Thailand Law Journal 2011 Fall Issue 2 Volume 14

In Thailand, the criteria of what constitutes a business operator with market domination is laid out in a Notification by the Trade Competition Commission.

The Cabinet approves the market shares and sales volume for a business operator with market domination under Section 3 of the Competition Act B.E. 2542 (1999) according to the following:

            1. A business operator, in any goods or services, with market share in the previous year of over 50% and at least 1,000 million baht turnover; or
            2. The top three business operators, in any goods or services, with combined market share in the previous year of over 75% and at least 1,000 million baht turnover
            The exception is for a business operator with a market share less than 10% or turnover less than 1,000 million baht in the previous year.
            The Notification has been effective since February 8,2007.¹⁶

3. Legally Banned Trade Practices

Being a player with significant power, or business operator(s) with market domination, itself is not illegal. A significant power player will only be considered violating the provision of the antitrust regulation when it conducts legally banned business practices as prescribed by the law.

There are certain legitimate reasons why antitrust regulations refuse to mandate monopolization without bad conducts (the "no-fault theory" of monopoly).¹⁷ One reason is that natural monopolization exists. Another explanation is that monopolization profit is actually an incentive for entrepreneur to enter the marketplace.

Natural monopoly exists because it is economically sensible.¹⁸ Natural monopolies arise where the largest supplier in an industry, often the first supplier in a market, has an overwhelming cost advantage over other actual and potential competitors. This tends to be the case in industries where capital costs predominate, creating economies of scale which are large in relation to the size of the market, and hence high barriers to entry; examples include public utilities such as water services and electricity. It is very expensive to build transmission networks (water/gas pipelines, electricity and telephone lines), therefore it is unlikely that a potential competitor would be willing to make the capital investment needed to even enter the monopolist's market. It may also depend on control of a particular natural resource.¹⁹

Other than the natural monopoly reason, the benefits of monopoly are a powerful incentive for an entrepreneur to enter the market in the first place so it is not rational to punish a player who has acquired the monopoly status without bad conducts or acting in bad faith.

Thai competition law designates the legally banned business practices in section 25 of the provision.²⁰

Section 25 A business operator having market domination shall not act in any of the following manners:

(1) Unreasonably fixing or maintaining purchasing or selling prices of goods or fees for services

Price fixing is an agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given level by controlling supply and demand. Price fixing may be intended to push the price of a product as high as possible, leading to profits for all sellers, but it may also have the goal to fix, peg, discount, or stabilize prices.²¹

From the provision, Thai law gives full discretion authority to the state in viewing which behavior of fixing or maintaining the price behavior are illegal. The Commission and the court will disapprove only in cases of "unreasonably" fixing or maintaining the price.

In 2000, consumers filed a complaint against the merger between United Broadcasting Corporation Public Company Limited (formerly IBC) and UBC Cable Network Public Company Limited (formerly UTV) to the Trade Competition Commission.²² Both companies were in the Thai national cable television business. After the merger, the UBC increased the membership monthly fee for their service package upsetting certain consumers since they did not agree with the companies' claim that the service was of the same standard prior to the merger. One part of the complaints concerned the regulation in section 25 (1) of the Competition Act which designated the rule about how an entrepreneur(s) with dominant position within the market cannot engage in unreasonably fixing the selling price of the service. The committee ultimately ruled that the UBC group behavior in setting the higher service fee was a legitimate act. The action was taken for the survival of the company and part of the strategy to tackle the problem of the floating Thai baht around the time the complaint was filed. There were also other possible justifications for the higher cost of production, improved quality of the commodity, and the rapid increase of demand of certain products.

In American law, colluding on price among competitors, also known as horizontal price fixing, is viewed as a per se violation of the Sherman Act regardless of the market impact or alleged efficiency of the action. In 2007, the U.S. Supreme Court ruled that vertical price fixing by a manufacturer and its retailers, also known as retail price maintenance, is not a per se violation.²³