Contributed By Chandler MHM Limited
The relevant merger control legislation is Section 51 of the Trade Competition Act B.E. 2560 (2017) (the “Act”), as well as supplementary announcements from the Trade Competition Commission of Thailand (TCCT), the overseeing regulator of the Act. The TCCT will often look to internationally recognised precedents from other major jurisdictions when adjudicating any issue.
There are a few specific provisions regarding merger control that exist within other industries, such as telecommunications and energy, that technically may be used in place of (but practically alongside with) the merger control provisions of the Act. Merger control for all other industries is governed by the Act. Other areas of trade competition (misconduct, cartels, etc) are also solely governed by the Act.
The TCCT is the primary regulator. The TCCT may ask other regulators for opinions during any process.
If the prospective merger transaction is deemed as reportable under the Act (whether as a pre-merger approval filing or a post-merger notification filing), it must be filed with the TCCT. The operators have the burden of deciding whether their transaction is reportable or not.
If a transaction requires approval and the parties breach this requirement, the parties can be fined up to 0.5% of the transaction value, and in theory the transaction may be unwound. If a transaction requires post-merger notification and the parties breach this requirement, the parties can be fined up to THB200,000 plus THB10,000 per day during the time such breach is ongoing. Directors and other natural persons responsible for such breach may also be fined alongside the juristic parties. Please note that the TCCT has almost always imposed fines on both the juristic parties and their responsible natural persons.
A merger under the Act is defined as corporate amalgamation, acquisition reaching or passing 25% of voting rights in any Thailand-listed company, acquisition of 50% of voting rights in any other type of company, or acquisition of 50% of operating assets.
Generally, if a merger will result in a new or enhanced dominant player, or an acquisition of a dominant player, the parties must undertake a pre-merger approval filing. However, if a merger will only result in a substantial reduction of competition, then the acquiring or resultant party must only undertake a post-merger notification filing. Internal reorganisation is exempt from filing.
A dominant player is defined as any business with 50% of market share and THB1 billion in annual sales for any market (normally the domestic market), or a to-three operator with combined 75% of market share and by itself having THB1 billion in annual sales and at least 10% of market share for any market (normally the domestic market.) Substantial reduction of competition is defined as having THB1 billion in annual sales for any market (normally the domestic market.)
See 2.3 Types of Transactions for changes that trigger merger filing. See 2.7 Business/Corporate Entities Relevant for the Calculation of Jurisdictional Thresholds for corporate linkage (control) that mandates group calculation.
See 2.3 Types of Transactions.
See 2.3 Types of Transactions. Normally, market share is viewed through sales, but can also be viewed through production volume and production capacity. Normally, sales and market share calculations are done at the domestic level, but there are cases of exceptions where the geographical area is smaller (such as for products with special characteristics, like ice) or larger than domestic (such as for products that may cross borders more easily).
Calculation of sales and market share figures are always done on a group-wide basis and will include all entities within such group that are under the same control of the ultimate controlling entity, with control defined as having a majority of voting rights or vote control (multiple levels), or the ability to appoint half of the directors (one level). For the review of the merger transaction, sales and market share of both sides of the transaction will be reviewed together.
Based on the current interpretation, foreign-to-foreign transactions are covered by the Act only if both sides have corporate presence in Thailand as well as local sales/effect. Having corporate presence in Thailand is only the first step of the review, and the parties will have to hit the market share and sales figure threshold as well.
See 2.3 Types of Transactions for market share information. Even if there is no overlap in any particular market, a filing may be required if the sales threshold and/or the market share threshold are met.
A joint venture by way of a new incorporation is not technically subject to the merger control provision of the Act. However, if the process of setting up such joint venture touches upon asset transfer or share acquisition, then the merger filing requirement may be triggered.
The TCCT has complete discretion to investigate under the Act, request documents and interviews, and apply fines or actions if deemed appropriate. This includes situations where a transaction may not hit the threshold, but the TCCT feels that it wishes to confirm such fact. There is no statute of limitation on the TCCT’s ability to investigate as it can revisit the issue at any time even after the closing of the transaction.
If the transaction requires pre-merger approval, then the merger cannot take place until approval is granted.
See 2.2 Failure to Notify. Penalties have been applied in the past and many cases have been issued as precedents, including cases of foreign-to-foreign transactions.
There are no general exceptions to the suspensive effect and there is no precedent indicating otherwise.
There are no circumstances where the authorities will permit closing before clearance and there is no precedent indicating otherwise. The only way to close a transaction without clearance is to ensure that relevant businesses are carved out in a way that will not trigger any requirement to file.
See 2.2 Failure to Notify. If the parties must obtain a pre-merger approval, then the approval must be obtained before the transaction is closed. If, however, the acquiring or resultant party only needs to undertake a post-merger notification filing, then such filing must be done within seven days from the transaction date. Any breach will result in penalties being incurred, which have been applied in the past.
The TCCT normally does not check the depth of intention, but the parties must submit an agreement or parts thereof that address the merger transaction for their review.
There is no filing fee for a post-merger notification filing, but there is a THB250,000 filing fee for pre-merger approval filing.
Both sides of the transaction (normally the parties attempting the transaction) will be responsible for filing the pre-merger approval filing, but sometimes the parent entities of the parties to the transaction can file in their place and the officers have accepted this minor deviation in the past. Furthermore, in the past, a couple of cases were filed with only the signature of the acquiring side and the officers have also accepted this minor deviation. For post-merger notification filing, only the acquiring or resultant entity needs to file the document.
Post-merger notification filing is much less detailed than pre-merger approval filing, but both will generally require the transaction agreement (or at least relevant parts thereof), financial statements, market share and sales figures, details of shareholders and types of businesses, products and services, and economic and commercial rationale for the transaction, as well as a defence stating why such merger should not be accepted. All applications and attachments must normally be in Thai or translated into Thai, unless the applicant is specifically exempt from this requirement by the officers in charge.
If an application is incomplete on the face of it, the filing will not be formally accepted. However, if an application has been formally accepted but later the officers find any part to be incomplete or have additional follow-up questions, the parties will have to submit additional information, documents and details in order to receive final acknowledgement or approval, as the case may be.
If the parties are suspected to have filed something that may be incorrect, incomplete or misleading, the officers will require follow-up explanations, and if it is subsequently proven that such was done deliberately, then the officers will undertake further investigation or may propose that the TCCT reject the application for merger.
For post-merger notification filing, the parties will need to informally submit the draft application for the officers’ review and then wait for their acquiescence before undertaking the transaction. This is to avoid any complication after the closing. The review period varies from weeks to months, depending on the complexity of the case. After the transaction is completed, the parties can then submit the application within seven days.
For pre-merger approval filing, the parties will need to informally submit the draft application for the officers’ review as well. The officers will normally ask as many questions as they need until they are satisfied that the presentation to the TCCT will be smooth. This can take between a couple of months to many months, depending on the complexity of the deal and workload of the officers. After the officers provide their acquiescence, the parties can then formally submit the application to them. The authority will then have in total 105 days to review and provide an answer, which can be unconditional approval, conditional approval or rejection.
Parties can engage in pre-notification discussions with the authorities and this is highly encouraged. The process will be treated confidentially.
Operators can expect the officers to come back with follow-up questions during the review period, and this will not stop the clock or suspend any part of the process, meaning the parties are highly encouraged to do their best to provide additional information, as lack of information will likely lead to a negative result.
There is no short form or fast track for review.
The authority will review the case from a holistic standpoint, including review from the perspectives of competitors, suppliers and vendors, service providers, customers and the public as a whole. The authority will review details from both the supply and demand side, vertical and horizontal relationships, and co-ordination and non-coordination.
The authority will look at all markets that hit the THB1 billion threshold, and will often look at other markets below the threshold as well. There is no precedent on a de minimis level below which competitive concerns are deemed unlikely, as long as such market already hits the threshold.
The authorities will rely on their own precedents and those from other major jurisdictions. Normally the TCCT will accept precedents from the EU, the US, Japan, Korea and Singapore.
The authority will look at all competition concerns from a holistic point of view. There is no clear precedent to pinpoint weight or to discard any of these areas.
The authority will normally consider economic efficiencies as the position rationale to counter negative impact, but this does not mean that the efficiencies will automatically override all other issues.
The authority will normally consider all non-competition areas, except for the environment, which has not historically been addressed. Employment has also been discussed but to much lesser extent when compared to industrial policy, national security or other public interest issues. Generally, the authority is given complete discretion to consider any of the non-competition areas it deems fit. Please note that non-competition concerns from the perspective of foreign direct investment is addressed under the Foreign Business Operation Act, which is a separate law under a separate overseeing authority. Separate licensing may be required.
See 2.10 Joint Ventures. A joint venture is technically exempt.
The authority has complete power to prohibit the transaction if it falls under their mandate. Any breach of this order can result in a fine or unwinding. The TCCT normally will issue a letter demanding explanation or mandating stoppage to the prospective merger, a breach of which will render the parties liable under the Act.
The parties can negotiate for remedies, although the channel to do so may be more limited than in other jurisdictions. It is normally easier for the parties to propose this at the very outset.
There is no legal standard that remedies must meet in order to be deemed acceptable. This is all at the discretion of the TCCT.
Remedies have rarely been used, but those that have been used are an increase of participation of certain groups within the industry, moratorium on contractual change with vendors and suppliers, indefinite prohibition of sharing of certain data between the merging parties, etc.
See 5.2 Parties’ Ability to Negotiate Remedies. The parties are recommended to propose remedies since the beginning as it may be difficult to propose this during the review process by the TCCT. In theory, the authority can unilaterally impose a remedy as a condition to their approval. In practice, they may discuss with the parties beforehand.
There is no standard timing and this will entirely depend on the TCCT. If the remedies are not fully complied with, the parties will be deemed to have breached the order of the TCCT on the merger, and the TCCT can revoke the approval for the merger, meaning the parties will need to unwind the transaction. Generally, all conditions must be met as mandated by the TCCT before the merger can take place, unless such conditions are planned for any period after the closing.
A formal decision will be provided to the parties, whether it is an unconditional approval, a conditional approval, or a rejection. Relevant parts of the decision may be issued to the public as a precedent, but commercially sensitive information will normally be redacted from the publication.
As long as a transaction falls under its mandate because of thresholds having been reached, regardless of whether it is a domestic or foreign-to-foreign transaction, the TCCT will oversee the case. The TCCT has historically imposed fines on foreign-to-foreign transactions before, but there is no evidence of any outright prohibition.
The decision will cover all related arrangements, if such have been made known to the authority in the filing. If any part of the transaction is not made known to the authority, such will not be covered by the decision and the parties can be at fault if the authority later learns of such part of the undisclosed arrangements, and such part somehow breaches the law on its own.
Any party can submit their opinion if they know about the pending case, and the TCCT may sometimes invite other parties to submit their opinion as well. However, these parties do not have any other right to stop the process of the TCCT, unless they find a valid cause of action to be filed with the Administrative Court.
The authority can contact third parties and has historically done so. Normally this is done via a written notice or questionnaire. There is no precedent that the authority has market-tested any remedies offered by the parties.
Normally all details are kept strictly confidential. Only parts of the filing that do not contain commercially sensitive information may be published as a precedent.
There is no clear evidence that the authority has historically shared details of specific transactions with other jurisdictions, but this has been indicated by the authority as one of their powers and intended courses of action. The authority, if wishing to do so, does not need the permission of the filing parties.
The parties can technically resubmit the case if they can change the facts of the case or remedies, to simply ask for the TCCT’s reconsideration. The parties can also appeal to the Administrative Court if they have a solid ground to argue so within 60 days after the date of decision.
There has not been any case of appeal within the merger control realm. The parties must appeal within 60 days after the date of decision.
In theory third parties can appeal to the Administrative Court if they have solid grounds that the decision was made in error. None of these attempts have been successful.
There is no foreign direct investment or foreign subsidies legislation in the jurisdiction. There are, however, different licensing requirements based on foreign ownership thresholds for different industries, but these do not concern antitrust or trade competition aspects of the operation or acquisition. Separate licensing may be required in any case.
There have been no recent changes to legislation or regulations, or proposals to change these. All current interpretations have been reflected as outlined above.
Based on public records, no pre-merger approval transaction has been prohibited, but there were around six transactions that were investigated and subject to fines, all for not filing within seven days of the transaction date for post-merger notification filing.
There is no current concern or trend within the merger control realm that can be specifically pinpointed.