Competition Law

Publication year2020
Date01 December 2020
Citation(2020) 21 SAL Ann Rev 263
Published date01 December 2020
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 Singapore LLP.
I. Overview

10.1 Despite the unusual circumstances brought about by COVID-19, 2020 remained a year where the Competition and Consumer Commission of Singapore (“CCCS”) continued to review matters and issue decisions. The CCCS issued two infringement decisions, concluded two of its investigations, and received one notification relating to an alliance under s 34 of the Competition Act1 (“the Act”). In light of the COVID-19 pandemic, the CCCS also saw itself issuing a Guidance Note on collaborations between competitors, in recognition of the need for competitors to collaborate and come to new agreements in these unprecedented times.

10.2 The CCCS was busier in so far as merger clearances under s 54 of the Act were concerned. It cleared five proposed acquisitions — substantially more than in 2019 — although it moved one proposed transaction into an in-depth Phase 2 review. As part of its continued review of merger clearances where remedies are imposed, the CCCS released the remedies imposed on Grab, which were first mandated following a 2018 infringement decision under s 54 as a new regulatory framework for ride hailing comes into force, and which will see the Land Transport Authority (“LTA”) overseeing activities in the ride-hailing sector under the Point-to-Point Transport Regulatory Framework (“P2P Regulatory Framework”).

10.3 On the consumer protection front, the CCCS has remained active in its enforcement efforts under the Consumer Protection (Fair Trading) Act2 (“CPFTA”). It undertook several investigations which culminated in the requirement for undertakings from four errant retailers and

obtaining a court order against one e-commerce retailer to stop its unfair trade practices.

10.4 From a regulatory review standpoint, the CCCS issued for public consultation proposed amendments to its competition guidelines relating to market definition, intellectual property, the s 47 prohibition on abuses of dominance, and the substantive assessment of mergers, merger procedures, and remedies, directions and penalties. Some of these amendments followed from a market study on e-commerce platforms that commenced in late 2019 and concluded in September 2020. Separately, the CCCS also published a set of Guidelines on Price Transparency, which whilst primarily provides guidance for consumer protection issues, nevertheless has an impact on competition analysis as well.

10.5 The year 2020 saw the issuance by a number of competition regulators across the world of guidance to businesses on how they would apply competition laws to agreements amongst competitors in response to the COVID-19 pandemic. Some ASEAN competition regulators likewise did so, taking the lead from the ASEAN Experts Group on Competition (“AEGC”), comprising senior representatives from the multiple ASEAN competition regulators, which issued a joint statement in response to the COVID-19 pandemic. The joint statement nevertheless reiterated that competition enforcers in ASEAN “will not hesitate to take action against any business taking advantage of the current pandemic crisis by engaging in exploitative conduct that amounts to an abuse of their dominant position”.

II. Anti-competitive agreements, decisions of associations of undertakings and concerted practices (section 34 of the Competition Act)

10.6 Section 34 of the Act prohibits all agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their “object or effect the prevention, restriction or distortion of competition within Singapore”. In particular, agreements which involve price-fixing, market-sharing, output control and bid-rigging agreements are considered “object” restrictions. In 2020, the CCCS issued two infringement decisions relating to bid-rigging, reiterating that such conduct continues to be one of the most severe forms of anti-competitive conduct. It likewise concluded an investigation into anti-competitive behaviour after finding that the competition issues in the relevant markets had been sufficiently addressed. It also received a single proposed airline alliance notification, which is currently still undergoing review.

10.7 Aside from the cases discussed above, enforcement has continued as usual, with a slew of smaller price-fixing and bid-rigging cases involving a number of industries such as warehousing operators, providers of various types of maintenance services. The recent infringement decision in Singapore against contractors for bid-rigging in tenders for maintenance services of swimming pools and water features must be highlighted as the first one where parties received a discount as leniency applicants and additionally for their participation in the CCCS's Fast Track Procedure. Under the Fast Track Procedure, parties who admit liability for their infringement of the Act and successfully conclude a Fast Track Agreement with CCCS are eligible for a fixed 10% reduction in the amount of financial penalty. This comes on top of the reduction obtained pursuant to leniency. This is the first time CCCS has applied both discounts cumulatively since the Fast Track Procedure was formalised.

A. Competition Appeal Board overturns appeal in part by Fresh Chicken Distributors3

10.8 An important decision, which will have an impact on how competition law is enforced, is the decision issued in December 2020 in Singapore by the Competition Appeal Board (“CAB”) in relation to the appeal lodged by five fresh chicken distributors (“the Parties”) against the 2018 CCCS decision which found that the Parties had entered into a price-fixing agreement and a non-aggression pact (“NAP”) for a period of close to seven years. Whilst the CAB affirmed the CCCS decision that the Parties had participated in a price-fixing arrangement over the period, the CAB agreed with the Parties that the CCCS had not established to the requisite legal standard that all the parties had participated in the NAP. In particular, the CAB noted that “if CCCS's case is that the NAP and Price Discussions are distinct infringements, they should not approach the evidence in a general broad-brush manner to treat relevant evidence as pointing to participation in a general collective ‘Anti-Competitive Discussions’ constituting both NAP and Price Discussions”, adding that evidence indicating participation in one agreement “cannot simply be taken to also indicate participation” in the other.

10.9 The CAB further disagreed with the CCCS's calculations of the financial penalties imposed. In addition to confirming that the relevant turnover for the purpose of calculating the penalties had to be the turnover in the financial year preceding the end of the infringement(s) — as opposed to the year preceding the issuance of the infringement decision — the CAB found that the CCCS was incorrect to assert that

minor and passive participation is not a mitigating factor. As a result, the overall penalty imposed on the appellants was reduced by an average of 40%. Whilst there are number of critical points that arise from the CAB's decision on process and procedure, which weigh in favour of businesses, it is worth noting that the CAB decision ends on the following remarks:4

Parliament legislated for very broad powers for the CCCS and the Competition Appeal Board that focused on the substance of infringements and somewhat less on the procedural elements as for example waiving the applicability of the Evidence Act and the law of evidence.

B. CCCS penalises three contractors for bid-rigging of quotations for provision of building, construction and maintenance services to Wildlife Reserves Singapore5

10.10 An infringement decision was issued on 4 June 2020 against contractors Shin Yong Construction Pte Ltd, Geoscapes Pte Ltd and Hong Power Engineering Pte Ltd, who were found to have participated in anti-competitive agreements to rig bids for the provision of building, construction and maintenance services under Invitations to Quote and Invitations to Tender called by Wildlife Reserves Singapore (“WRS”). By way of background, the complaint was referred to the CCCS by WRS. Following investigations by the CCCS, it was discovered that the Parties had exchanged bid information and co-ordinated their bids for eight tenders and quotations called by WRS from 1 July 2015 to 6 October 2016. The CCCS then conducted unannounced inspections at their places of business, following which the parties applied for leniency under the CCCS's leniency programme.

10.11 Bid-rigging is considered to be one of the most harmful types of anti-competitive conduct. It distorts the competitive bidding process as it eliminates the pressure on suppliers to submit their best offers to a customer. This prevents the customer from getting the best value for their tenders. In this case, the parties rigged and co-ordinated their bids, creating the false impression that independent and competitive bids were being submitted when they were not.

10.12 On the facts of this case, the CCCS held that the parties' conduct was anti-competitive, and found that their conduct distorted competition as the parties would agree on their bid prices before submitting their tenders to WRS, and this prevented WRS from obtaining the best prices through independent competitive bids. The CCCS imposed a financial

penalty of $32,098 on the parties. Additionally, the parties have also been barred by WRS from bidding for any of WRS's contracts.

10.13 This case serves as a good illustration and reminder of how bid-rigging can be detected without a formal investigation. Here, it was WRS who detected the suspicious activity and reported it to the CCCS.

C. CCCS fines three contractors for rigging bids in tenders for maintenance of swimming pools and other water features6

10.14 On 14 December 2020, an infringement decision was issued against three businesses for infringing s 34 of the Act. CU Water Services Pte Ltd (“CU Water”), Crystalene...

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