“Collusion” in the context of commercial competition refers to the agreement among businesses (Cartels). The competition law of the European Union (EU) defines collusion as an agreement among competing businesses of two or more parties that aims to dominate the market or create barriers to reduce fair competition in the market.

Examples include setting prices for goods or services together (Price fixing), jointly allocating production to limit output (Quota allocation), agreeing on dividing sales territories (Market allocation), and collaborating to restrict imports or exports (Import/Export restriction), among others.

Similarly, the definition of collusion by the Organisation for Economic Co-operation and Development (OECD) is akin to that of the European Union, but it does not include agreements that enhance fair competition in the market.

According to the Trade Competition Act B.E. 2560, it is considered an offense if businesses agree on commercial behaviors that monopolize, reduce, or limit competition in the market.

Collusion is categorized into two markets: 1. collusion among businesses competing in the same market (Horizontal agreements) and 2. collusion among businesses competing in different markets (Vertical agreements).

Collusive behaviors among businesses in the same market are considered hardcore collusion (Hardcore cartel), such as setting purchase-sale prices or any conditions affecting the prices of goods or services.

For example, businesses producing ice in the same area collude to raise ice prices simultaneously. Limiting the quantity of goods or services through agreements among businesses that produce, buy, sell, or service is another example, such as businesses producing face masks colluding to limit production quantities to increase face mask prices in the market. Conspiring among businesses to ensure one party wins a bid is also an example, where a group of businesses participates in bidding for a project from a private company, colluding to ensure one business in the group wins the bid, which often results in a winning bid price higher than what would occur through genuine competition. The awarded project is then distributed among the businesses within the group. Dividing sales territories is another example, where businesses A and B produce the same type of product, with business A selling in upper Bangkok and business B selling in lower Bangkok.

This is done to create market power and prevent other businesses producing the same goods from entering the market. Such collusive behaviors are considered offenses under Section 54 and carry criminal penalties under Section 72 of the Trade Competition Act B.E. 2560.

Collusive behaviors among businesses not in the same market are considered non-hardcore collusion (Non-Hardcore cartel), such as reducing the quality of goods or services. For instance, business A produces mobile phones and business B produces mobile batteries, colluding to lower the quality of their products to reduce costs, leading to increased profits. Appointing a single individual as the sole distributor of the same type of goods or services is another example.

SOURCE : www.bangkokbiznews.com