Thailand Regulator Drafts 20 Measures to Curb Retail Power Over Suppliers

A Framework to Level the Playing Field

Thailand's Trade Competition Commission has put forward a framework of 20 measures designed to regulate business practices in the wholesale and retail sectors, targeting conduct by a handful of large conglomerates that dominate the market. The public consultation, running from July 13 to August 13, addresses concerns that some operators lack sufficient consideration for fair trade, integrity, and social responsibility in dealings with manufacturers and distributors.

The wholesale and retail markets in Thailand are highly concentrated, with a few large players controlling significant market share. The commission found that some operators' business practices may not adequately account for the interests of suppliers and the broader community, prompting the need for formal guidelines that promote social responsibility based on operator size and revenue.

Banning Hidden Costs and Entry Barriers

The proposed framework prohibits wholesalers and retailers from charging manufacturers and distributors for a range of additional expenses. These include market research charges, shelf placement fees, store renovation expenses, hospitality expenses, and site visit fees. The measures aim to eliminate costs that suppliers have historically borne as a condition of doing business with large retail chains.

Entry fees are also banned under the proposal, except under specific conditions such as for new products that have not been sold in more than 25 percent of all branches during the previous 365 days. This provision is intended to prevent retailers from extracting fees simply for granting access to shelf space, while still allowing charges for genuinely novel products that require additional risk and effort to introduce.

Fair Placement and Contract Transparency

The framework requires the creation of guidelines on fair product placement and categorization. Wholesalers and retailers are barred from charging fees for more favorable product placement, a practice that has historically allowed operators to extract additional revenue from suppliers seeking better visibility for their goods.

The proposal also prohibits operators from engaging in self-preferencing of their own private label products. This measure addresses a growing concern that large retailers use their market power to favor house brands over third-party suppliers, distorting competition and limiting consumer choice.

Operators are further barred from misusing business secrets such as product prices, costs, formulas, or promotional campaigns, or using such information to gain an advantage for their private label offerings. This provision aims to protect suppliers from having proprietary information turned against them.

Mandatory Written Contracts

The framework requires wholesalers and retailers to create written contracts and retain them for a specified period. Contracts must clearly state terms and conditions, avoiding hidden or complex provisions that suppliers may not fully understand. This transparency requirement is intended to reduce the power imbalance between large operators and smaller suppliers, ensuring that all parties have a clear record of their obligations.

Policy Context and Regional Implications

The commission established a dedicated subcommittee last month to develop guidelines and action plans for the wholesale and retail sectors. According to Associate Professor Sudharma Yoonaidharma, acting chairman and vice chairman of the commission, the body will not only focus on competition but also consider the social responsibilities of businesses.

Speaking in early July, Yoonaidharma noted that the arrival of large wholesale or retail operators from outside a community could have an impact on local businesses if they do not prioritize the interests of the community. This framing positions the proposed regulations within a broader debate across Southeast Asia about the role of modern trade in local economies and the balance between efficiency and social equity.

The consultation period, which closes mid-August, will determine whether the framework moves forward as drafted or undergoes revision based on stakeholder input. If implemented, the measures would represent one of the more comprehensive regulatory interventions in Thailand's retail sector in recent years, with potential implications for how large operators structure supplier relationships across the region.

Manufacturers and distributors have long complained of opaque fee structures and unequal bargaining power in negotiations with dominant retailers. The proposed framework, if adopted, would formalize protections that have until now been largely absent from Thailand's commercial code, shifting the balance of power in supplier-retailer relationships and setting a potential precedent for other markets grappling with similar concentration dynamics.