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Published on January 17, 2008

Modern trade practices employed by international retail giants have prompted the Commerce Ministry to draw up stringent regulations to force them to treat their suppliers more fairly.

The Internal Trade Department, Thai Retailing and Wholesaling Association and major suppliers will jointly draft the regulations. The move is aimed at preventing supermarket operators from placing unfair conditions on suppliers.

The regulations will be drawn under the Trade Competition Act then forwarded to the trade competition committee for approval. The new rules are expected to be implemented by March.

Yangyong Phuangrach, director-general of the Internal Trade Department, said yesterday that traders, retailers and suppliers must comply with the new rules or they will be penalised.

In some instances, violators could be subject to three years' imprisonment and/or fined Bt6 million.

The regulations are intended to protect suppliers and small retailers who face difficulties in matching the lower prices charged by the major retailers.

The new regulations will require a fair entrance fee charged by big retailers to suppliers, a limitation on rebates and sales promotions and on the time allowed for payment.

The move came as a result of complaints by rice packers that supermarkets forced them to sell at lower prices and pay exorbitant fees from 1 per cent to 6 per cent of the sales invoice.  Suppliers affected by so-called unfair trade practices include rice packers and manufacturers of palm oil, plastic products, auto-parts and dairy products.

A member of the Rice Packers Association, Sumeth Laomoraphorn, said that suppliers to major retail operators were badly affected by their unfair trade practices.

For instance, rice packers have been forced to offer rebates and pay entrance fees.

Petchanet Pratruangkrai

 The Nation