Competition Law
| Published date | 01 December 2012 |
| Author | Kala ANANDARAJAH LLB (Hons) (National University of Singapore), MBA (Banking and Finance) (Nanyang Technological University of Singapore); Advocate and Solicitor (Singapore); Partner, Head, Competition & Antitrust and Trade Practice, Rajah & Tann LLP. |
| Citation | (2012) 13 SAL Ann Rev 153 |
| Date | 01 December 2012 |
10.1 Competition Law has been in Singapore since January 2006. In the last seven years, the Competition Commission of Singapore (‘CCS’) has issued numerous cases which touch on various aspects of competition law. This update addresses the cases according to the multiple areas, including market definition, anti-competitive agreements, abuse of dominance, substantial lessening of competition and penalties.
10.2 Market definition is critical in any competition analysis. The CCS employs the small but significant and non-transitory increase in price test or hypothetical monopolist test to define markets. From a practical perspective, the CCS has acknowledged that the hypothetical monopolist test only provides ‘an appropriate frame of reference for competition analysis’ (Competition Commission of Singapore, CCS Guidelines on Market Definition (June 2007) at para 2.9). The CCS recognises that the presumptions employed in the hypothetical monopolist test cannot be applied mechanically in its market analysis and will adjust the test to suit the qualitative and quantitative characteristics of each specific focal product and market.
Application to s 34 prohibition
10.3 In the context of a s 34 prohibition of the Competition Act (Cap 50B, 2006 Rev Ed), market definition serves two main purposes: (a) to determine whether an agreement and/or concerted practice has an ‘appreciable effect on competition’; and (b) to identify the relevant turnover of the infringing party in order to calculate the appropriate penalty.
10.4 In its assessment of the Singapore Medical Association's (‘SMA’) Guidelines on Fees (Application for Decision by the Singapore Medical Association in Relation to its Guideline on Fees Pursuant toSection 44 of the Competition Act CCS 400/001/09 (18 August 2010) (‘SMA Guidelines on Fees’)), the CCS used market definition as a tool to assess whether the SMA's Guidelines would restrict competition appreciably, as well as to determine whether the exception of net economic benefit applied.
10.5 In most of the cases involving price-fixing and bid-rigging, ie, Collusive Tendering (Bid-rigging) for Termite Treatment/Control Services by Certain Pest Control Operators in Singapore CCS 600/008/06 (9 January 2008) (‘Pest Control Services’), Price Fixing in Bus Services from Singapore to Malaysia and Southern Thailand CCS 500/003/08 (3 November 2009) (‘Express Bus Operators’), Collusive Tendering (Bid-rigging) in Electrical and Building Works CCS 500/001/09 (4 June 2010) (‘Electrical Works’), Fixing of Monthly Salaries of New Indonesian Foreign Domestic Workers in Singapore CCS 500/001/11 (30 September 2011) (‘Employment Agencies’) and Price-fixing in Modelling Services CCS 500/002/09 (23 November 2011) (‘Modelling Agencies’), the CCS stated that a distinct market definition is not necessary for the CCS to establish an infringement of a s 34 prohibition. The very nature of price-fixing, collusive tendering or bid-rigging, market sharing or output limitations are regarded to prevent, restrict or distort competition appreciably. In such instances, the purpose of defining the market is to determine the appropriate level of penalties to be meted out.
10.6 The CCS has routinely recognised in all of its decisions relating to co-operative agreements between airlines that the starting point for market definition in relation to the provision of air passenger transport services is the origin and destination pair. A typical origin and destination pair is a pairing of cities, with one city being the point of origin and another city being the point of destination. This market definition was derived from the observation and analysis of air passengers' behaviour: passengers generally want to travel to a specific destination point and will not resort to substitutes even when faced with a small, non-transitory increase in price. However, in Notification for Decision by Qantas Airways and British Airways of their Restated Joint Services Agreement CCS 400/002/06 (13 February 2007) (‘Qantas and British Airways Restated Joint Services Agreement’), the CCS also noted that there could be other appropriate market definitions if certain distinctions were made, ie, types of passengers and types of flights.
10.7 In Infringement of the Section 34 Prohibition in Relation to the Price of Ferry Tickets between Singapore and Batam CCS 500/006/09 (18 July 2012) (‘Ferry Operators’), the CCS adopted the approach it took in relation to the airlines notifications and held that the general preliminary position for the definition of scheduled transport services is the origin and destination pair.
Application to a s 47 prohibition
10.8 In the context of a s 47 prohibition, the purpose of defining the market is to ascertain an undertaking's market share and identify whether that particular undertaking is dominant in the relevant product market, either in Singapore or overseas.
Application to a s 54 prohibition
10.9 In the context of a s 54 prohibition, the CCS will define the market to evaluate likely changes in the competitive landscape after the merger. There is a key difference in the way the CCS will assess the likely competitive effects arising from a merger compared to the s 34 and s 47 prohibitions. In a merger evaluation, the CCS will focus on the areas of overlap in the merger parties' activities and ascertain whether the merger will result in an increase in prices, reduction in supply or poorer quality of services to the detriment of consumers. Further, the CCS will assess whether any anti-competitive effects will affect or spill over to related markets such as complementary upstream or downstream markets.
10.10 In Notification for Decision: Merger between The Thomson Corp and Reuters Group plc CCS 400/007/07 (23 May 2008), the CCS used the hypothetical monopolist test to further narrow the market for the provision of financial information products to three separate markets, aftermarket broker research, earning estimates and fundamentals, and carried out their competitive assessment on each separate market.
10.11 There have been instances where the CCS considered it unnecessary to determine the precise relevant market and left open the point of exact delineation. In Notification for Decision: Proposed Acquisition by Glencore International AG of Chemoil Energy Ltd CCS 400/005/09 (24 February 2010), the CCS considered that it was unnecessary to determine whether the product market constituted fuel oil or marine oil since the eventual outcome of the competition analysis would be identical under both definitions. In Re Notification for Decision of the Proposed Acquisition by SIF Group Pte Ltd of Penguin Ferry Services Pte Ltd Pursuant to Section 57 of the Competition Act CCS 400/002/11 (6 June 2011) (‘Proposed Acquisition by SIF Group Pte Ltd of Penguin Ferry Services Pte Ltd’), SIF Group Pte Ltd was a newly incorporated company with no existing business. Hence, the CCS found that there was no need to precisely define the product market since there would be no overlapping products or merging of competitors.
10.12 The CCS stated in Notification for Decision: Anticipated Merger Involving Acquisition by Chartered Semiconductor Manufacturing Ltd of Hitachi Semiconductor Singapore Pte Ltd CCS 400/009/08 (28 March 2008) that it was unnecessary to define the product market precisely since there were no competition concerns arising from the various alternative product market definitions. The CCS reached the same conclusion in Re Notification for Decision of the Proposed Acquisition by Accenture Pte Ltd of NewsPage Pte Ltd Pursuant to Section 57 of the Competition Act CCS 400/003/12 (31 October 2012) and did not define a precise product or geographic market as it found that the merger was unlikely to lead to competition concerns under other possible alternative product and geographic market definitions.
10.13 In Notification for Decision: Acquisition of Singapore Computer Systems Ltd by Computer Systems Holdings Pte Ltd CCS 400/004/08 (30 September 2008), the CCS decided that a precise market definition was not necessary in this case and conducted its assessment on the subcategories in the IT services industry. The CCS attempted to explore various methods of market definition but came to the conclusion that determining an exact market definition was irrelevant since the market definition would not affect the findings relating to competitive concerns. Likewise, in Re Notification for Decision of the Proposed Acquisition by Seagate Technology Public Ltd Co of Certain Assets of the Hard Disk Drive Business of Samsung Electronics Co Ltd Pursuant to Section 57 of the Competition Act CCS 400/003/11 (29 November 2011), the CCS left open the exact scope of the relevant product markets for hard disk drives. The CCS had followed the European Commission's approach (as evidenced from various European Commission decisions, including Seagate/Maxtor COMP/M.4100 (27 April 2006), Quantum HDD/Maxtor COMP/M.2199 (8 December 2000), Hitachi/IBM Harddisk Business COMP/M.2821 (11 May 2009), Toshiba/Fujitsu HDD Business COMP/M.5483 (11 May 2009)) by leaving the market definition open and considering subcategories according to end-use instead.
10.14 Section 34 of the Competition Act prohibits agreements between undertakings, decisions by associations of undertakings or concerted practices which have as their object or effect the prevention, restriction or distortion of competition within Singapore.
Agreements and concerted practices
10.15 An agreement is formed once parties mutually agree on their course of behaviour in the market, whether formally, informally or through concerted practice. In most of its investigations in relation to price-fixing or bid-rigging, the CCS has clarified that the s 34 prohibition applies to agreements and concerted practices either...
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