New trade com­pe­ti­tion law lacks teeth

Bangkok Post - - OPINION - SUPHAWATCHARA MALANOND Suphawatchara Malanond, Law Fac­ulty, Prince of Songkla Univer­sity.

The long-awaited Trade Com­pe­ti­tion Act (TCA) or an­titrust law came into force this month, with some mech­a­nisms many be­lieve will help close loop­holes that made the 1999 ver­sion weak and in­ef­fec­tive. The law, dubbed the “eco­nomic con­sti­tu­tion”, seeks to pro­hibit car­tel and col­lu­sive con­duct be­tween com­peti­tors that may re­sult in mar­ket mo­nop­o­li­sa­tion.

There are many changes in the re­vised act, which took ef­fect on Oct 5, but I would like to high­light two key points.

The 2017 act es­tab­lishes a seven-mem­ber Com­pe­ti­tion Com­mis­sion which, with more ex­ten­sive power, is tasked with up­hold­ing mar­ket com­pe­ti­tion. The new com­mis­sion un­der the act is dif­fer­ent from the in­cum­bent com­mis­sion­ers, who were mostly se­nior gov­ern­ment of­fi­cials from key min­istries be­ing named for the job by po­si­tion. Led by the min­is­ter of com­merce, the com­mis­sion had no ad­min­is­tra­tive tools, nor man­power. This ex­plains why there was not a sin­gle an­titrust case filed in court.

Un­der the 2017 TCA, the Of­fice of Trade Com­pe­ti­tion Com­mis­sion (OTCC) will be formed as an in­de­pen­dent body, with its own bud­get, and staff, to sup­port the work of the seven-mem­ber Com­pe­ti­tion Com­mis­sion, who are to work as full­time pro­fes­sion­als.

The com­mis­sion­ers, who will have a four-year re­new­able term, must not be mem­bers of busi­ness as­so­ci­a­tions, pri­vate em­ploy­ees or gov­ern­ment of­fi­cials and must pos­sess ex­pe­ri­ence in the field of con­sumer pro­tec­tion. They will be ap­pointed by a panel com­pris­ing per­ma­nent sec­re­taries from key min­istries, namely Fi­nance, Agri­cul­ture and Agri­cul­tural Co­op­er­a­tives, Com­merce, Jus­tice and In­dus­try along with the sec­re­tary-gen­eral of the Na­tional Eco­nomic and So­cial Devel­op­ment Board (NESDB), the sec­re­tary-gen­eral of the Con­sumer Pro­tec­tion Board, the chair­man of the Cham­ber of Com­merce and the pres­i­dent of the Fed­er­a­tion of Thai In­dus­tries.

The fact that the panel which names the com­mis­sion­ers are mostly bu­reau­crats and peo­ple from large in­dus­try, there is lit­tle chance of mem­bers of civic groups or pub­lic sec­tor hav­ing a chance to play a role in the com­mis­sion. If that is the case, there is a pos­si­bil­ity the com­mis­sion will be the con­nec­tion be­tween the state and large con­glom­er­ates. The re­quire­ment for the com­mis­sion­ers of the OTCC to pos­sess ex­pe­ri­ence in the area of con­sumer pro­tec­tion may be dif­fi­cult to meet.

Se­condly, we should look into the ex­emp­tion of state en­ter­prise as stated in the 2017 law. In Thai­land, there are 56 state en­ter­prises with to­tal as­sets of 11.9 tril­lion baht em­ploy­ing 42,000 peo­ple. The Thai state en­ter­prises con­trib­ute sub­stan­tially to the coun­try’s GDP, em­ploy­ment and mar­ket cap­i­tal­i­sa­tion. They have com­peted harshly with pri­vate firms in sev­eral in­dus­tries, al­beit not on an equal foot­ing given a blan­ket ex­emp­tion from an­titrust scru­tiny as stip­u­lated un­der the 1999 act re­gard­less of the fact that they may op­er­ate for prof­its/ com­mer­cial pur­poses.

How­ever, the 2017 TCA at­tempts to ad­dress the is­sue by pro­vid­ing a new regime, and re­de­fines the scope of the ex­emp­tion which some­how re­mains un­clear. Ac­tiv­i­ties that are in line with na­tional se­cu­rity and pub­lic in­ter­ests or pub­lic util­i­ties may still be ex­empted from an­titrust scru­tiny. More­over, the law pro­vides the reg­u­la­tory ex­emp­tion for “in­dus­tries with spe­cific laws reg­u­lat­ing com­pe­ti­tion”.

In my opin­ion, the above-men­tioned ex­emp­tions may un­der­mine com­pe­ti­tion and the level play­ing field for the pri­vate firms once they have to com­pete with state en­ter­prises. How do we de­fine pub­lic in­ter­est or pub­lic util­ity for such profit-ori­ented state en­ter­prises such as Krungthai Bank, the Elec­tric­ity Gen­er­at­ing Author­ity of Thai­land and PTT Plc?

More­over, it should be noted that the re­vised act does not in­tro­duce any spe­cific cri­te­ria for the as­sess­ment of the mar­ket power of com­pa­nies on plat­form mar­kets, for ex­am­ple: di­rect and in­di­rect net­work ef­fects; par­al­lel use of mul­ti­ple ser­vices and switch­ing costs for users; economies of scale in the con­text of net­work ef­fects; ac­cess to com­pet­i­tively sen­si­tive data; and in­no­va­tion-driven com­pet­i­tive pres­sure. Such fea­tures are im­por­tant to the dig­i­tal econ­omy and start-ups but the law seems not to pro­vide pre­cise rules on this mat­ter. I hope this will be demon­strated later on in the sub­or­di­nate reg­u­la­tions.

The 2017 TCA fails to put in place a le­niency pro­gramme which is com­mon in many coun­tries like the US, EU, Aus­tralia, Canada, Ja­pan, South Korea, Malaysia and Singapore. A le­niency pro­gramme is an ef­fi­cient tool for car­tel de­ter­rence in a way that it of­fers firms in­volved in a car­tel ei­ther to­tal im­mu­nity from fines or a re­duc­tion of fines if they self-re­port and hand over ev­i­dence to the com­pe­ti­tion au­thor­i­ties. The pro­gramme ben­e­fits the con­cerned au­thor­i­ties, al­low­ing them not only to pierce the cloak of se­crecy in which car­tels op­er­ate but also to ob­tain in­sider ev­i­dence of car­tel in­fringe­ment.

The le­niency pol­icy can de­ter car­tel for­ma­tion as well as desta­bilise the op­er­a­tion of ex­ist­ing car­tels as it sows the seeds of dis­trust and sus­pi­cion among car­tel mem­bers.

With re­gards to pri­vate en­force­ment mech­a­nism, the 2017 law still recog­nises the rights of any per­son who suf­fers loss or dam­age from an­titrust be­hav­iour to file a com­plaint with the In­tel­lec­tual Prop­erty and In­ter­na­tional Trade Court (IPIT Court).

For civil pro­ceed­ings, the risk of dou­ble re­cov­ery is out­weighed by the pub­lic in­ter­est in en­sur­ing that anti-com­pet­i­tive be­hav­iour is de­terred and that those who suf­fer losses are ad­e­quately com­pen­sated. How­ever, the re­vised TCA does not pro­vide any new mech­a­nisms to fa­cil­i­tate pri­vate right of ac­tion, for in­stance, puni­tive dam­ages and the ex­ten­sion of the lim­i­ta­tion pe­riod. In many ju­ris­dic­tions, for ef­fi­cient en­force­ment of the law, it pro­vides for dou­ble dam­ages or tre­ble dam­ages and has a lim­i­ta­tion pe­riod of up to three years. Our law is one year only.

The re­vised TCA is far from per­fect given that it still lacks pro­vi­sions that will im­prove law en­force­ment. But if the peo­ple are aware of the prob­lem, we may call for fur­ther amend­ments to ad­dress the prob­lem. In ad­di­tion, I hope we can get wellqual­i­fied peo­ple, those who are keen on the role of com­pe­ti­tion in the mar­ket econ­omy, to per­form in the com­pe­ti­tion com­mis­sion.

Last but not least, the com­pe­ti­tion law should en­sure the com­pe­ti­tion process, thus guar­an­tee­ing a level play­ing field for SMEs and start-ups, help­ing them to com­pete with busi­ness giants. Ob­sta­cles or bar­ri­ers must be erad­i­cated so they can en­ter the mar­ket.

EPA

In this June 27 photo, a mul­ti­ple ex­po­sure shows Google Shop­ping lo­gos and Euro­pean Com­mis­sioner for Com­pe­ti­tion Mar­grethe Vestager dur­ing a press con­fer­ence on an an­titrust case against Google Shop­ping in Brus­sels, Bel­gium.

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