M-150 & illegal anti-competitive retail practices

Forcing shops to not carry other brands with threat of cutting shops off if they do, what M-150 producer is accused of. Govt action might be taken soon.

BEVERAGE, RETAIL & ANTITRUST

M-150 & illegal anti-competitive retail practices

25/07/2016
Phusadee Arunmas & Pitsinee Jitpleecheep

A leading energy drink company has been found to be prohibiting retail outlets from selling the products of competitors.

The Trade Competition Board is set to file a lawsuit against the company after an investigation found it had been using these unfair trade practices.

M150 & THAILAND'S BIG ENERGY DRINK MARKET

The name of that producer is widely understood to be Osotspa Co, the country's oldest consumer goods conglomerate and maker of M-100 and M-150, although the name has not been released officially to the public yet.

M-100 and M-150 command the highest market share (57.7%), followed by Carabao Daeng (21.1%) and Krating Daeng (16.3%).

According to market research company AC Nielsen, Thailand's energy drink industry was worth 21.4 billion baht as of May 30.

For the first five months of the year, the market is estimated to have shrunk by 2-3% to 21.40 billion baht, mainly due to the country's economic slowdown, the widespread drought and lacklustre consumer spending.

Osotspa offered no comment when questioned by a Bangkok Post reporter on the matter.

THREAT OF CUTTING OFF SUPPLY

According to Santichai Santawanpas, a member of the Trade Competition Board, the probe was done at the request of one unnamed competitor.

The probe found that the market leader was found to have clearly engaged in unfair practices by prohibiting retail outlets from selling competitors' drinks, lest they be cut off from Osotspa products.

Such practices, which unduly restrict consumer choice, are a breach of Sections 25 and 29 of the Trade Competition Act of 1999.

Violators can face three years in prison, a 6-million-baht fine or both.

MOVING AHEAD WITH CASE, UP TO PROSECUTORS

But Mr Santichai said it would now be left to the prosecutor's discretion as to whether to move ahead with the case.

The current Trade Competition Act defines market domination as a market share in the previous year of at least 50% and annual sales of at least 1 billion baht.

FAILURE OF LAW TO CURB UNFAIR TRADE PRACTICES 

Since the act came into force in 1999, 85 cases have been filed with the Office of the Thai Trade Competition Commission for vetting, but no case has proceeded to reach a ruling in those 17 years.

One case was submitted to prosecutors but was dropped because the Attorney-General's Office found insufficient evidence to take it up against the alleged offender.

AMENDMENTS TO PREVENT UNFAIR TRADE PRACTICES

The Commerce Ministry is scheduled to submit draft amendments to the Trade Competition Act for cabinet approval tomorrow, according to Wiboonlasana Ruamraksa, director-general of the Internal Trade Department.

The amendments, if passed, could become law this year.

Ms Wiboonlasana said the government believes the draft amendments will prevent unfair trade practices, ensure fair competition and attract more investment to Thailand.

The salient points are improving the words "entrepreneur or business operator" to cover a company or partnership under the same business group.

It also empowers the board to announce the term "market domination" to take into account factors such as market structure, which includes the number of players, positioning, concentration and obstacles to access, access to manufacturing bases and distribution channels, natural resources and infrastructure, investment, and networking.

http://www.bangkokpost.com/business/news/1043741/drink-firm-faces-suit-after-probe

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