Restaurants and food outlets are a popular investment for foreign businesses in Thailand and the numerous online delivery platforms have allowed many restaurants to keep going during the COVID-19 crisis. The convenience and new customer potential have helped businesses that could not afford to organize a delivery service on their own. Nevertheless, concerns arose that these online platforms were taking advantage of their market position regarding their fees and services charged to the F&B vendors.
At the end of 2020, the Trade Competition Commission of Thailand (TCCT) published a notification on Guidelines on Unfair Trade Practices between Online Food Delivery Platforms and Restaurants (link in Thai) (Guidelines). In force as of 23 December 2020, these Guidelines offer restaurants and similar businesses certain explicit protections when dealing with online delivery platforms.
What do the Guidelines do?
The Guidelines are specific in their scope and purpose. The TCCT wanted to make it clear that online delivery platforms must offer clear, reasonable, and non-discriminatory services for clear, reasonable, and non-discriminatory charges. It defines an online food delivery platform as a business that provides an online or electronic interface between restaurants, delivery persons, and end consumers. Restaurant businesses here include any business that makes or sells food and/or beverages.
Specifically, in Clause 3, every agreement between a restaurant business and an online food delivery platform must be in writing and follow understandable “normal business practices”.
The four prohibitions for online delivery platforms
The Guideline’s focus is Clause 4. Clause 4 outlines the following unfair, obstructive conduct:
- Unreasonable or unjustifiable fees or increases in fees. This includes charges for advertising, promotion, or other add-ons that the restaurant business did not specifically request or agree to. It also includes charging different rates for businesses with the same offerings, menu prices, locations, etc. Any changes to fees must follow prior written notice with clear explanations.
- Preventing restaurant businesses from using other services. An online food delivery service provider cannot demand exclusivity. It must allow restaurant businesses to sell their products on other platforms as well.
- Employing forced bargaining or payment terms. Online food delivery services cannot use their position to force restaurant businesses to change their prices without appropriate justification. Nor can they dictate unreasonably long payment terms to restaurants after a transaction is over. Online platforms also cannot remove a restaurant or amend agreed terms or conditions without reasonable grounds or notice.
- Any other practices that may be considered unfair, limiting, or obstructive to a restaurant business that uses the online food delivery platform.
How can a restaurant make a claim?
Online food delivery service providers that fail to comply with the Guidelines could face severe fines. Fines include up to 10% of annual revenue in the year of the offense as well as having to cease operations until they are fully compliant. Of note, the Guidelines are not specific as to what is “unreasonable”. Since these are new rules, it remains to be seen how the TCCT will rule. GPS Legal is monitoring any developments and can assist any online food delivery platform that wants to check its compliance or any restaurant business that believes they have grounds to make a claim. Contact us today for a free initial consultation.