Comparison Study on Practices of Business Operators with Market Domination, Section of the Competition Act B.E. 2542 (1999) and United States Antitrust Law Regime
By Suthatip Jullamon 1
MToday's economic system based on the concept of laissez – faire2 the idea of non - intervention by the state in the marketplace, and relies on "demand and supply" or the invisible hand playing its role. Inevitably, the invisible hand only works at its best in a perfect market that is one in which there is perfect market information, no participants with the market power to set price, no barriers to entry or exit, and equal access to production technology3. In reality, markets are usually imperfect, thus consumers and small players require government aid.
Antitrust or Competition law is one government mechanism to achieve such a purpose. This article specifically explores the basic concept of section 25 of the Competition Act B.E. 2542 (1999) of Thailand through comparison with the fundamental ideas of the Sherman Act, a core antitrust statute of the United States and relevant precedents.
2. Business operator(s) with market domination
Section 3 "Business operator with market domination" means one or more business operators in the market of any goods or service who have the market share and sales volume above that prescribed by the Commission with the approval of the Council of Ministers and published in the Government Gazette, having regard to the market competition.4
The state has a duty to control players with market domination to protect the benefit of the small players and ensure consumers' welfare. The influential players according to section 3 of the Competition Act B.E. 2542 (1999) can be either a single entrepreneur or a group of entrepreneurs. Influential entrepreneur(s) possess greater market share and sales volume than the standard designated by the Trade Competition Commission.
In order to figure out one company's market share and sales volume, the first task is to define the "relevant market" of the service or product in question.
This will depend upon what one regards as competing in that market.5
In United States v. Aluminum Co. of America6, the Aluminum Company of America (Alcoa) was the single producer of "virgin" ingot-a mass of metal, such as a bar or block, cast in a standard shape for convenient storage or shipment7 in the United States during the time the claim was brought forward. However, such fact did not necessarily constitute a monopoly8, and the judges had to figure out whether Alcoa was subjected to competition from other competing items, in this case imported "virgin" ingot and the secondary ingot or whatever was considered by consumers to substitute or be functionally interchangeable with the "virgin" ingot. If the answer to the finding is yes, therefore, all three types of products constituted the "relevant" market for the case.
In United States v. E.I. du Pont De Numours & Co.9, during the period relevant to the action, du Pont produced almost seventy-five percent of the cellophane sold in the Unites States, and cellophane constituted less than twenty percent of all "flexible packaging materials". The government contention was that by dominating cellophane production, du Pont monopolized a part of the trade or commerce.10 The judges needed to determine what the relevant market was: was it solely cellophane or was it cellophane and other flexible packaging materials altogether? As a result, even though cellophane possesses advantages in itself, it is one among other choices of flexible packaging materials when it comes to its uses. Thus, the court below held that there was a cross-elasticity of demand11 between du Pont cellophane and other flexible packaging materials: there was a considerable sensitivity among customers to price and quality changes in the flexible packaging markets. Du Pont did not possess monopoly over price-monopoly power is the power to control prices or exclude competition and ordinarily may be inferred from the predominant share of the market.12 The relevant market in this case includes cellophane and other flexible packaging materials.
Other than the product market, "the geographic market" also needs to be inspected in order to ascertain the exact market relevant to the disputed area of trade.
In United States v. Grinnel Corps.13, Justice Fortas and Justice Stewart joined the dissent. For some products or services, geographical market is defined as nationwide, for others, local. This depends on the nature of the product or service in question, which in this case were burglary and fire protection products. The companies also offered a central station service under which hazard-detecting devices installed on the protected premises automatically transmitted an electric signal to a central station. Upon receipt of a signal, the central station, where appropriate, dispatches guards to the protected premises and notifies the police or fire department directly.14 The geographic market should be defined as local since the need and the service are intensely local. The protection must be provided on the spot and must-be furnished by local personnel able to bring help to the scene within minutes. Even the central stations can provide services only within a certain radius. Where the tenants of the premises turn to central stations for this service, they must make their contracts locally with the central station and purchase their services from it on the basis of local conditions.15