Business operators in Thailand are afforded the protection against unfair trade practices under the Trade Competition Act 2017 (“Act”), with the exception of a few categories of operations and businesses prescribed under the Act. The Act, which is aimed at promoting trade competition, imposes a general prohibition on certain unfair trade practices and behaviours damaging to other business operators.

The conduct of business operators falls within the purview of the Office of Trade Competition Commission. Since its establishment in 2017, the Trade Competition Commission (“TCC”) has been seen to actively enforce the unfair trade practices regulations.

In February 2020, TCC issued an order against Nissan Motor (Thailand) Co., Ltd. (“Nissan”) stemming from the complaints filed by seven car dealers regarding Nissan’s purported non-renewal of the dealership agreements.

The brief facts leading up to TCC’s order are that in December 2019, Nissan informed the dealers of its intention to not renew the dealership agreements, without cause, despite the dealers satisfying the performance test set by Nissan. The non-renewal would inevitably result in expiry of the dealership agreements on 31 March 2020.

Having considered the case put forward by the dealers and Nissan, TCC, finding Nissan’s unilateral refusal to renew the agreements a violation of Section 57 of the Act, effectively ordered Nissan on 5 February 2020 to renew the dealership agreements.

Under Section 57, business operators are broadly prohibited from causing damage to other business operators by engaging in one or more of the following activities:

  • Unfair obstruction of business operations of other business operators.
  • Unfair abuse of superior market power or bargaining power.
  • Unfair imposition of trade conditions having the effect of restricting or preventing the business operations of other business operators.
  • Any other conduct as may be prescribed by TCC through notification issued under the Act.

Any business operator aggrieved by the conduct of another may request TCC to determine the legality of such conduct. If found to be in violation of the Act, TCC is empowered to order the offending business operator to suspend or rectify its conduct and, when making such order, impose any conditions it deems necessary.

Each case is determined by TCC on a case-by-case basis. For Nissan, it appears from a reading of the news published by TCC that TCC took into account the fact that the seven dealers in question, together with other dealers whose dealership agreements have been renewed by Nissan, have all satisfied the performance test for renewal. On this basis, TCC concluded the non-renewal of the seven agreements unfair and arbitrarily discriminatory.

If Nissan is dissatisfied with TCC’s ruling, its only recourse in challenging TCC’s order is to file an action with the administrative court within 60 days of receipt of TCC’s order. We do not yet have any information as to whether or not Nissan will challenge TCC’s order.

Earlier, we summarised the unfair trade practices regulations for franchise business that came into effect on 5 February 2020 (read more here).

Written by Samantha Liew and Wethaka Saenprom