Australia strengthens its competition law
By Anita Thompson
New rules took effect on 6 November 2017, which significantly strengthen Australian competition law.
The key changes are:
- Misuse of market power: The prohibition against anti-competitive conduct by corporations with a substantial degree of market power has been broadened. In particular, the concept of “misuse” has been removed, and a corporation is now in contravention merely if its conduct has the purpose or effect (or likely effect) of substantially lessening competition. The legal profession has expressed strong concerns about the increased uncertainty that this will cause for businesses.
- Concerted practices: A new broadly framed prohibition has been introduced against “concerted practices” (a concept that also exists in EU law) that have the purpose or effect (or likely effect) of substantially lessening competition.
Other changes include:
- Third line forcing (ie, a business refuses to supply goods or services, or give a certain price or discount, unless the purchaser buys goods or services from a third party) is no longer strictly prohibited. It is now only prohibited where it has the purpose or effect (or likely effect) of substantially lessening competition.
- Resale price maintenance (RPM): Parties can now notify RPM to the Australian competition watchdog (the ACCC), and obtain immunity from breaking the law, provided that the ACCC does not object to the conduct within 28 days of the notification.
- Cartels: The prohibition is now confined to conduct affecting Australian markets.
China continues to impose behavioral remedies in merger cases
By Laura Liu and Wenting Ge
China’s Ministry of Commerce (MOFCOM) conditionally cleared seven cases in 2017 (five in the fourth quarter), of which six involved behavioral remedies. For example, in Hewlett-Packard/Samsung Printers, HP was required to refrain from engaging in any tying practices. In its conditional approval of Advanced Semiconductor/Siliconware Precision Industries, MOFCOM required the merging parties to maintain the independence of some of their businesses, even after the merger was completed. (MOFCOM last imposed this “hold-separate” remedy in 2013, in MediaTek/MStar.)
Hong Kong (inadvertently?) deters consortium bidding; consults on first individual exemption application
By Stephen Crosswell and Bill Brown
The Hong Kong Competition Commission (HKCC) has issued a recommendation that organizations inviting bids for contracts prohibit bidders from communicating with any other person prior to making a bid. Although there are certain exceptions, these are narrowly drawn, and many consortium bids and supply arrangements would be ruled out if this recommendation is followed. The recommendation is contained in a “User Guide” for procuring organizations. Fortunately, the recommendation is not legally binding, and HKCC has made it clear that procuring organizations are free not to follow it. Unusually, businesses were not given an opportunity to comment on this proposal before it was finalized, as there was no prior public consultation.
Click here for further details.
HKCC’s approach contrasts with that of competition authorities in other jurisdictions such as Ireland, where the competition authority has actively encouraged consortium bidding by small and medium-sized businesses (SMEs), as this increases competition. The authority has issued a guide for SMEs, explaining how they can engage in consortia while complying with competition law. It is hoped that HKCC will do likewise, as a counterpart to its User Guide for procuring organizations.
Separately, HKCC is consulting on the first application for an exemption of an individual agreement (as opposed to a block exemption) under the Competition Ordinance (CO). The application has been made by 14 banks in Hong Kong for exemption of the Code of Banking Practice, which was issued by the Hong Kong Association of Banks and the DTC Association (the full name of which is the Hong Kong Association of Restricted Licence Banks and Deposit-taking Companies). The application claims the benefit of the legal compulsion exclusion, which exonerates from the CO arrangements that are compelled by other legislation. Interested parties have until 15 February 2018 to make representations on the application.
Click here for further details.
Japan’s Supreme Court rules that competition law can apply to price-fixing of products supplied to customers outside Japan
By Junya Ae
On 12 December 2017, Japan’s Supreme Court ruled that the Japan Antimonopoly Act prohibits price-fixing of products supplied outside Japan to overseas subsidiaries of Japanese companies. On this basis, the court upheld a penalty imposed by the Japan Fair Trade Commission in 2010 on Samsung SDI in Malaysia for engaging in price-fixing of cathode ray tubes for televisions.
Malaysia’s first decision on abuse of dominance upheld
By Lydia Kong
The Malaysian Competition Appeal Tribunal has upheld the first (and so far only) abuse of dominance decision by the Malaysian Competition Commission (MyCC) since the competition law came into effect in 2012.
The decision had been issued in 2016 against My E.G. Services Berhad (MyEG) and its wholly owned subsidiary. MyEG manages an online system for the renewal of foreign workers’ permits, while its subsidiary acts as an agent for several companies for the sale of mandatory insurance policies for foreign workers.
MyCC decided that MyEG had abused its dominant position in the market for foreign workers’ permit renewals, making it compulsory or inducing the employers of the foreign workers to purchase the mandatory insurance policies through its subsidiary.
Click here for further details.
Philippines sets merger filing timelines
By Christina Macasaet-Acaban and Lara Camille Lee
The Philippine Competition Commission (PCC) has issued rules setting out its timelines for handling merger filings.
Mergers and acquisitions that meet the thresholds for mandatory notification have to be filed within 30 days after signing of the binding agreement. The PCC will then conduct a “sufficiency check” within 15 days. Upon the PCC’s confirmation of the sufficiency of the forms and payment of the filing fees, the Phase 1 review takes place, for a maximum period of 30 days. During this review, the PCC may gather supplementary information from the parties and third persons, and conduct site visits of the parties’ business premises, their customers and/or competitors.
If the PCC identifies competition concerns during Phase 1, or is unable to form a conclusion on this issue, the transaction will proceed to a Phase 2 review, which must be completed within 60 days. The merger procedure provides for a detailed process during Phase 2, which can include the filing by the PCC’s Mergers and Acquisitions Office (MAO) of a statement of concerns, state of play meetings between the parties and the MAO, and the imposition by the PCC of such interim measures as it may deem necessary.
If the PCC finds that the transaction substantially prevents, restricts or lessens competition, it may impose remedies to address the potential negative effects of the transaction.
Parties may propose voluntary commitments at any stage of the Phase 1 or 2 review, except when the PCC has already rendered a decision.
Click here for further details.
Singapore consults on changes to Competition Act; imposes its largest cartel penalty to date
By Christine Xu and Melissa Healy
On 21 December 2017, the Singapore Competition Commission (CCS) published a consultation on proposed changes to the Competition Act. The proposed changes would:
- codify the process of providing confidential advice to businesses for anticipated mergers, which would provide more certainty to businesses and stakeholders
- enable businesses under investigation to offer legally binding commitments to address any anti-competitive conduct
- make CCS’s evidence-gathering and investigation process more efficient, thereby minimizing any potential disruption to businesses
Click here for further details.
On 5 January 2018, the CCS issued an infringement decision against five manufacturers of aluminium electrolytic capacitors (AECs) for engaging in price-fixing, and the exchange of confidential sales, distribution and pricing information. The CCS imposed a total fine of more than SGD 19.5 million (approx. USD 14.7 million): the highest total fine to date in Singapore for competition law infringement. According to its decision, the CCS commenced its investigation after receiving an application for immunity by one of the manufacturers involved in the cartel (Panasonic). The CCS also awarded a discount in penalties to ELNA, Rubycon and SCC.
Click here for further details.
Thai authority’s rejection of abuse of dominance complaint upheld
By Pornapa Thaicharoen and Narumol Chinawong
Thailand’s Supreme Administrative Court has upheld a decision by the Office of Trade and Competition Commission (OTCC) to reject a complaint by several Thai health advocacy organizations that an international pharmaceutical company had abused a dominant position, in breach of the Trade Competition Act 1999.
The complaint concerned the company’s decision to withdraw its drug registration in 2007 after the Thai government had announced the compulsory licensing (CL) of its HIV medication. The OTCC had rejected the complaint, on the grounds that:
- the company’s turnover fell below the current statutory turnover threshold of THB 1 billion (approximately USD 31 million), one of the criteria that needs to be fulfilled for a finding of dominance
- in any event, the withdrawal of the registration would not have constituted an abuse, as it did not prevent customers from accessing the product from outside Thailand
It should be noted that new criteria for defining dominance in Thailand are due to be announced by 5 October 2018, so businesses should monitor any changes to ensure compliance. Watch this space for further details in due course.
