Global | Publication | April 2024
The Competition Act 2004 (the Competition Act) is the primary statute which governs competition law in Singapore, and aims to protect consumers and businesses from anticompetitive practices in Singapore. It prohibits three types of anticompetitive conduct:
The Competition Act does not apply to certain specific sectors, where the exercise of competition law is governed by sectoral regulations. These include areas such as broadcasting and media, the telecommunications sector, electricity and gas sectors, the auxiliary police, the supply of wastewater management services, the provision of public transport, the provision of cargo terminal operations, the operation of clearing houses and the postal service.
Section 34 of the Competition Act prohibits 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. Examples of such prohibited behaviour include but are not limited to – directly or indirectly fixing prices, bid-rigging (collusive tendering), market sharing, limiting or controlling production or investment, exchanging price information, restricting advertising, setting technical or design standards, etc. The Competition and Consumer Commission of Singapore (CCCS) in its guidance explains that the first four types of agreements are considered serious infringements of the Competition Act and are, by their very nature, regarded as restrictive of competition to an appreciable extent. Other types of agreements will be examined on their facts and if found to be restrictive of competition by effect, will similarly be regarded as restrictive of competition to an appreciable extent. However, vertical agreements, which are agreements between undertakings at different levels of the production or distribution chain, are excluded from the section 34 prohibition.
Market share is a central factor in considering whether the Competition Act has been breached and the CCCS has issued guidance that an agreement is unlikely to have an appreciable adverse effect on competition if:
The Competition Act prohibits conduct that constitutes an abuse of a dominant position in a market, including conduct that protects, enhances or perpetuates the dominant position of an undertaking in ways unrelated to competitive merit. Examples of such conduct include, but are not limited to, predatory behaviour towards competitors (such as selling below cost), limiting production, markets, or technical development to the prejudice of consumers, vertical restraints between companies at different levels of the production or distribution chain, refusals to supply or make essential facilities available to competitors, price discrimination or applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage, making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations, which by their nature or according to commercial usage, have no connection with the subject of the contracts, etc.
The section 47 prohibition only prohibits abuses of a dominant position but does not prohibit dominance itself. Business undertakings will not be penalised solely because they have a dominant position or attempt to achieve it. A dominant position maintained through conduct arising from efficiencies, such as through successful innovation or economies of scale, will not be regarded as an abuse of dominance. However, mergers or acquisitions that substantially lessen competition may be subject to section 54 of the Competition Act. This may in some circumstances prevent a merger which leads to the creation of a dominant undertaking.
The CCCS applies a two-step test to assess whether the section 47 prohibition has been infringed: (i) whether an undertaking is dominant and (ii) whether it is abusing its dominant position in a market in Singapore.
Under the CCCS’s guidance, what amounts to a “dominant position” is determined by a number of factors, including whether the entity can profitably sustain prices above competitive levels or restrict output or quality below competitive levels. Although market share is not a fool-proof guide, a market share greater than 60 per cent will generally be considered dominant in that market.
The section 47 prohibition also extends to conduct of two or more undertakings, where there is an abuse of a collective dominant position. A collective dominant position may arise when two or more legally independent undertakings present themselves or act together on a particular market as a collective entity. Essentially, undertakings holding a collective dominant position are able to adopt a common policy on the market and, to a considerable extent, act independently of their competitors, customers and consumers.
Section 54 prohibits mergers that have resulted, or are expected to result, in a substantial lessening of competition within any market in Singapore for goods and services. In determining whether a merger is anticompetitive, the CCCS will assess whether the merger leads to a substantial lessening of competition. For example, if the merger results in increase in prices above the prevailing level, lower quality, and/or less choice of products and services for consumers – it will be considered an anticompetitive merger and infringing upon the Competition Act. While there are no mandatory merger control requirements in Singapore, it is advisable to notify the CCCS if either:
The above thresholds are only indicators of potential competition concerns and do not automatically give rise to a presumption that such a merger will lessen competition substantially. Merger parties must conduct a self-assessment to establish if their merger may give rise to a substantial lessening of competition within any market affecting Singapore, in which case the CCCS should be notified of the merger.
A party to an anticipated merger can notify the CCCS of the merger and apply for the CCCS to make a decision as to whether the proposed merger would be in breach of the Competition Act. Similarly, a party to a completed merger can also notify the CCCS of the merger and apply for a decision to be made as to whether any infringement under the Competition Act has occurred.
The above indicative thresholds do not differentiate between transactions with and without horizontal increments.
In addition, the CCCS is unlikely to investigate a merger involving small companies, i.e. where:
In addition to the Competition Act, parties to mergers that involve companies active in Singapore should also take note of other possible regulatory approvals or notification requirements, which apply in addition to or in lieu of the merger regime under the Competition Act. These tend to vary depending on the relevant sectors, although some cross-sector requirements may also arise, including under the Significant Investments Review legislation that was passed in Parliament in early 2024. This new legislation will allow the government to designate entities as critical to Singapore’s national security interests. Any party – including a foreign investor – that intends to make a significant investment into a designated entity (obtaining 5% or more of the total equity interest in the entity) will be subject to notification or clearance requirements, depending on the level of ownership and control.2
The CCCS has the power to issue directions to bring infringements of the Competition Act to an end. It may also impose financial penalties on undertakings for infringing the Competition Act.
The amount of the penalty imposed may be up to 10 per cent of the turnover of the business of the undertaking in Singapore for each year of infringement, up to a maximum of three years. Financial penalties imposed by the CCCS will be calculated taking into consideration, amongst other things, the nature, duration and seriousness of the infringement, the turnover of the business of the undertaking in Singapore for the relevant product and geographic markets affected by the infringement, market conditions, aggravating factors including the existence of any prior anticompetitive practices and behaviour of the infringing party, and mitigating factors, which include the existence of any compliance programme and the extent to which the infringing party has cooperated with the CCCS.
Directions are issued in writing by the CCCS and will typically require the person concerned, individuals and undertakings, to modify or cease the agreement or conduct in question.
The Competition Act applies to anticompetitive conduct outside Singapore if they have the effect of eliminating or restricting competition in Singapore. The Section 54 prohibition on merger control also applies to foreign mergers if such mergers result in a substantial lessening of competition in Singapore.
The Competition Act is enforced by the CCCS. Where the CCCS has made an infringement decision, the parties may appeal to the Competition Appeal Board, an independent body comprising members appointed by the Minister for Trade and Industry. Further appeals against the decisions of the Competition Appeal Board may be made to the High Court, and thereafter to the Court of Appeal, but only on points of law and the amount of the financial penalty.
In appropriate cases, parties under investigation for infringing the Competition Act may also offer commitments to reduce or eliminate competition concerns relating to their conduct. Where the CCCS accepts such commitments, it will cease its investigation on condition that parties agree to abide by the commitments.
Persons who suffer direct loss or damage as a result of another party’s infringement of the prohibition on anticompetitive agreements, abuses of dominance or merger control rules may bring a court action against that party for damages or other remedies. This right of private action for infringements of the prohibitions in the Competition Act is enshrined in section 86 of the Competition Act itself.
However (unlike in jurisdictions like the UK) a private action in Singapore cannot be brought as a “stand-alone” action – it must be brought as a “follow-on” claim, meaning that the decision of the CCCS, Competition Appeal Board or the Higher Court must be used to establish the fact that an infringement has occurred. The party bringing the claim must wait for this decision to establish liability, and cannot gather and present its own evidence to establish liability.
Contracts which violate the prohibition on anticompetitive agreements are considered void to the extent that they infringe Section 34 of the Competition Act. As a result, such anticompetitive agreements cannot be enforced.
The Competition Act does not contain express provisions in respect of a leniency policy. However, section 61 of the Competition Act provides that the CCCS can publish guidelines indicating the manners in which the CCCS will give effect to the provisions of the Competition Act, further to which the CCCS published Guidelines on Lenient Treatment for Undertakings Coming Forward with Information on Cartel Activity, as last revised in 2016 (the Leniency Guidelines).
The CCCS leniency programme is only available for certain infringements of the section 34 prohibition, such as for hard-core cartels (i.e. cartels involving price fixing, output limitation, bid-rigging and market sharing) and the sharing of forward-looking price information.
As of March 2024, the leniency programme has led to the issuance of infringement decisions and the impositions of financial penalties in ten out of 17 of the CCCS’s cartel infringement decisions. This amounts to more than 50 per cent of cartel infringement decisions.
The CCCS has extensive and wide-ranging powers of investigation and enforcement. Its investigative powers include the power to enter into premises for inspection (with or without a warrant), undertake dawn raids, require the production of specified documents and information (including emails) and request explanations of documents from directors, employees or parent company managers. The CCCS can take copies and extracts from documents on premises that are entered without a warrant. If the CCCS enters premises with a court warrant, they can also seize original documents. Failure to cooperate with a CCCS investigation is a criminal offence.
Between 1 January 2006, when the section 34 prohibition came into effect, and March 2024, 17 cartel and bid-rigging infringement decisions have been issued by the CCCS. Of the 17 cartel and bid-rigging infringement decisions issued by the CCCS to date, three involved international cartels.3
| Financial penalties imposed by the CCCS January 2006 to March 2024 |
|||
| Cartel and bid-rigging case | Fines (S$ million) |
Cartel and bid-rigging case | Fines (S$ million) |
| Fresh chicken distributors cartel | 26.95 | Bid-rigging for maintenance service for swimming pools and water features | 0.41 |
| Capacitor manufacturers cartel | 19.55 | Modelling agencies cartel | 0.36 |
| Ball and roller bearings cartel | 9.31 | Ferry operators cartel | 0.29 |
| Freight forwarders cartel | 7.15 | Pest control operators cartel | 0.26 |
| Warehouse operators cartel | 2.8 | Electric works cartel | 0.19 |
| Express bus operators cartel | 1.70 | Motor vehicle traders cartel | 0.18 |
| Hotel operators cartel | 1.52 | Employment agencies cartel | 0.15 |
| Financial advisers cartel | 0.91 | Bid-rigging for building, construction and maintenance services for Wildlife Reserves Singapore | 0.03 |
| Electrical services and asset tagging services cartel |
0.63 | ||
As of March 2024, the CCCS has only issued one infringement decision (in June 2010) in respect of a violation of the section 47 prohibition after the provision took effect on 1 January 2006, namely, an abuse of a dominant position by SISTIC. The SISTIC case related to explicit restrictions requiring two venues and 17 event promoters to use SISTIC, Singapore’s largest ticketing agency, as the sole ticketing service provider for all their events. The financial penalty imposed was of around S$1 mn (approx. US$0.74 mn). Following an appeal by SISTIC, the Competition Appeal Board upheld the CCCS's decision on liability in 2012, but varied the quantum of SISTIC’s financial penalty to S$769,000 (approx. US$572,000).
The CCCS has also issued media releases on several investigations relating to abuses of dominance. Notably, the CCCS has closed its investigations in six cases following voluntary commitments to remove exclusive arrangements and/or commitments to supply, including by Coca-Cola Singapore Beverages, Cordlife Group, Asia Pacific Breweries, E M Services, BNF Engineering, C&W Services Operations, Chevalier Singapore Holdings, and Fujitec Singapore.
Since the start of the merger control regime in 2007, the CCCS has received 104 merger notifications as of June 2023, of which eight progressed to a Phase 2 review for complex mergers (with one pending). Five were granted conditional clearance subject to commitments while eight were withdrawn by the merger parties, and the remainder cleared in CCCS’s Phase 1 review.
The most notable merger decision issued by the CCCS is the infringement decision in relation to the sale of Uber’s Southeast Asian business to Grab, which was not notified to the CCCS and which resulted in remedies and fines of S$6.5 mn (approx. US$4.85 mn) imposed on Uber and of an equivalent amount imposed on Grab. To date, this is the first and only CCCS decision relating to a failure to notify a merger. Following the completion of the transaction, the CCCS commenced an investigation on the basis that the transaction may have infringed the Competition Act as an anticompetitive merger. The CCCS found that Uber would not have left Singapore absent the transaction and observed that Grab increased its prices post-transaction. Further, the CCCS found that potential competitors were hampered by strong network effects and exclusivities between Grab and taxi companies, car rental partners, and some of its drivers which prevented competitors from competing effectively against Grab. In January 2021, the Competition Appeal Board upheld the CCCS decision, noting that the country’s voluntary merger control regime does not mean that there are no risks to proceeding with a merger without notifying the CCCS.
In 2022 the CCCS updated its main guidelines under the Competition Act (namely, on Market Definition, Major Competition Provisions, Section 34 Prohibition, Section 47 Prohibition, Substantive Assessment of Mergers, Merger Procedures; Directions and Remedies Appropriate Amount of Penalty in Competition Cases, and Treatment of Intellectual Property Rights), mainly to take into consideration the rapidly evolving business landscape in Singapore, in particular the proliferation of online business activities. This followed a new Business Collaboration Guidance Note at the end of 2021, which provided detailed guidance to businesses seeking to cooperate in the face of the COVID pandemic. More recently, the CCCS published its Guidance Note on Business Collaborations Pursuing Environmental Sustainability Objectives in March 2024.
The CCCS continues to use market studies to complement its enforcement efforts, including a notable market study on e-commerce platforms that was published in September 2020. While the market study found that the existing competition framework was able to address the competition issues that may arise from the proliferation of e-commerce platforms that compete in multiple market segments, the CCCS identified key areas where further guidance could be beneficial, including in relation to the market definition exercise in cases involving multi-sided platforms or when assessing market power in cases involving digital platforms, as standard indicators of market power (such as market shares) may not be conclusive in relation to digital platforms. The CCCS took into account these findings in the recent revisions of its guidelines (as mentioned above).
Societal concerns are also a key focus for the CCCS in its market studies. In August 2023, the CCCS published a market inquiry into the leasing of private retail spaces in Singapore, after reports in the media suggested that tenants in private detail developments faced unfair and potentially anti-competitive clauses when negotiating tenancy agreements. The inquiry considered various factors which might indicate that a landlord had market power, and also identified two types of clauses that raised competition concerns, namely, exclusivity radius clauses and clauses restricting the choice of electricity retailers. In November 2023, the CCCS published a market study into the funeral services industry, which considered the potential vulnerability of consumers when purchasing funeral products and the possible competition and consumer protection issues that might arise. The impetus for this market study was Singapore’s aging population, and the fact that competition and consumer concerns had arisen in other jurisdictions such as the US, the UK and Australia.
The CCCS has also become more aggressive in its imposition of fines. In 2018, the CCCS issued its largest cartel fine to date (S$26.95 million (approx. US$20.05 million)) to 13 distributors of fresh chicken for fixing prices and agreeing not to compete during a seven-year period. The CCCS is also open to negotiating settlements with the parties, which occurs most frequently in relation to cases involving alleged abuses of dominance. The Uber/Grab infringement decision and fines imposed on the parties are also signs of a more robust enforcement on the merger front.
Another area of focus for the CCCS is environmental sustainability. The CCCS has embarked on a series of activities to widen the discourse on sustainability, which will inform its policy making process. These activities include awarding a research grant for a research project regarding greenwashing and online marketing, organising an Economics Roundtable on the subject of sustainability, competition and consumer protection, and launching an essay competition on the role of competition and consumer protection laws in supporting environmental sustainability.
Singapore Competition Act 2004
45 Maxwell Road
#09-01
The URA Centre
Singapore 069118
Hotline: 1800-325 8282
Tel: +65 6325 8200
Fax: +65 6224 6929
Email: cccs_feedback@cccs.gov.sg
Website: www.cccs.gov.sg
Publication
Miranda Cole, Julien Haverals and Emma Clarke of our Brussels/ London offices are the authors of a chapter on procedural issues in merger control that has been published in the third edition of the Global Competition Review’s The Guide to Life Sciences. This covers a number of significant procedural developments that have affected merger review of life sciences transactions.
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