A BIG-TICKET ISSUE FOR SINGAPORE‘S BIGGEST TICKETING ISSUER

• Citation: (2011) 23 SAcLJ 538
• Author: Nicholas TAN BA (Hons) (Cambridge), LLM (Harvard); Visiting Fellow, National University of Singapore Business School.
• Published date: 01 December 2011
• Date: 01 December 2011

The Approach to “Abuse” of Dominance in Singapore The growing significance of abuse of dominance law and economics is underscored by the seriousness with which lawmakers and regulators around the world are increasingly viewing violations of it and the record-breaking size of fines recently imposed. In Singapore, the Competition Commission of Singapore has issued its first ever infringement decision for abuse of dominance under s 47 of the Competition Act. This article examines, with particular reference to the SISTIC decision, issues relating to what approach is acceptable, and what elements are required to be shown, in establishing that conduct of a dominant undertaking is “abusive” under s 47.

I. Introduction

1 Section 47 of Singapore‘s Competition Act sets out one of three substantive prohibitions in Singapore‘s relatively new competition framework.1 It prohibits undertakings from engaging in “conduct which amounts to the abuse of a dominant position” in any market in Singapore.2 The provision is closely modelled after s 18 of the UK

Competition Act 1998,3 which is in turn based on Article 102 of the Treaty on the Functioning of the European Union4 (“TFEU”). Art 102 TFEU, problematically, is worded in broad terms and neither defines what an “abuse” of a dominant position is, nor provides criteria or guidance as to what is required to be proven in order to establish a case of abuse, leaving EU enforcement and judicial organs considerable difficulty in grappling with its many uncertainties. Indeed, it has been argued before the Court of Justice that the concept of an “abuse” of a dominant position, along with the concept of a dominant position itself, are “among the most indeterminate and vague concepts both in community law and the law of member states”.5 Despite the fact that the same statutory breadth and lack of definitional guidance exists in Singapore‘s own corresponding provision, these problems have not yet been discussed much in Singapore. Singapore courts have so far not had to address these issues because no abuse of dominance case has ever reached a Singapore court,6 and in fact, until

only recently,7 no infringement decision for abuse of dominance had ever been issued by the regulatory authority here since s 47 came into force.8

2 Difficult issues surrounding s 47 may soon have to be confronted squarely. On 4 June 2010, the Competition Commission of Singapore (“CCS”), Singapore‘s competition authority, issued its first ever infringement decision for an abuse of dominance against SISTIC.com Pte Ltd (“SISTIC”).9 In its decision, CCS found that SISTIC had contravened s 47 by entering into various agreements with venue organisers and event promoters that contained explicit exclusivity restrictions requiring the use of SISTIC as sole ticketing provider. These agreements, totalling 19 in number, included an agreement with The Esplanade Co Ltd that required the use of SISTIC as sole ticketing provider for all events held at the Esplanade and another with the Singapore Sports Council that required the use of SISTIC as sole ticketing provider for all events held at the Singapore Indoor Stadium.10 SISTIC has since filed a notice of appeal against the decision, seeking that the infringement decision be set aside or, in the alternative, that the financial penalty be reduced.11

3 The appeal will now be heard by the Competition Appeal Board. Significantly, depending on the outcome of that hearing, the case may finally come before Singapore‘s judicial system for consideration, as further appeals from the Competition Appeal Board‘s decision on points of law and the amount of the financial penalty are available first to the Singapore High Court and thereafter to the Singapore Court of Appeal.

4 The significance of abuse of dominance law, not only in Singapore but in many other jurisdictions, is underscored by the seriousness with which regulatory authorities around the world are increasingly viewing violations of it and the large and growing size of fines recently imposed. In Singapore, the S$989,000 financial penalty imposed on SISTIC for its abuse of dominance is the largest CCS has

ever handed out, across all possible Competition Act violations;12 in July 2009, the Korea Fair Trade Commission imposed a record-breaking fine of approximately KRW260bn (S$296m) on Qualcomm for abusing its dominance;13 and in May 2009, the European Commission imposed on Intel a Œ1.06bn (S$1.83bn) fine, Europe‘s largest ever competition fine, also for abusing its dominance.14

5 This article examines, with particular reference to the SISTIC decision, the issue of what approach is acceptable, and what elements are required to be shown, in establishing that conduct of a dominant undertaking is “abusive” under s 47.15 Is it necessary under Singapore law to show in every case that the conduct complained of has resulted in provable anti-competitive harm (often described as an “effects-based” approach)? Does Singapore reject rules that classify certain categories of behaviour as being so clearly harmful to competition by their very nature that showing that conduct falls within those categories would of itself suffice for establishing an abuse (often described as “per se rules”)? Or, as a further possibility, will Singapore explicitly recognise alternative approaches residing somewhere in between a pure effects-based approach on the one hand and per se rules on the other?16

II. Establishing an “abuse” of dominance

A. The EU background: An intermediate approach?

6 The starting point in establishing an “abuse” involves the fundamental question whether a competition authority must demonstrate the occurrence of actual, adverse effects in order to make a determination that a dominant undertaking has abused its dominant position. If so, then a failure to establish the presence of such effects, or a failure to establish that the effects were caused by the conduct in issue, would be fatal to any abuse of dominance case. In examining the issue, the regulatory and judicial experience in the EU in interpreting and enforcing Art 102 TFEU is particularly significant because Singapore‘s s 47 is very similar to, and has its origins ultimately in, Art 102 TFEU. Case law on abuse of dominance in the EU is also fairly extensive and developed, with a number of cases having been adjudicated upon by the EU‘s highest court.

7 In the EU, it was somewhat clear after the pivotal cases of Manufacture francaise des pneumatiques Michelin v Commission17 (“Michelin II”) and British Airways plc v Commission18 (“British Airways”), for a while at least, that there was no requirement under EU law to show that adverse effects have actually and already occurred in order to establish an abuse. Michelin II was a case involving a scheme of conditional rebates offered by a tyre manufacturer designed to induce loyalty among its dealers. It was specifically argued on behalf of the dominant undertaking that its conduct must be shown to have at least some actual anti-competitive effect in order to be considered abusive, and that the European Commission‘s decision against it should be set aside because it had failed to carry out the sort of detailed analysis required to demonstrate the occurrence of such effects.19 The applicant relied on prior case law and in particular Hoffmann-La Roche & Co AG v Commission (“Hoffmann-La Roche”), where the European Court of Justice, the EU‘s highest court, had held that an abuse is one which “… has the effect of hindering the maintenance of the degree of competition still existing in the market or the growth of that competition”20 [emphasis added].

8 This Hoffmann-La Roche formulation appeared to suggest that a showing of actual effects is necessary. However, on appeal, the Court of First Instance rejected this argument, disagreeing that Art 102 TFEU requires the European Commission to make such a showing.21 Reasoning that the “effect” referred to in Hoffmann-La Roche and other case law did not necessarily mean actual effect,22 the court then went on to say that, for the purposes of establishing an infringement of Art 102 TFEU, it is sufficient to show that the abusive conduct of the undertaking in a dominant position “tends to restrict competition[23] or, in other words, that the conduct is capable of having that effect” [emphasis added].24

9 In British Airways, the court endorsed the same conclusion:25

… for the purposes of establishing an infringement of [Art 102 TFEU], it is not necessary to demonstrate that the abuse in question had a concrete effect on the markets concerned. It is sufficient in that respect to demonstrate that the abusive conduct of the undertaking in a dominant position tends to restrict competition or, in other words, that the conduct is capable of having or likely[26] to have such an effect.

10 This case law, however, was not without difficulty. Despite Michelin II and British Airways, a strict “effects based” or “actual effects” approach continued occasionally to be advocated. To some extent, the

judgments of Michelin II and British Airways continued to be fertile soil for seeds of doubt, perhaps because their unequivocal rejection of an “actual effects” approach was not accompanied by any equally unequivocal explanation of what an acceptable approach would be - at least not with exposition and detail sufficient to assure observers that the approach envisioned would be a robust, rigorous and economicsoriented one. Indeed, there was concern that the judgments were suggestive of, or even synonymous with, a judicial retreat to blanket disallowances and “per se rules” against certain entire categories of commercial conduct.27

11 The rejection of an “actual effects” requirement and the validity of an alternative, “capability-based” approach were reaffirmed by the General Court in the recent case of Tomra v Commission28 (“Tomra”). On appeal, the General Court confirmed once again,29...