Digital Platforms: Stricter Rules Ahead

Thailand Unveils Landmark E-commerce Regulations to Foster Fair Competition

Thailand has officially launched comprehensive new guidelines designed to regulate multi-sided platforms and fundamentally reshape its burgeoning e-commerce sector. These significant regulations, enacted under the framework of the Trade Competition Act of 2017, officially came into effect following their publication in the Royal Gazette on March 24, after months of anticipation.

The new rules are specifically targeting platforms that have become central to Thailand’s digital commerce, encompassing both online marketplaces and social commerce channels. Prominent players such as Shopee, Lazada, and TikTok Shop, where powerful network effects have historically concentrated control over sellers, payment systems, and logistics, are now under closer scrutiny.

Visanu Vongsinsirikul, the secretary-general of the Trade Competition Commission of Thailand, elaborated on the purpose of these guidelines, stating that they will provide much-needed clarity on which business practices are considered monopolistic behaviour. The overarching intention of this regulatory framework is to curb the excessive leverage of dominant platforms, introduce tighter oversight on commission fees, and dismantle restrictive practices that limit sellers’ freedom to choose their preferred logistics providers.

By actively addressing these inherent structural imbalances, Thai regulators aim to dilute the dominance of major platforms, stimulate genuine competition within the logistics sector, and ultimately cultivate a more equitable and dynamic marketplace across Thailand’s substantial 1.15-trillion-baht digital commerce market.

Key Prohibitions and Restrictions Under the New Guidelines

The newly introduced guidelines lay out a detailed catalogue of prohibited conduct, addressing both pricing and non-pricing strategies that could potentially distort fair competition.

• Pricing Practices:

  • Predatory pricing, where platforms set prices artificially low to eliminate competitors.
  • Resale price maintenance, dictating the minimum price at which sellers can offer their products.
  • Price parity clauses, which prevent sellers from offering lower prices on competing platforms.

• Platform Fees:

  • The regulations scrutinize various fees imposed by platforms, including:
    • Commission charges.
    • Advertising fees.
    • Logistics or pick-up fees.
    • Promotional fees.
    • Payment processing fees.
  • These charges may be deemed problematic and subject to intervention if they are found to be excessive, discriminatory, or lack clear and justifiable business rationale.

• Non-Price Restrictions:
  • Platform operators are now cautioned against engaging in practices such as:
    • Self-preferencing, where platforms favour their own products or services over those of third-party sellers.
    • Reducing the visibility of specific sellers, thereby limiting their reach and sales potential.
    • Imposing conditions that compel business users to exclusively utilize the platform’s in-house services, including logistics, advertising, or payment systems.
  • Furthermore, restrictions that hinder sellers’ ability to operate across multiple platforms, as well as actions like unjustified delisting of sellers or outright refusal to engage in business dealings, are also explicitly covered by these new rules.

Algorithmic Transparency and Data Usage Under Scrutiny

The evolving digital landscape necessitates addressing the growing influence of algorithms and data in shaping online markets. The new Thai regulations acknowledge this by bringing algorithmic systems under potential scrutiny.

• Algorithmic Practices:
  • Systems used for ranking products, setting prices, and allocating services may be subject to review if they lead to:
    • Discriminatory outcomes for sellers or consumers.
    • Unfair prioritization of certain entities.
    • The misuse of third-party data to gain an unfair competitive advantage.

The enforcement approach adopted by these guidelines is intentionally broad. The regulations stipulate that any conduct which results in restricted competition, the creation of an unfair advantage, or significant market distortion may be classified as anti-competitive, even if it is not explicitly detailed within the listed prohibitions.

Enforcement and Penalties

While the guidelines themselves do not specify individual penalties for non-compliance, any violations will be addressed under the existing provisions of the Trade Competition Act of 2017. This signals a commitment to stricter oversight of platform operators and their operational practices.

The penalties are structured based on specific sections of the Act, including Sections 50, 54, 55, and 57. These penalties are categorized into criminal and administrative sanctions, with the severity and nature of the violation determining the type of sanction applied. Notably, violations of Sections 50 (abuse of a dominant market position) and Section 54 (cartels or agreements that monopolize or reduce competition) are subject to criminal penalties, underscoring the seriousness with which these anti-competitive practices are viewed.