceable.³³ In June of 2000, the TCC proposed a threshold dominance of 33.33% market share and I billion baht sales revenue in the relevant market. With the prevalent abuse of dominance cases being investigated at the time, it was hoped that passing the threshold would ensure that the relevant provision would be enforced. But opposition by the Federation of Thai Industries ("FTI") did much to prevent the cabinet from approving the proposed definition of market dominance.³⁴ The new government that came into office in early 2001 decided to return the proposed dominance threshold to the Trade Competition Office for review. A 50% market share threshold was the counter-proposal by the business sector. The higher market share threshold would severely circumscribe the scope of application of the law as only a handful of companies would be classified as dominant. At this time, the dominance threshold has not made it through the Cabinet, rendering the provisions on abuse of dominance and mergers still ineffective.

Another study, by Suriyasai Takasila and Rajitkanok Chitmunchaitham,³⁵ attributes the lack of enforcement and the selective enforcement of the competition law to conflict-of-interest problems inherent among competition commissioners. The authors found that one of the commissioners considering the tied-sale case of whisky and beer in the year 2000 was a director of a company affiliated with the powerful whisky conglomerate. The conglomerate is known to be one of the largest contributors to all political parties, charities, and sports events and it is staffed with high-ranking retired bureaucrats that have strong links with the relevant regulatory authorities. Another commissioner was found to be a director of a company affiliated with the cable television monopoly accused of bundling cable services and charging excessive monthly fees. There is no evidence that these commissioners recused themselves from meetings that discussed the cases in which they had a direct or indirect financial interest.

This brings us to the next factor that has a significant bearing on the ultimate success or failure of competition law: administrative due process. A transparent and objective enforcement procedure can, to a great extent, protect itself from undesirable political interventions and lobbying. Due process in Thailand's administrative branch is prescribed by the Administrative Law, the Public Information Law, and various provisions found in the competition law itself. For example, the Administrative Law:

Prohibits officials with financial and non-financial (i.e., family and other relatives) interests from being involved in the administrative procedure.
Requires that both parties involved in the proceeding be given the chance to present evidence and offer counter-evidence to the administrative officials.
Requires that all government committees' decisions that have a bearing on the private sector be recorded with details describing the minority views and opinions, as well as the signatures of every commissioner. The decisions must also be made publicly available according to the Public Information Act 1997.
Requires that all government agencies set a specific time frame for responding to inquiries or complaints.³⁶

Most of these provisions were imported into the Trade Competition Act. Those that have been left out should apply nevertheless since the Administrative Law stipulates clearly that the standard of administrative procedures specified in other sui generis laws must, at a minimum, contain all the provisions specified in the Administrative Law. Unfortunately, the Office of Trade Competition Commission has failed to comply with most of the provisions stated above.³⁷ For example, as mentioned earlier, certain commissioners were deliberating in cases in which they had a conflict-ofinterest. Commission decisions never specify the views of any of the commissioners, let alone the minority views. Complainants are not informed about how the Trade Competition Office handles the cases and how long each steps will take.