A STANDALONE ACTION FOR SINGAPORE'S COMPETITION LAW REGIME

Date01 December 2017
Published date01 December 2017
Citation(2017) 29 SAcLJ 224
AuthorJeremiah LAU LLB (Hons) (National University of Singapore); Advocate and Solicitor (Singapore); Associate, Rajah & Tann Singapore LLP.

Challenges and Opportunities

This article discusses whether introducing a standalone private action for damages to Singapore's competition law regime is a good idea. Currently, there is only a follow-on action for damages available – private claimants have to wait for an infringement decision from the Competition Commission of Singapore before they have a chance of receiving damages. The policy goals and potential benefits of implementing a standalone action will be analysed. Practical issues with introducing this new action are examined – including a possible clash with the leniency regime of the Competition Commission of Singapore. Finally, several workarounds to these problems that have been implemented in other jurisdictions are discussed.

I. Introduction and outline

1 Singapore's competition law regime has celebrated its ten-year anniversary. The Competition Commission of Singapore (“CCS”), responsible for the public enforcement of competition law, has produced jurisprudence in the form of infringement and clearance decisions on all three substantive aspects of the law1 and the Competition Appeal Board (“CAB”) has issued eight appeal decisions.2

2 However, little discussion has been had regarding how competition law is enforced. In 2010, the current Chief Executive of the CCS said that “rights of private actions may be a trend to watch”.3

3 Currently, there is a follow-on private right to bring a claim for relief following an infringement decision by the CCS, provided the party bringing the claim has suffered loss or damage, established by s 86 of the Competition Act.4

4 The prevailing view is that s 86, which creates the statutory follow-on action, is meant to be exhaustive in the sense that no other rights to private action (including any rights to a standalone action) exist.5 The fact that s 86 is meant to exhaustively detail all available rights of private action can be implied from the Second Reading of the Competition Bill 2004, where the Minister said that “violators of the competition law are liable to be sued by parties who suffered loss and damage” and that “Clause 86 provides for such rights”.6 Thus, although there has never been any formal pronouncement that there is no standalone right in Singapore, it seems unlikely that such a right currently exists.7

5 In the UK, parties have the right to initiate an action in the ordinary courts for breach of competition law rules.8 Any person or undertaking that has suffered loss or damage as a result of an infringement of UK (or European Union (“EU”)) competition law rules may bring a claim for damages or other relief before the Chancery Division of the High Court.9 These standalone claims are brought as

tortious claims for breach of statutory duty.10 It is clear that Singapore's current enforcement model is not the only way to do things.11

6 It is the aim of this article to stimulate a discussion on whether Singapore should reform its private enforcement system by adopting the standalone right to bring a private action (“standalone right” or “standalone action”).

7 The next four parts of this article will progressively examine if we should adopt the standalone right which exists in the UK.

8 Part II12 will explain why private enforcement, specifically a standalone right, is desirable in the first place.

9 Part III13 will present an empirical analysis as to whether the UK standalone right has been utilised, and if so, how many of these cases brought by private plaintiffs have been successful.

10 Part IV14 will analyse potential areas of conflict with the public enforcement model – inconsistency between the ordinary courts and the CCS, and leniency applications and their vulnerability to discovery. This will be analysed in the context of the position at general law in Singapore.

11 Part V15 will evaluate whether the legal framework in Singapore can accommodate the standalone right. Standalone actions (for the breach of competition law) before the UK High Court are brought as tortious claims for the breach of a statutory duty. The state of tort law in Singapore, and its amenability to the same kind of action in the UK, will be evaluated.16

12 Having shown in Parts II to V that the standalone action introduces benefits that the follow-on action cannot provide,17 and that the difficulties surrounding its implementation are not insurmountable, Part VI18 will analyse some major changes that are proposed at the UK and EU levels to make the standalone action more attractive to claimants. Part VI19 will then conclude the article, recommending that Singapore should adopt the UK-style standalone right, but only with the additional reforms proposed.

II. What goals of competition law can standalone actions help to serve?

13 First, the goals that private enforcement of competition law can serve, as well as the criticisms of the ability of private enforcement to achieve these goals, will be laid out. Second, why the standalone action can serve these goals in ways that the current follow-on action cannot –ie, why the availability of the follow-on action is insufficient – will be specifically addressed.

14 John Locke famously distinguished two rights:20

… the one of punishing the crime, for restraint and preventing the like offence, which right of punishing is in everybody, the other of taking reparation, which belongs only to the injured party.

15 This applies more specifically to competition law too. The Competition Law Association (UK) has stated that “public enforcement is aimed at preventing antitrust infringements, whereas private enforcement has the task of compensating the victims”.21 This statement, while helpful in illustrating the two goals of competition law, is perhaps overly simplistic. Private enforcement is not merely limited to achieving the compensatory goal – the threat of being on the receiving end of a private action, in addition to public investigation by the competition law authority, also acts as a deterrent to would-be competition law infringers.

16 To contextualise the following discussion on the twin goals of competition law, it might be appropriate to say a few words about the rationale behind this body of law.

17 Modern competition law had its genesis in the US, with the enactment of the Sherman Antitrust Act in 1890. The aim of the Act was to restore and maintain competitive conditions in the market by prohibiting abusive practices, be they anticompetitive agreements to fix prices, or abuses of dominance by monopolistic entities.

18 The Sherman Antitrust Act has been said to be the synthesis of two ideologies.

19 The first ideology (the evolutionary vision) sees the market as a mechanism for facilitating free exchanges among individuals in the pursuit of their best interests as well as the best interests of the group as a whole – Adam Smith's invisible hand.

20 The second ideology (the intentional vision) views the market as a mechanism that can be exploited by powerful interests to coerce consumers, labour and small businesses. In this vision, the harmful outcomes of market processes can and should be corrected by governmental intervention.22

21 Sitting in the middle of these ideologies, competition law recognises the power of the free market to generate wealth and opportunity, but also sees the potential for abuse by powerful market players.

A. Private enforcement and the compensatory goal

22 Upon the successful litigation of a private action alleging the breach of competition law rules, the plaintiff receives damages. The goal here is to “correct for the consequences when a violation has taken place, by making the party which wrongfully committed the violation compensate other parties who innocently suffered the consequences of

the violation”.23 The European Court of Justice (“ECJ”) in Courage and Crehan24 held that:

The full effectiveness of Article 85 of the Treaty … would be put at risk if it were not open to any individual to claim damages for loss caused to him … by conduct liable to restrict or distort competition.

23 There is some academic debate as to the proper range of remedies for private actions in the UK – should they be compensatory, punitive or restitutionary? However, the courts in the UK have come to the position that in private actions, only compensatory damages are available, and “a restitutionary award is not an available remedy in an anti-trust case”.25

24 Of course, the identification of the victims of an anticompetitive practice will depend on which competition law rule was breached. Breaches of s 34 of the Competition Act (which deals with anticompetitive agreements), generally speaking, tend to have more widespread effects. Price-fixing affects all consumers, and has a direct impact on consumer welfare. Abuse of dominance (regulated by s 47), on the other hand, often has more readily identifiable victims – for example, firms that have been forced out of the market by the abusive conduct of a dominant firm.26

B. Private enforcement and the deterrence goal

25 Private actions can have an impact on deterrence27 as well. The deterrence goal of competition law is this – to ensure that “the antitrust prohibitions are not violated and that the anticompetitive effects which the antitrust prohibitions aim to avoid are indeed avoided”.28 This is done by creating a credible threat of sanction, which affects the

cost/benefit analysis of potential violators, thus causing them to refrain from violations.

26 Potential infringers of competition law would be more cautious in their behaviour29 if they had to worry about both the possibility of an investigation by the CCS, and lawsuits from private parties who have suffered loss. The threat of private actions thus acts as a deterrent, making potential infringers take their compliance obligations more seriously.

27 In fact, there is a kind of natural symbiosis – through the use of the notification system, private...

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