The Trade Competition Commission has ordered Nissan Motor Thailand to rescind its contract termination with seven dealers, calling the Japanese car firm's unilateral refusal to renew the dealership contracts an unfair trade practice.
Somsak Kiatchailak, secretary-general of the Office of the Trade Competition Commission (OTCC), said the commission issued an order dated Feb 5 in accordance with Section 60 of the Trade Competition Act 2017, informing Nissan Motor to suspend, stop, or correct or change such conduct that may cause damage to the dealers.
Seven dealers notified the commissioner on Dec 23 and 24 last year that the car maker had informed them it would not renew the dealership contracts, which were due to expire on March 31 this year, without giving a reason.
Dealers said the contract termination is unfair because all have passed Nissan's performance evaluation criteria applicable to other dealers whose contracts were renewed.
According to Mr Somsak, the OTCC has considered information and evidence from the two sides and said the reasons cited by Nissan were insufficient to support its decision to terminate the contracts with seven dealers.
The office said Nissan's conduct imposes trade conditions that may limit or unfairly obstruct the business practices of others, violating Section 57 of the act.
According to Section 57, no business operator shall undertake any conduct resulting in damage to other business operators in one of the following ways: (1) by unfairly obstructing the operations of other business operators; (2) by unfairly utilising superior market power or superior bargaining power; (3) by unfairly setting trading conditions that restrict or prevent the business operation of others; (4) by conduct in other ways prescribed in the commission's notification.
"The commission has thoroughly considered information and facts about the car dealership business, and it is imperative to issue an order to Nissan to revoke the contract termination with seven dealers to prevent any losses to them," Mr Somsak said.
Nissan's conduct is considered unfair and discriminatory, he said, adding that if Nissan disagrees, it still has the right to explain, argue and provide its own evidence to the office.
Any person violating Section 60 shall be subject to an administrative fine of not more than 6 million baht and a further fine of not more than 300,000 baht per day if the violation continues.
Peter Galli, vice-president for communications at Nissan Motor Thailand, said the company is aware of the decision.
"Nissan has been cooperating with the investigation and will continue to do so," he said. "But Nissan is unable to comment further on the ongoing legal investigation."
Mr Galli said Nissan as a global company is committed to complying with all applicable laws and regulations of each market in which it operates, including Thailand.