You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

January 25, 2023

New Competition Regulations for Thailand’s Energy Sector

Subscribe to Updates

Thailand’s Energy Regulatory Commission (ERC) has issued four new regulations under the Energy Business Act B.E. 2550 (2007) setting forth competition regimes to control both anticompetitive conduct and market structure in the energy business sector. The regulations were published in the Government Gazette on December 19, 2022, and took effect the following day.

The key provisions of these ERC competition regulations largely mirror those articulated in the Trade Competition Act B.E. 2560 (2017) and its subordinate legislation. The most significant features of these competition regulations are summarized below.

Market Definition Regulation

The ERC’s market definition regulation (officially the ERC Regulation re: Market Definition and Relevant Market of Related Energy Services B.E. 2565) outlines the general framework for defining relevant markets in the energy sector. The factors to be taken into consideration include types of energy licenses, geographical areas, competition conditions, and interchangeability of energy services. In the annex to this regulation, the ERC has classified the relevant energy service markets as follows:

  • Power business activities include power generation, power transmission system services, power distribution system services, power distribution services, and power system control services.
  • Natural gas business activities include natural gas transmission through pipelines via natural gas transmission systems, natural gas procurement and wholesale via natural gas distribution systems, natural gas retail via natural gas distribution systems, and storage and regasification of liquefied natural gas.

The ERC will review its market definitions and relevant energy service markets from time to time, taking into account changes in technology and competition conditions as well as feedback from public hearings.

Market Dominance Regulation

Under the ERC’s market dominance regulation (officially the ERC Regulation re: Criteria on Business Operator having a Market Dominance B.E. 2565), the ERC is empowered to proactively determine and declare which license-holding energy business operators have a dominant position or significantly dominant position under its criteria, subject to public hearing and objections from the business operators concerned. The ERC can also request market data from business operators for these purposes. In addition, the ERC assumes authority to impose measures on business operators to prevent potential harm to competition or eliminate competition concerns.

Anticompetitive Conduct Regulation

The ERC’s anticompetitive conduct regulation (officially the ERC Regulation re: Rules and Measures on Monopoly, Reduction and Restriction on Competition in Energy Businesses B.E. 2565) aims to prevent license-holding energy business operators from unilaterally or jointly undertaking actions that may cause monopolization of—or reduction or restriction of competition in—energy service markets. However, the anticompetitive conduct regulation does not clarify or list examples of anticompetitive conduct; rather, the ERC will investigate and decide on a case-by-case basis regarding the conduct’s potential harm to competition and its effects in each relevant energy service market.

All energy business operators must notify the ERC immediately in the following cases:

  • They are aware of any conduct that may lead to monopolization or to reduction or restriction of competition;
  • They are harmed by anticompetitive conduct by other license holders; or
  • A license holder gains or may gain a dominant position in an energy service market.

An investigation and inquiry can be initiated with either a complaint from a license holder or by the ERC itself. The ERC has authority to impose specific remedies to suppress anticompetitive conduct, including cease-and-desist orders, administrative fines, orders to separate certain businesses’ accounting systems, obligation to disclose information to or notify the ERC, ERC determination of service prices or fees, and obligation to provide services to other license holders.

Merger and Cross-Shareholding Regulation

The ERC’s merger and cross-shareholding regulation (officially the ERC Regulation re: Rules and Procedures on Merger and Cross-Shareholding in Energy Businesses, B.E. 2565) repeals the previous merger control regulation for energy businesses and sets forth a new set of regimes to control mergers and acquisitions between two or more license holders in the energy industry. Under this regulation, “mergers” include mergers, amalgamation and acquisitions of assets, and direct and indirect acquisitions of shares as defined by the regulation. Cross-shareholding between license holders is also subject to control by the ERC.

  • Preapproval requirement: License holders that wish to proceed with a merger or cross-shareholding transaction must seek approval from the ERC at least 60 days in advance. Supporting documents that the concerned parties must submit include objectives and plan, market analysis, and an impact assessment report. In approving the merger, the ERC will reflect on potential harm to competition, the effect on the license holders’ contractual parties, and impact on stability of energy and public interests, as well as whether it is a merger with a failing company.
  • Pretransaction reporting requirement: Energy license holders only need to submit a premerger report (instead of a preapproval application) to the ERC if the license holder can prove that after the merger is completed, the total assets, revenue, or value of assets acquired from other license holders will not exceed the threshold prescribed by the regulation.

These requirements also apply to a merger by a license holder’s controlling entity, parent entity, subsidiary, or affiliate.

Implications

The announcement of these four new competition regulations by the ERC signals its intention to combat anticompetitive behaviors and market concentration. This also presages more stringent enforcement by the ERC to relieve competition concerns and ensure free and fair competition in the energy industry. License holders and business operators active in the relevant energy business markets should be prepared for stricter controls and more stringent duties to seek approval from, notify, or report to the ERC as a result of the triggering events prescribed in these ERC regulations.

For more information on internal competition compliance, or any aspect of the regulatory regime for energy businesses in Thailand, please contact Kobkit Thienpreecha at [email protected], Supasit Boonsanong at [email protected], Nutavit Sirikan at [email protected], or Kobchai Nitungkorn at [email protected].

Related Professionals

Industries

Energy

Practices

Antitrust and Competition

Location

RELATED INSIGHTS​ 

February 3, 2023
The Federation of Thai Industries (FTI) announced on January 16, 2023, the opening of registration for carbon credit trading on its Renewable Energy and Carbon Credit Exchange Platform. This new online platform supports the domestic carbon market and provides Thai exporters with the ability to purchase carbon credits, allowing them to address demands from importing nations to conform to carbon emission reduction regulations. This is expected to be a positive step forward for the current practice in Thailand, in which the carbon market operates as a voluntary and unregulated buy-sell platform, free from government regulation. Developed in partnership with the Thailand Greenhouse Gas Management Organization (TGO), the FTI: CC/RE/REC X Platform, or FTIX, is intended to increase the promotion of national carbon credits, renewable energy, and renewable energy certificates, thus improving the country’s efforts to mitigate climate change. Entrepreneurs interested in registering for carbon credit trading on the FTIX can do so through the FTIX website at fti-cc.com. The platform initially supports carbon credit trading through over-the-counter methods. In the near future, the FTIX will be developed to support 100% renewable energy (i.e., RE100 energy) and renewable energy certificate trading. However, the related tax and carbon pricing policies have not yet been issued. The TGO is currently in discussions with the Fiscal Policy Office and the Ministry of Finance regarding fiscal policy for the FTIX. For more information on the FTIX, or on any aspect of renewable energy activities in Thailand, please contact Charuwan Charoonchitsathian at [email protected], Napassorn Lertussavavivat at [email protected], or Ratchapat Triteeyaputranonta at [email protected].
Read More
August 31, 2022
Thailand’s Draft Climate Change Act Countries around the world have given significant attention to climate change legislation, with many national, regional, and global attempts to slow the momentum of climate change. The most notable of these multilateral efforts is the Paris Agreement, a legally binding international treaty on climate change currently adopted by 193 parties. Its goal is to limit the global average temperature to well below 2°C (preferably below 1.5°C) above preindustrial levels, and the treaty’s coordinated efforts to combat climate change are much more ambitious than previous global agreements and discussions. Article 4 of the Paris Agreement requires countries to provide “nationally determined contributions” (NDCs), consisting of their action plans for climate action. Thailand, as a party to the Paris Agreement, has put forth an NDC that pledges to achieve an unconditional greenhouse gas (GHG) emission reduction target of 20% from the business-as-usual projection for 2030, with the possibility of increasing that target to 25% subject to adequate and enhanced access to technology development and transfer, financial resources, and other support. To enable the accomplishment of this pledge, Thailand is looking to enact climate change legislation that functions as a key mechanism for domestic climate action. In 2018, the Office of Natural Resources and Environmental Policy and Planning (ONEP) under the Ministry of Natural Resources and Environment was assigned to prepare a draft Climate Change Act. The draft is now complete, and according to news reports it is set to be submitted to the cabinet for further consideration. The draft Climate Change Act lays out Thailand’s action plan for climate change mitigation and adaptation, including emissions reductions. Some of the key sections in the draft law involve citizen rights, the National Climate Change Policy Committee, and a national GHG database. Rights of Citizens The draft establishes the
Read More
August 26, 2022
Thailand’s Board of Investment (BOI) has extended its previously announced period for reduction of import duty on imported raw and essential materials for battery manufacturing for electric vehicles and other applications. The BOI’s announcement No. 5/2565 dated August 8, 2022, extended the reduction period to a maximum of five years. The BOI’s promoted activities list includes two battery-manufacturing business activities: Activity 4.8.3.1 – Battery manufacturing Activity 5.2.6.1 – High energy density battery manufacturing Qualifying battery manufacturers who have cell or module manufacturing processes are eligible for 90% import duty reductions on raw and essential materials that cannot be produced in Thailand. These reductions will be available on an annual basis, and are renewable for five years in total—up from the original two years. Existing projects (i.e., those which have the original two-year duration in their BOI certificate) can also benefit from the extension by preparing a project amendment form, along with a clarification letter and supporting documents, for submission to the BOI office. For more details on these customs duty reductions, or on any aspect of investment promotion in Thailand, please contact Charuwan Charoonchitsathian at [email protected] or +66 2056 5657, or Napassorn Lertussavavivat at [email protected] or +66 2056 5662.
Read More
August 16, 2022
On July 21, 2022, Vietnam’s Ministry of Industry and Trade (MOIT) submitted Report No. 126/BC-BCT to the Prime Minister regarding the mechanism for transitional wind and solar power projects. In this report, the MOIT proposed some recommendations to explicitly address difficulties for outstanding wind and solar power projects (“Transitional Projects”) which have been developed under the Prime Minister’s Decision No. 13/2020/QD-TTg dated April 6, 2020, on the development of solar power projects (Decision 13) and Decision No. 37/2011/QD-TTg dated June 29, 2011, on the development of wind power projects (Decision 37), as amended by Decision No. 39/2018/QD-TTg dated September 10, 2018 (Decision 39). The Transitional Projects primarily include those which have completed construction but have not yet been put into operation, and those which have been put into operation but for which the power price has not yet been decided, due to missing the deadline set forth under the aforementioned decisions to be eligible for the feed-in-tariff (FIT). In particular, the MOIT has proposed the following key recommendations to the Prime Minister: Mechanism for Transitional Projects The MOIT proposes two options: Option 1: Developers of the Transitional Projects negotiate and sign power purchase agreements (PPA) with Vietnam Electricity (EVN) within the price framework issued by the MOIT in accordance with the Law on Electricity, the Law on Prices, and their subordinate guiding legislation; or Option 2: The Prime Minister formulates a new decision specifying the mechanism for bidding on the purchase of power produced by the Transitional Projects, estimated to be implemented for the time limit of three years and within the price framework issued by the MOIT. Mechanism for future wind and solar power projects The MOIT proposes to apply the mechanism that developers of future wind and solar projects negotiate the power price and sign the PPA
Read More