Competition Law

AuthorKala 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(2013) 14 SAL Ann Rev 194
Published date01 December 2013
Date01 December 2013

10.1 In the past 12 months, the Competition Commission of Singapore (‘CCS’) has not issued as many decisions but the few that have been issued have led to important developments. This update examines the cases and developments in the last year, adopting a similar approach as the prior update and touches on, inter alia, market definition, anti-competitive agreements, abuse of dominance, substantial lessening of competition and brings up some new issues that were looked at recently.

Market definition

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. The market definition analysis has primarily been in relation to anti-competitive agreements rather than on dominance.

Application to a 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 the 2013 bid-rigging case, ie, Collusive Tendering (Bid-rigging) in Motor Vehicle Public Auctions CCS 500/003/10 (28 March 2013) (‘Motor Vehicles’), the CCS has maintained (at para 71) its existing stand that a distinct market definition is not necessary for the CCS to establish an infringement of a s 34 prohibition. The CCS has reiterated that the very nature of price-fixing, collusive tendering or bid-rigging, market sharing or output limitations are regarded as preventing, restricting or distorting competition appreciably. As such, in such instances, the purpose of defining the market is to determine the appropriate level of penalties to be meted out.

10.5 Separately, in reviewing notifications involving the aviation industry, the CCS has also demonstrated a consistent approach to its previous decisions relating to co-operative agreements between airlines by following the origin and destination (‘OD’) pair market definition. The two notifications in the aviation industry in 2013 are Notification for Decision by Emirates and Qantas Airways Ltd of their Proposed Conduct CCS 400/006/12 (28 March 2013) (‘Qantas-Emirates’) and Notification for Decision by Qantas Airways and Jetstar Airways of their Proposed Conduct CCS 400/02/12 (5 September 2013) (‘Qantas-Jetstar’).

10.6 Additionally, in Qantas-Emirates, the CCS once again recognised that the carriage of passengers and the carriage of freight were two different markets. The two markets were identified as follows: Air Passenger Services Market (‘APSM’) and Air Freight Services Market (‘AFSM’). The reason for the different markets lay primarily in the fact that air freight services are ‘less time sensitive’ and frequently ‘involves transportation to multiple locations “behind” and “beyond” the points of origin and destination’.

10.7 Another market that the CCS reviewed in 2013 concerned the ‘payment system industry’. In Notification for Decision by Visa Worldwide Pte Ltd of its Multilateral Interchange Fee system CCS 400/001/06 (3 September 2013) (‘Visa’), using the hypothetical monopolist test, the CCS examined the various activities that a card network could engage in and the different services that they could provide. It then concluded on the facts and information available that the ‘payment system industry’ could be divided into three different markets, namely, Card Scheme Administration Services, Card Issuing Service and Merchant Acquiring Services.

Application to a s 54 prohibition

10.8 In the context of a s 54 prohibition, the CCS defines the market to evaluate likely changes in the competitive landscape after the merger. As such, the CCS focuses on the areas of overlap in the merger parties' activities, and ascertains whether the merger will result in an increase in prices, reduction in supply or poorer quality of services to the detriment of consumers. The CCS also assesses whether any anti-competitive effects will affect or spill over to related markets such as complementary upstream or downstream markets. Herein lies the 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.

10.9 In Notification for Decision: Acquisition by Micron Technology Inc of Elpida Memory Inc CCS 400/009/12 (30 January 2013) (‘Micron-Elpida’), the CCS examined the Dynamic Random Access Memory (‘DRAM’) market and determined that it could be viewed as a whole product market without the need to further segregate the market. In doing so, the CCS noted the similar approach the European Commission (‘EC’) took in its own decision involving the DRAM market. Specifically, the EC had in Case No Comp/jv.44 – Hitachi/NEC-DRAM/JV considered the existence of different sub-categories according to size, applications and end-products, but ultimately did not find it necessary to further delineate the DRAM market.

10.10 There have been instances where the CCS considered it unnecessary to determine the precise relevant market and left open the point of exact delineation. For instance, in Notification for Decision: Acquisition by Fincantieri-Cantieri Navali SpA of STX OSV Holdings Ltd CCS 400/001/13 (28 February 2013) (‘Fincantieri’), the CCS considered that it was unnecessary to determine whether the product market constituted shipbuilding or ship repair and conversion services since there was no competition concerns regardless of which product or geographic definition was used. A key reason for this was because there was very limited overlap between the activities of the parties.

Section 34 – Prohibition of anti-competitive agreements

10.11 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

10.12 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 disjunctively or conjunctively. In Motor Vehicles, CCS maintained the position established by its previous decisions: that it is not necessary to characterise anti-competitive conduct as one that is exclusively an agreement or concerted practice since the two concepts may overlap with each other.

Object or effect of preventing, restricting or...

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