Competition Law
| 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 Singapore LLP. |
| Publication year | 2021 |
| Citation | (2021) 22 SAL Ann Rev 219 |
| Date | 01 December 2021 |
10.1 Even as the COVID-19 pandemic continued into 2021, the Competition and Consumer Commission of Singapore (“CCCS”) was just as active, if not more, as it continued to review new transactions, undertake investigations and issue decisions.
10.2 Although CCCS continued to investigate potential violations of the Competition Act 20041 (“the Act”), including seemingly commencing new investigations, it did not issue any infringement decisions relating to anti-competitive agreements or abuse of dominance in 2021. It did, however, receive one notification relating to an alliance under s 34 of the Act, which is still in the midst of review. Additionally, following the expiry of the Guidance Note on Collaborations between Competitors in Response to the COVID-19 Pandemic2 (“COVID-19 Guidance Note”), CCCS issued a Business Collaboration Guidance Note3 (“Guidance Note”) to provide businesses with more clarity on common collaborations between competitors. CCCS also recommended that the Competition (Block Exemption for Liner Shipping Agreements) Order4 (“BEO”) should be extended for three years, which the Minister for Trade and Industry has adopted.
10.3 For merger reviews, CCCS was much busier. It reviewed ten proposed acquisitions in 2021: six were cleared unconditionally, one was cleared following commitments provided by the parties, one was withdrawn due to the termination of the merger agreement, and two were still being reviewed at the time of writing.
10.4 CCCS was also very busy on the regulatory review front. Following the public consultations on the proposed revisions to the competition guidelines, CCCS finally published the revised competition guidelines at the end of 2021. These revisions covered a number of the competition guidelines, including market definition, intellectual property, the s 47 prohibition on abuses of dominance with a particular focus on issues brought about by the digital world, the substantive assessment of mergers, merger procedures, and remedies, directions and penalties. The revised guidelines have since come into effect on 1 February 2022.
10.5 On the consumer protection front, CCCS continued to enforce the Consumer Protection (Fair Trading) Act 20035 (“CPFTA”). Following its investigations, CCCS received an undertaking from an errant beauty services retailer and obtained a court order against a fire extinguisher retailer to stop its unfair trade practices. CCCS, alongside the Consumers Association of Singapore (“CASE”), also issued an advisory on online consumer transactions in response to the prevalence of online shopping and the increased number of consumer complaints during the COVID-19 pandemic.
10.6 At the international level, the trend towards increasing co-operation between competition authorities continues. Regionally, CCCS concluded a memorandum of understanding (“MOU”) with the Philippine Competition Commission (“PCC”) on the enforcement of competition law. The CCCS also signed an MOU with China's State Administration for Market Regulation (“SAMR”) on co-operation of competition law.
10.7 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 and hence per se violations. Under the Act, CCCS has the power to investigate allegedly anti-competitive agreements and issue directions and/or impose financial penalties against parties to such agreements.
10.8 In 2021, CCCS did not issue any infringement decisions on anti-competitive agreements, decisions of associations of undertakings and concerted practices. However, CCCS did receive a proposed airline alliance notification.
10.9 Parties who are unsure if an agreement infringes the s 34 prohibition on anti-competitive agreements have the option of notifying CCCS for the purposes of seeking guidance or decision. Upon an application for guidance under s 43 of the Act, CCCS may give guidance on whether the agreement is likely to infringe the s 34 prohibition, or whether the agreement is likely to fall under a block exemption. Upon an application for a decision under s 44 of the Act, CCCS may make a decision on whether the agreement has infringed the s 34 prohibition, and if it has not, whether that is because of an exclusion, the agreement being exempt from the prohibition, or commitments having been accepted. The key difference between the two is that the application for guidance is treated as confidential, whilst that for notification is made public. The benefit of notifying CCCS of a co-operation where there is genuine uncertainty as to whether it is potentially anti-competitive is that the arrangement benefits from immunity from financial penalties for infringement (if any) from the period beginning on the date on which the notification was lodged and ending on such date as specified by CCCS if a likely infringement is to be found.
10.10 CCCS received a public airline alliance notification this year from Singapore Airlines Limited (“SIA”) and All Nippon Airways Co Ltd (“ANA”). The notification concerned their proposed commercial co-operation, with the parties entering into a joint venture framework agreement (“Proposed Commercial Co-operation”). The parties intended to co-operate on various aspects of the business, including scheduling, pricing, sales and marketing, and other commercial areas such as expanded code-sharing and special prorate arrangements. The parties to the Proposed Commercial Co-operation included SilkAir (Singapore) Private Limited (SIA's subsidiary), and Air Japan Co Ltd and ANA Wings Co Ltd (ANA's subsidiaries).
10.11 The parties submitted that the Proposed Commercial Co-operation would result in significant consumer and economic benefits and efficiencies. This included an enhanced air travel product for
10.12 At the time of writing, CCCS had yet to issue its decision.
10.13 Section 47 of the Act prohibits one or more undertakings with a dominant position from engaging in conduct which amounts to an abuse of dominance. For an undertaking to be liable for infringing s 47 of the Act, CCCS must first show that it is dominant in the relevant market. It is widely accepted that an undertaking holds a dominant position if it possesses substantial market power. In assessing whether a particular undertaking is dominant, CCCS will consider various factors, such as market shares, barriers to entry and expansion, as well as the extent of competitive constraints exerted by competitors and customers. As an indicative threshold, CCCS uses a 60% market share as a proxy for dominance.
10.14 Being dominant is not in itself a violation of s 47 of the Act. What is prohibited is leveraging on such dominance to restrict competition in any market in Singapore. Examples of abusive conduct include predatory pricing, price discrimination, refusal to supply, exclusive dealing and margin squeeze.
10.15 This year, CCCS did not issue any infringement decisions on abuses of dominance.
10.16 Section 54 of the Act prohibits mergers that substantially lessen competition in any market in Singapore and applies to completed and anticipated mergers, unless they are excluded or exempted under the Act. Whether a merger would substantially lessen competition involves a comparative analysis between the anticipated state of competition in the market subsequent to the merger and that which is pre-existing as if the merger did not take place, that is, the counterfactual.
10.17 Notwithstanding that a merger may substantially lessen competition, the presence of efficiency gains, amongst other factors, may operate to offset these anti-competitive effects. In such cases, CCCS will proceed to clear the merger. CCCS may clear the merger following a Phase 1 review or following a further review pursuant to a Phase 2 review, in both instances, with or without commitments. CCCS generally adopts a positive approach towards vertical mergers (mergers between undertakings operating on different levels of the production or distribution chain) and conglomerate mergers (mergers between undertakings operating in different and unrelated markets). This is because they are less likely to have an adverse impact on competition. However, this does not mean that vertical and conglomerate mergers will always be cleared. In recent times, CCCS has taken a more in-depth review of conglomerate mergers, as reflected by its approach to some of the more recent cases it was notified of. This is also evidenced by CCCS making adjustments to Form M1 to include an additional question on conglomerate effects to be explained when notifying a merger.
10.18 As the merger notification regime in Singapore is a voluntary regime, merger parties are not, strictly speaking, legally required to submit a merger notification to the CCCS. However, as was evident in the Grab/Uber merger, parties assume the various risks that come with such non-notification, such as...
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