Thailand: A Journey to ESG – Key Competition Law Issues Examined
ESG (environmental, social and governance) considerations are becoming increasingly important for companies and businesses around the world, so much so that we have now reached the point where ESG has become one of the priorities. key boards around the world. Regulations are emerging, pressure from stakeholders is increasing and consumers are increasingly aware of ESG issues, which influences their purchasing decisions, as the marketing manager of a Thai consumer goods company recently noted. : “Consumers increasingly want to buy products from organizations that are successful in achieving their ESG goals.1
- Anti-competitive agreements
- Vertical retention
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In this new era where sustainability has become the new normal and a business imperative, companies across industries are striving to meet ESG targets and goals, which go beyond core regulatory standards. For example, achieving zero carbon targets, removing forced labor from the entire supply chain, and improving animal welfare.
Despite good intentions, companies engaged in ESG activities are not exempt from the obligation to comply with laws and regulations. Here we highlight the main competition law issues that can arise.
Often, companies do not work alone to achieve desired ESG goals. Sometimes this is because collaborating with other companies can be more convenient and efficient, sharing their expertise, tasks and costs, and sometimes because companies will not be able to successfully implement meaningful ESG initiatives. ” working with the entire industry or supply chain. As a result, many initiatives have been implemented through collaborations between companies within supply chains and also between competitors. For example, one of the ESG collaboration commitments in Thailand was established from a joint effort of around 32 Thai institutional investors, including fund management companies and insurance companies.
ESG collaborations may, depending on the circumstances, require the involvement of the parties concerned in one way or another, for example through a management meeting, a meeting between members of the work team, a meeting in a professional association or some other form of communication (whether verbally or in writing). Once we have entered this area of collaboration and cooperation between business operators and come together to discuss the cases and concerns related to their industry, the competition authority could draw a conclusion of potential anti-competitive agreements. from commercial operators.
Of course, not all collaborations and actions are prohibited. The Commercial Competition Act BE 2560 (2017) prohibits joint anti-competitive conduct between commercial operators which may create a monopoly, or which will reduce or limit competition in any good or service, with a few exceptions. As a rule, examples of common conduct which are absolutely prohibited include agreements on prices, territory, distribution of customers, etc. production, distribution or supports economic or technical development. The term “agreement” is broadly defined to include a wide range of activities, ranging from a formal agreement to a simple exchange of information. Failure to comply with the law can result in criminal and administrative fines.
ESG initiatives can also involve other operators in supply chains (eg suppliers or customers). For example, a question may arise whether a company can ask its suppliers to commit to its ESG policy (such as the obligation to use sustainable materials or to refrain from using illegal forced laborers). The vertical restraints to be imposed should be assessed on a case-by-case basis, although Thai competition law recognizes the concept of rule of reason.
Therefore, companies should carefully design and plan their ESG programs before implementing them. Compliance guidelines and preventative measures can also be put in place to minimize potential risks and exposures under competition law.
If you have any questions, please contact our Competition team at Baker McKenzie.
The Bangkok Competition Group is made up of seasoned lawyers with a deep knowledge and understanding of the local regulatory climate. We actively work with regulators to help shape the regulatory and enforcement environment. The diversity of our team’s experiences allows our customers to benefit from effective assistance, especially in the face of competition.
investigations and litigation before the authorities and the courts. We can assist clients with a range of services, including: Antitrust and compliance advice; Development of the compliance policy; Merger control; Cartels; Unfair trading practice; Health check and audits in competition law; Legal training and compliance; and anti-monopoly / competition litigation, among others.
1 Page 12, From Strategy to Action – Advancing ESG in Asia-Pacific, Baker McKenzie