Tighter rules on mergers urged to avert dominance
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The Commerce Ministry has been urged to strengthen the rules on mergers to ensure that consolidation does not result in market dominance to the detriment of competing businesses and consumers, particularly in the upcoming era of the Asean single market.
Speaking at yesterday’s “Business Convergence: Help Strengthen or Lead to Monopoly” seminar, organised by the Internal Trade Department, panellists shared the view that the government needed to tighten the Trade Competition Act to ensure fair practice for consumers.
Duenden Nikomborirak, an economist at the Thailand Development Research Institute, called on the Commerce Ministry to enact stringent regulations on business mergers to prevent monopolies in the future.
She said a requirement that enterprises must inform the government before merging was
crucial to ensure that consolidation did not lead to price collusion and monopoly in the long run.
“Although a merger can help lower the cost of production and create strong business, it can lead to market dominance and hurt consumers. The government needs to closely monitor the practice of merging by strengthening the law,” Duenden said.
She added that after the introduction of a seamless regional market under the Asean Economic Community in 2015, the Thai authorities should stringently control mergers as foreign firms with strong financial support would otherwise easily be able to buy local businesses and beat off their competitors.
While the Trade Competition Act has been in force since 1999, it has no regulation to control mergers, merely requiring that any business that will have a post-merger market share larger than 25 per cent or sales in excess of Bt1 billion seek prior approval from a board established under the act.
However, Duenden said the rule needed to be made more stringent by lowering the sales threshold to Bt100 million in the domestic market, while it should include global assets for multinational enterprises with combined worldwide assets larger than Bt3 billion.
Kitti Tangjitmaneesakda, vice chairman of the Federation of Thai Industries for legal and tariff affairs, said the government needed to strengthen the trade competition law to ensure fair competition, in particular for small and medium-sized enterprises.
Regulations to prevent market monopoly should be created to ensure that giant enterprises do not damage the interests of consumers after a consolidated enterprise has beaten off its competitors, he said.
Santichai Santawanpas, deputy director-general of the Internal Trade Department, told the seminar the ministry would carefully consider whether to tighten the regulations.
New regulations could increase post-merger market share to one-third of the overall market value, or require businesses with sales revenue above Bt5 billion to seek the department’s approval before merging.
During the 12 years of the Trade Competition Act’s implementation, 77 cases concerning market dominance have been submitted to the ministry.
However, no enterprise has yet been penalised under the Act because of the lengthy investigation process.
