By Ken Chia, Yi Lin Seng and Hazmi Hisyam (Baker McKenzie Singapore) Singapore has introduced a general competition law, largely similar to the United Kingdom model, which incorporates minor elements from Irish, Canadian and Indian competition laws. The Competition Act was passed by Parliament on 19 October 2004. Sector-specific guidelines prohibiting anti-competitive behavior also exist, notably in the telecommunications, media and energy sectors.
The Competition Act prohibits the following three main activities:
- agreements which have as their object or effect the prevention, restriction or distortion of competition in Singapore;
- conduct which amounts to the abuse of a dominant position in any market in Singapore; and
- mergers that have resulted or may be expected to result in a substantial lessening of competition within any market in Singapore for goods and services.
The Competition Commission of Singapore (Commission), which was formally established under the Competition Act, is responsible for the administration of the Competition Act. The Commission may recommend block exemption orders to be made by the Minister for Trade and Industry. The Commission has wide powers to conduct investigations if there are “reasonable grounds” for suspecting an infringement.
2.1 The Competition Appeals Board
A Competition Appeals Board has been established to hear appeals regarding the Commission’s decisions. However, appeals relating to decisions made by the Commission in relation to block exemptions will be heard by the Minister for Trade and Industry, because the power to make block exemption orders rests with the Minister. Only a person who is party to the proceedings in which the Board has made a decision may appeal to the High Court on a point of law arising from the Board’s decision or from any decision made by the Board on the amount of a financial penalty.
Section 34 of the Competition Act (which came into force on 1 January 2006 but was subject to a transitional period of six months so that parties could bring their agreements into compliance) stipulates that 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 are prohibited unless they are exempt or excluded in accordance with the provisions of the Competition Act. Please note that notwithstanding the above, an agreement will only fall within section 34 if the prevention, restriction or distortion of competition is appreciable. Agreements, decisions or concerted practices which involve the following will always have an appreciable effect on competition and will therefore be deemed as illegal no matter what the circumstances:
- the fixing (whether directly or indirectly) of purchase or selling prices or any other trading conditions;
- the limitation on or control of production, markets, technical development or investment;
- the sharing of markets or sources of supply; or
- bid rigging or collusive tendering.
The following agreements, decisions or concerted practices may or may not appreciably prevent, restrict or distort competition and must be examined on its facts:
- fixing trading conditions;
- joint purchasing or selling;
- sharing or exchanging price and/or non-price information;
- restricting advertising; or
- setting technical or design standards.
Section 47 of the Competition Act (which also came into force on 1 January 2006 but was not subject to a transitional period) stipulates that any conduct on the part of one or more undertakings which amounts to the abuse of a “dominant position” in “any” market in Singapore is prohibited. “Dominant position” refers to a dominant position within Singapore or elsewhere. The Competition Act does not deal with the criteria for determining whether an undertaking has a “dominant position”. However, the Commission has issued guidelines that provide indicative thresholds and considerations to take into account in determining dominance (see the next paragraphs). The Competition Act lists examples of conduct which may constitute an “abuse of a dominant position”, namely:
- predatory behavior toward competitors;
- limiting production, markets or technical development to the prejudice of consumers;
- applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; or
- making the conclusion of contracts subject to acceptance by the other party of supplementary obligations which have no connection with the subject of the contracts.
Exclusions from section 47 are listed in the Third Schedule to the Competition Act and are similar to the exclusions in relation to section 34, save that section 47 does not benefit from the vertical agreement and “net economic benefit” exclusions.
Any agreement or decision containing provisions that contravene section 34 will be held void. However, the following (listed in the Third Schedule to the Competition Act) are excluded from the restrictions:
- undertakings entrusted with the operation of services of general economic interest;
- agreements made to comply with legal requirements;
- agreements which create “exceptional and compelling reasons” why the above prohibitions ought not to apply (including to avoid a conflict between the Competition Act and Singapore’s international obligations);
- agreements or conduct which relate to any goods or services where there already exists (or there are plans to put in place) a more appropriate sectoral regulatory framework that balances competition issues with other policy concerns;
- agreements or conduct which relate to any “specified activity” (which includes the supply of piped potable water, wastewater management services, cargo terminal operations, scheduled bus services and rail services);
- “vertical agreements” (agreements between undertakings operating along different levels of the same value chain, for example, between manufacturer and distributor). The reason for this is that the undertakings have “a mutual interest in ensuring that as many goods and services are sold to consumers as possible” and because such vertical agreements will “have pro-competitive effects that more than outweigh the potential anti-competitive effects”; and
- agreements with “net economic benefit” (i.e., agreements which contribute either to improving production or distribution or to promoting technical or economic progress, but which do not impose restrictions which are dispensable to the attainment of those objectives, or afford the undertakings concerned the possibility of eliminating competition in respect of a substantial part of the goods or services in question).
In July 2006, a block exemption was granted for liner shipping agreements which was due to expire on 31 December 2010. After a public consultation held by the Commission, the Commission recommended for the block exemption to be extended for five years. The block exemption has been extended for a further five years until 31 December 2015.
Section 54 of the Competition Act (which came into force on 1 July 2007) prohibits mergers or anticipated mergers that have resulted, or are expected to result, in a substantial lessening of competition within any market in Singapore for goods and services. Ancillary restrictions which are directly related and necessary to the implementation of those mergers are excluded from section 34 and section 47 of the Competition Act. Certain mergers are excluded from these restrictions (listed in the Fourth Schedule to the Competition Act) and essentially permit mergers that:
- are approved by any ministry or regulatory authority (other than the Commission) pursuant to any requirement for such approval imposed by any written law;
- are approved by the Monetary Authority of Singapore;
- are under the jurisdiction of any regulatory authority (other than the Commission) under any written law relating to competition, or code of practice relating to competition issued under any written law;
- are in relation to the specified activities set out in the Third Schedule; or
- result in economic efficiencies arising which outweigh the adverse effects due to the substantial lessening of competition in the relevant market in Singapore.
Other pertinent aspects of the restrictions on mergers and acquisitions are as follows.
6.1 Voluntary notification of anticipated mergers
A party to an anticipated merger is allowed to notify the Commission of the anticipated merger and apply for the Commission to make a decision as to whether the anticipated merger would breach section 54 of the Competition Act. Similarly, a party to a completed merger can notify the Commission of the merger and apply for a decision to be made as to whether the merger would breach section 54 of the Competition Act. There is no mandatory requirement for merger parties to notify their merger to the Commission. Notification is voluntary.
6.2 Confidential advice from the Commission
The Guidelines on Merger Procedures were fairly recently revised, with the revised guidelines coming into effect on 1 July 2012. Under the revised merger guidelines, the Commission has provided the possibility of merger parties obtaining confidential advice in respect of whether a merger is likely to raise competition concerns in Singapore. In order to obtain confidential advice from the Commission for a merger, certain conditions must be met:
- the merger must not be completed and there must be a good faith intention for the parties to proceed with the transaction;
- the merger must not be in the public domain. The Commission may consider giving confidential advice in respect of mergers which are no longer confidential, but the parties are required to justify why they wish to receive confidential advice as opposed to filing a notification;
- the merger must raise a genuine issue in relation to the competitive assessment in Singapore (i.e., there must be some doubt as to whether the merger situation raises concerns such that notification is appropriate); and
- the requesting party or parties are expected to keep the Commission informed of significant developments in relation to the merger situation in respect of which confidential advice was obtained, for example, completion date or abandonment of the merger.
The information required to be provided to the Commission in order to obtain confidential advice is similar to that as required in the Form M1 (i.e., information similar to that as required for notification applications). Confidential advice is, however, not binding on the Commission, since the Commission retains the right to investigate all merger situations as long as the relevant statutory requirements are met.
6.3 Pre-notification discussions
The Commission is prepared to enter pre-notification discussions with a party or parties in respect of the merger or anticipated merger. Such a request for discussion has to be submitted in writing and the Commission will not entertain discussions on speculative or hypothetical transactions. These discussions are not binding on the Commission and are meant to provide an opportunity for the Commission to indicate any potential competition concerns that might arise from the transaction.
6.4 Conditional mergers
These are mergers that are allowed to proceed on the basis of binding commitments or specific undertakings, made or given by the merger parties to address any competition concerns identified. A merger was recently given conditional approval in October 2014 based on behavioral and divestiture commitments made to CCS. This is covered in greater detail in the section “Future Developments” below.
6.5 Two-phase merger assessment process
The Commission has adopted a two-phase review process. Phase 1 is expected to be completed within 30 working days and is meant to be a quick review so that merger situations which clearly do not raise competition concerns can proceed without undue delay. Phase 2 applies if the Commission is unable to conclude during Phase 1 that there are no competition concerns, in which case it will carry out a more detailed and extensive examination of the merger situation. Phase 2 is generally expected to last for a period of 120 working days.
7.1 Sector-specific competition regulations
Certain industries will continue to be self-regulated. The Ministry of Trade and Industry (MTI) has taken the view that “it would be more appropriate for the relevant sectoral regulators, with their industry knowledge and expertise, to administer their own competition rules.” The MTI also noted that the sectoral exclusions are not intended to be permanent and will be reviewed by the Commission after the Competition Act has been in operation for a period of time. In the telecommunications sector, for example, the Code of Practice for Competition in the Provision of Telecommunication Services, and in the media sector, the Media Development Authority’s Code of Practice for Market Conduct in the Provision of Mass Media Services, are both examples of subsidiary legislation which are industry-specific and largely prohibit unfair methods of competition, predatory pricing and general misuse of market power.
The Commission has issued 13 sets of guidelines intended to provide clarification on how it proposes to apply and interpret the Competition Act. The guidelines cover the section 34, 47 and 54 prohibitions, market definition, the Commission’s powers of investigation, enforcement, the leniency program, the filing of notifications, transitional arrangements in respect of the section 34 prohibition, the appropriate amount of penalties, the treatment of intellectual property rights and competition impact assessment for government agencies. Whilst such guidelines are not binding on the Commission, it has indicated that it will abide by the guidelines as much as possible.
7.2.1 Guideline on the section 34 prohibition (anti-competitive agreements)
This guideline clarifies that an “undertaking” means any person (whether an individual, a body corporate or an unincorporated body of persons) that is capable of engaging, or is engaged, in commercial or economic activity. Section 34 does not apply to agreements made between entities where one of the entities does not have economic independence and freedom to determine its own behavior in the market (i.e., the entities are part of a single economic unit). Thus an agreement between parent and subsidiary, or principal and agent, is unlikely to be subject to the section 34 prohibition if such parties comprise a single economic unit. However, this also means that a parent may be liable for its subsidiaries’ infringement of section 34 where they form a single economic unit. “Agreement” will be defined widely to include written and oral agreements, and legally enforceable and non-enforceable agreements (such as gentleman’s agreements). The prohibition applies equally to concerted practices. These are situations of informal cooperation, such as parallel behavior in a market, between parties without any formal agreement or decision where the risks of competition have been substituted by such cooperation. In respect of decisions between associations of undertakings, a trade association that is party to an activity that infringes the Competition Act, as well as its members, would be liable for any infringement. The guideline sets out the “appreciable adverse effect” test, providing that an agreement will only infringe section 34 if it has as its object or effect an appreciable effect on competition in Singapore. If the parties’ aggregate market share does not exceed 20 percent (where they are competitors), or where each party’s market share does not exceed 25 percent (where they are not actual or potential competitors), the agreement will generally not have an appreciable adverse effect. In addition agreements between “SMEs” (small and medium enterprises below a specified size) will rarely be capable of having an adverse appreciable effect. Notwithstanding, an agreement involving price fixing, bid rigging, market sharing or output limitations (i.e., “hardcore” restrictions) will always have an appreciable adverse effect on competition even if the market shares of the parties are below the said thresholds. The guideline also clarifies how the “net economic benefit” exclusion will be applied. The exclusion applies to agreements which contribute to (i) improving production or distribution or (ii) promoting technical or economic progress. The guideline explains that the purpose of these criteria is to define the types of efficiency gain that can be taken into account. The parties’ efficiency claims must be substantiated as follows:
- the claimed efficiencies must be objective in nature;
- there must be a direct causal link between the agreement and the efficiencies; and
- the efficiencies must be of significant value, enough to outweigh any anti-competitive effects.
The greater the increase in market power resulting from the agreement, the more significant the benefits must be. The guideline gives examples of improvements in production or distribution, i.e., lower costs from longer production or delivery runs, or from changes in methods of production and distribution, improvements in product quality or increased product range. Examples of promotion of technical or economic progress include efficiency gains from economies of scale and specialization in research and development with the prospect of an enhanced flow or speed of innovation. The “net economic benefit” exclusion also requires that the agreement does not impose restrictions which are dispensable to the attainment of the objective benefits and does not afford the undertakings concerning the possibility of eliminating competition in respect of a substantial part of the goods and services in question. Both the agreement itself and any restrictions must be reasonably necessary to attain the efficiencies. The Commission will also consider whether more efficiencies are produced with the agreement in place than without, and whether there are less restrictive ways of achieving the efficiencies. A restriction will be viewed as indispensable if its absence would eliminate or significantly reduce the efficiencies that flow from the agreement, or make them much less likely to materialize. Restrictions relating to price fixing, bid rigging, market sharing and output limitation are unlikely to be considered indispensable by the Commission. When assessing the indispensability of restrictions, the Commission will look at the agreement in context, taking into account the market structure, economic risks facing the parties and the incentives they face. When assessing whether the agreement affords the parties the possibility of eliminating competition in respect of a substantial part of the goods or services in question, the Commission will look at the degree of competition with and without the agreement. Accordingly, this factor will be of particular importance in a market where competition is already relatively weak. The Competition Act provides the Minister with the power to grant block exemptions in respect of agreements which, despite having an appreciable adverse effect on competition in Singapore, have a net economic benefit.
7.2.2 Guideline on the section 47 prohibition (abuse of a dominant position)
This guideline looks at how dominance will be assessed and states that although an undertaking’s market share is an important factor in assessing dominance, it will not be decisive. Amongst others, the Commission will look at the relative positions of other undertakings operating in the same market and how market shares have changed over time in that market. The guideline states that in general, dominance may be presumed if an undertaking has a market share in excess of 60 percent although a market share of less than 60 percent can be indicative of dominance if strong evidence of dominance is provided by other factors. The guideline includes a list of examples of the types of conduct that may amount to an abuse of dominance, including predatory pricing, and confirms that the Commission will consider pricing below average variable cost to be predatory in the absence of objective justification. Where an undertaking prices above average variable cost but below average total cost, the Commission will consider other evidence, including whether there is evidence that this strategy was intended to harm competition and the feasibility of recouping the losses sustained. The Commission may consider if the dominant undertaking is able to objectively justify its conduct. The undertaking will have to show that its conduct was a proportionate response in the circumstances.
7.2.3 Guideline on the substantive assessment of mergers and merger procedures
This guideline provides clarification on the kinds of transactions that are considered mergers under the Competition Act. Under the Competition Act, a merger occurs when:
- two or more undertakings, previously independent of one another, merge;
- one or more persons or undertakings acquire direct or indirect control of the whole or part of one or more other undertakings; or
- an undertaking acquires the assets (or substantial part thereof) of another undertaking so that the first undertaking replaces the second in the latter’s business (or part thereof).
Section 54(3) of the Competition Act states that “control” is acquired if the acquirer is able to exercise decisive influence over the target. In this respect, the guideline clarifies that “control” can be legal or de facto. Legal control arises where the acquirer has ownership of more than 50 percent of the voting rights of the undertaking. If the acquirer gains ownership of between 30 and 50 percent of the voting rights, this would give rise to a rebuttable presumption that there is decisive influence over the company. The Commission will also consider de facto control, which is evaluated on a case by case basis. De facto control may arise via financial arrangements, additional agreements and/or rights to veto strategic and commercial decisions by the company. Joint ventures can also be subject to section 54 of the Competition Act if they are subject to joint control, perform the functions of an autonomous economic entity and do so on a lasting basis. These definitions are further clarified in the guidelines. The test used in relation to mergers is the substantial lessening of competition test. This test takes into consideration the prospects of competition with and without the merger and is a prospective one, i.e., it attempts to assess future competition. The focus of the analysis is on competition and concerns that do not result from the merger are not taken into consideration for the purpose of section 54. The Commission will first define the relevant market and then review the changes to the market structure as a result of the merger. Market definition is focused on the areas of overlap in the merger parties’ activities. The Commission will also examine the structure and level of concentration in the relevant market, as well as the merged entity’s market power. The general guideline is that there is no competition issue unless:
- the merged entity will have a market share of 40 percent or more; or
- the merged entity will have a market share of 20 to 40 percent and the combined market share of the three largest firms in the market is 70 percent or more.
Other relevant factors that are taken into consideration include the immediate competitive effects of the merger (for horizontal mergers), whether the merger will affect the entry into and/or expansion of the market and the possibility of market foreclosure (for non-horizontal mergers). In the event there is an infringement of section 54, the guidelines provide that the Commission can exercise two broad forms of remedies: structural and behavioral. Structural remedies generally require the sale of one or more of the overlapping businesses that have led to the competition concern, with the buyer being approved by the Commission. A behavioral remedy is generally prescribed where a divestment is impractical or disproportionate to the competition concerns. These are meant to constrain the scope for a merged company to behave competitively.
7.2.4 Guideline on market definition
This guideline sets out the analytical framework used by the Commission to define markets when investigating possible infringements of sections 34 and 47. In this respect, the guideline states that the Commission will use the “hypothetical monopolist test” (also known as the SSNIP test) as the conceptual approach to define markets. The guideline confirms that the Commission, like other competition law authorities, will consider the product market (looking at both demand side and supply side substitutability), the geographic market and the temporal market.
7.2.5 Guideline on powers of investigation
This guideline sets out the powers granted to the Commission under the Competition Act to investigate parties suspected of anti-competitive behavior. The guideline gives examples of information that may be a source of reasonable grounds for suspicion to justify an investigation by the Commission, and specifies the documents and information that may be requested by the Commission (plus the procedures applicable to the seizure of documents). It also sets out the Commission’s power in respect of entering premises (including domestic premises and vehicles), and in respect of obtaining information regarding the undertaking’s suppliers, customers and competitors. The guideline confirms that communications between a company and both its external legal counsel and its in-house lawyers will be classed as privileged communications and therefore be beyond the reach of the Commission’s power. If the Commission considers it reasonable in the circumstances, it may, subject to such conditions as it considers appropriate, grant a company’s request to wait for legal advisors to arrive at the premises.
7.2.6 Guideline on enforcement
This guideline sets out the extent of the Commission’s powers of enforcement, addressing inter alia the Commission’s ability to direct a party to bring an infringement to an end, and to impose interim measures during an investigation and financial penalties. It also details the process that is open to a party who wishes to appeal against a direction.
7.2.7 Guideline on lenient treatment for undertakings coming forward with information on cartel activity
This guideline sets out the leniency program for parties which provide the Commission with information about cartel activities and co-operate during investigations. The guideline provides that an undertaking may be granted the benefit of total immunity from financial penalties if certain conditions are satisfied, including being the first to provide the Commission with evidence of the cartel activity before an investigation has commenced, maintaining continuous and complete co-operation throughout the investigation and until the conclusion of any action by the Commission arising as a result of the investigation and that the undertaking must not have been the one to initiate the cartel. Reduction of financial penalties of up to 100 percent where the undertaking is the first to come forward but which does so only after an investigation has commenced is also available if the undertaking fulfils certain criteria. Subsequent leniency applicants may also qualify for a reduction of up to 50 percent in the level of financial penalties if certain criteria are fulfilled. Under the leniency plus program, cartel members who fail to get a 100 percent reduction in financial penalties in respect of one cartel, may provide information in relation to a completely separate cartel in order to qualify for a further reduction in financial penalty for its involvement in the first cartel.
7.2.8 Guideline on filing notifications for guidance or decision
Parties may apply to the Commission for guidance or a decision as to whether an agreement or particular conduct is likely to infringe sections 34 or 47, respectively. The guideline states that parties should only notify the Commission if they have serious concerns about their agreements and conduct infringing the Competition Act. A fee will be payable by the party filing the notification, although the amount is not specified in the guideline, it is listed by the Commission as follows:
|Initial Fee||Further Fee|
|Notification for Guidance||SGD3,000||SGD20,000|
|Notification for Decision||SGD5,000||SGD40,000|
The guideline sets out the process for filing a notification with the Commission and specifies the information that must be provided and the steps that must be taken.
7.2.9 Guideline on merger procedures
This guideline sets out the procedure for parties to make an application to the Commission for pre-notification discussions as well as setting out the information gathering powers of the Commission in relation to mergers and its powers of investigation. The guideline was revised in 2012, with the revised guideline taking effect on 1 July 2012. The main revisions in the revised merger guideline include:
- an indication from the Commission that it is unlikely to investigate a merger situation that only involves small companies, namely where the turnover in Singapore in the financial year preceding the transaction of each of the parties is below SGD5 million and the combined worldwide turnover in the financial year preceding the transaction of all of the parties is below SGD50 million. The turnover in Singapore refers to the turnover booked in Singapore as well as turnover from customers in Singapore; and
- the ability to obtain non-binding confidential advice from the Commission, in order for merger parties to decide whether they wish to notify the Commission of their merger situation (see above section on Confidential Advice from the Commission).
7.2.10 Guideline on the appropriate amount of penalty
This guideline sets out the factors which the Commission may take into account when determining the appropriate financial penalty for a breach of the Competition Act. The guideline states that the Commission’s policy objective in imposing any financial penalty is to reflect the seriousness of the infringement and to deter undertakings from engaging in anti-competitive practices. Among the factors that the Commission will take into account include the seriousness of the infringement, the duration of the infringement, other relevant factors (such as deterrent value) and any further aggravating or mitigating factors. Each of these factors is considered in detail in the guideline.
7.2.11 Guideline on the treatment of intellectual property rights
This guideline sets out the factors the Commission will consider when assessing the object or effect of IP licensing restraints. The Commission will look at whether the agreement in question is between competitors or non-competitors. Arrangements between competitors are considered, prima facie, more likely to contain anti-competitive elements. Agreements between non-competitors, where one party has market power, may also impose anti-competitive restraints. The Commission will also look at whether the licensing restraints restrict actual or potential competition that would have existed in their absence and whether, if the agreement falls within the section 34 prohibition, it has any net economic benefit. The guideline clarifies that vertical agreements are excluded from section 34 provided that the IP provisions are not the primary object of the agreement. The guideline sets out the indicative thresholds in excess of which a licensing agreement is presumed to have an appreciable adverse effect on competition. If the parties’ aggregate market share does not exceed 25 percent (where they are competitors), or where each party’s market share does not exceed 35 percent (where they are not actual or potential competitors), the agreement will generally not have an appreciable adverse effect. However, as with the case of other agreements under section 34, a licensing agreement between competitors which involves price fixing, bid rigging and market sharing or output limitations will always have an appreciable adverse effect on competition.
7.2.12 Guideline on competition impact assessment for government agencies
The guideline is meant to assist government agencies in their policy formulation process. The Commission recognizes that government policies can have a significant impact on competition and the guideline thus helps government agencies to identify and assess the likely competitive impact of their proposed policies.
Where the Commission decides that the relevant prohibition has been infringed, it has the power to issue directions to the infringer, as it deems appropriate, in order to eliminate the infringement and/or to prevent a recurrence of the infringement. Such directions may include that the infringer modify or terminate the agreement or conduct in question, make structural changes to its business or provide a performance bond or guarantee on such terms and conditions as the Commission may determine. Where the Commission is satisfied that the infringement was committed intentionally or negligently, it may impose a financial penalty of up to 10 percent of the undertaking’s turnover in Singapore for each year of infringement up to a maximum of three years. In addition, any person, i.e., any individual, body corporate, an unincorporated body of persons or other entity capable of carrying on commercial or economic activities relating to goods and services, found guilty of an offense under the Competition Act for which no penalty is expressly provided will be liable to a maximum fine of SGD10,000 or to imprisonment for a maximum term of 12 months or both. Where the offense is committed by a body corporate with the consent of, or attributable to any neglect on the part of, an officer of the body corporate, the officer as well as the body corporate may be held accountable. Where the affairs of the body corporate are managed by its members, such members may also be punished accordingly.
8.1 Civil liability
Any person who suffers loss or damage as a result of an infringement shall have a right of action for civil relief against the infringing party. Under such an action, the court may grant the plaintiff injunctive or declaratory relief, damages (including exemplary damages) and such other relief as the court thinks fit.
The Commission has confirmed that Singapore will, like other competition regimes, operate a program of leniency for parties which provide the Commission with information about cartel activities and cooperate during investigations. The Commission will grant total immunity from fines to any party that can satisfy certain criteria, (including being the first to provide the Commission with evidence of the cartel activity). Subsequent leniency applicants may be granted a reduction of up to 50 percent in the amount of the financial penalty which would otherwise have been imposed. A party which initiated a cartel will not be eligible for the full reduction, even if it is the first to blow the whistle. The leniency program also comprises the following features:
- introduction of a marker system to allow an applicant to keep its place in the queue while it gathers the necessary information; and
- a Leniency Plus system to encourage cartel members who fail to get 100 percent reduction in financial penalties in respect of one cartel to provide information in relation to a completely separate cartel in order to qualify for a further reduction in financial penalty for involvement in the first cartel.
The Competition Act applies to a party, agreement, abuse of dominant position or merger if such a party, agreement, abuse of dominant position or merger has infringed any of the prohibitions above and affected a market in Singapore, notwithstanding that:
- the agreement has been entered into outside Singapore;
- any party to such agreement is outside Singapore;
- any undertaking abusing the dominant position is located outside Singapore;
- the merger has taken place outside Singapore;
- any party to such merger is located outside Singapore; or
- any other matter, practice or action arising out of such agreement, dominant position or merger is outside Singapore.
Recent developments in Singapore competition law include: The Commission issued a clearance decision in August 2014 in respect of a proposed merger between Holcim Ltd. and Lafarge S.A. (LaFarge), a worldwide merger whereby the two parties had a presence in Singapore. This case was significant as the Commission had considered Lafarge’s market share for ready-mix concrete in Singapore to be that of 100 percent of the estimated market share of a joint venture in which Lafarge holds 33 percent interest. This finding by the Commission showed that the single economic entity doctrine was not confined to anti-competitive agreements but could also be invoked in a merger clearance context, thus following the lead of European competition law decisions. In October 2014, the Commission granted conditional approval of the acquisition by SEEK Ltd. and SEEK Asia Investments Pte. Ltd. (collectively, SEEK) of 100 percent of the issued share capital in certain recruitment business assets of JobStreet Corporation Berhad, including JobStreet.com Pte. Ltd. based on various behavioral and divestiture commitments offered by SEEK. The entities were competitors in the online recruitment service industry. This case is significant as it is the first time that CCS has granted conditional approval based on behavioral and divestiture commitments. It is therefore clear from this decision that the Commission is willing to grant conditional approvals of mergers subject to the undertaking of commitments by the relevant merger parties, including behavioral and divestiture commitments. Whilst the Commission has previously indicated that behavioral commitments may not be the preferred approach, where it is of the view that such commitments may be appropriate in light of the potential adverse effects resulting from a proposed merger, potential merger parties should be aware that the Commission will not hesitate to require such commitments to be made as a condition of clearing a proposed merger. [wpdm_package id=’4258′]