The Competition Commission of Singapore (CCS) is Singapore’s national competition authority responsible for enforcing the Competition Act. This is no mean feat, as markets are complex ecosystems and exhibit differing characteristics from country to country. Singapore’s small domestic economy, lack of hinterland and natural resources have hitherto necessitated a trade and foreign investment-oriented economic strategy. The tradability of many goods and services as a result of being one of the most open economies in the world does mitigate against competition concerns, as business and consumers can source globally for goods and services. Nonetheless, anti-competitive effects may still be imported into Singapore through the operation of international cartels, resulting in higher prices for business and consumers. At the same time, goods and services that are non-tradable may be more prone to anti-competitive conduct as a result of the lack of international competition. As such, a number of the CCS’s cases have involved non-tradable services.
Within the international competition community, there is unanimity that hard-core cartels are one of the most harmful forms of anti-competitive conduct and the CCS similarly takes a serious view of them. In 2013, we commissioned an independent post-enforcement study of the concluded bus operators cartel case, and the study found that ticket prices fell after the CCS’s intervention, thus substantiating empirically the harmful effects of cartels. The detection and enforcement against hard-core cartels will remain a high enforcement priority for the CCS in 2014.
The CCS’s resolve against cartels is demonstrated in our first international cartel case which was detected through our leniency programme. On 16 December 2013, the CCS issued a proposed infringement decision against four Japanese ball and roller bearings manufacturers and their Singapore subsidiaries for engaging in anti-competitive agreements and unlawful exchange of information in respect of the price of ball and roller bearings sold to customers in Singapore.
This is the first time that the CCS has exercised the extraterritorial reach of its powers. It also signals our intent to act against international cartels that have an anti-competitive impact in Singapore. To this end, our leniency programme plays a critical role in the fight against international cartels, with 19 leniency applications currently in the docket.
To complement our leniency programme, we have been developing a framework for cartel detection employing a combination of indicators within industry sectors. We have enhanced our reward scheme where we offer up to S$120,000 for whistle-blowers who provide information relating to competition infringements. We have had occasion to use the leniency-plus system which encourages cartel members under investigations to report their involvement in another cartel activity so as to secure reduced financial penalties for the first cartel activity.
But we are aware that there is a spectrum of coordinated activity in business, ranging from hard-core cartels at one end and economically beneficially joint ventures at the other end. We therefore need to continue with our advocacy efforts by working closely with businesses, professionals, trade associations and chambers of commerce. To cite one example, associations that wish to ‘standardise’ certain terms and conditions in the industry will need to pass the net economic benefit test and the CCS’s notification system allows us to render decisions and guidance to businesses and associations for this purpose.
In the area of abuse of dominance, the Singapore Competition Appeal Board’s landmark decision in 2012 in the SISTIC case has laid down the legal test for dominance and abuse of dominance in Singapore. This has greatly informed our investigations in this area. We are currently looking at a number of possible abuse of dominance cases and will elaborate more at the appropriate juncture. We are starting to see the benefits of our intervention in the SISTIC case as new entrants enter the ticketing services market, no longer hampered by exclusive agreements.
Although the CCS operates a voluntary merger regime, we have stepped up our market surveillance and issued a number of letters to parties who we feel may need to self-assess if they should notify the CCS of their mergers. In 2012, we introduced a confidential advice process for mergers. We did so as we found that there were parties who do not want to publicly announce their intentions to merge but nonetheless wanted an indication from the CCS on the merger. The take-up has been encouraging and, to date, we have already provided a great deal of confidential advice. We have also formed a commitments and remedies unit and we think this will be especially useful in merger cases.
To complement our enforcement efforts for 2014, the CCS will also be sharpening its internal advocacy and market monitoring through the formation of a new division to look specifically at this. The division will help the CCS fulfil two of its statutory roles, namely ‘to maintain and enhance efficient market conduct and promote overall productivity, innovation and competitiveness of markets in Singapore’ and ‘to advise the government and other public authority on national needs and policies in respect of competition matters generally’. For instance, as a follow-on to the CCS Guidelines on the Competition Impact Assessment for Government Agencies in 2008, there is a need for the CCS to provide thought leadership on competition policy and to work closely with other government agencies in delivering competition advisories on government policies to make them pro-competitive. The new division will also deploy market investigation tools, as well as other sector monitoring tools, to identify areas for attention. The division will also work with think tanks and academic institutions on suitable areas of research on competition policy, economics or law.
The conduct of market studies is one tool for horizon scanning to identify potential problem areas for possible courses for future action. Our recently concluded aviation market study has provided insightful information on airline joint venture agreements that is useful in assessing future cases involving airline alliances and cooperation agreements. We are currently conducting a multi-agency market study on shopping centres in Singapore.
Just as we engage government agencies and sectoral regulators, we similarly engage competition practitioners at roundtables. As part of its ongoing efforts to measure the extent of understanding and engagement with our key stakeholder groups (business communities, practitioners and the general public), the CCS will conduct a biannual stakeholder perception survey to collate ground feedback in 2014.
In the area of legislative reform, we are currently reviewing our legislation and guidelines to ensure that it is up to date, as well as to allow for more intervention options for cases to improve efficiency and outcomes.
Looking beyond Singapore’s shores, the CCS has, in its development, found international competition networks such as the ICN and the OECD to be invaluable platforms for networking and experience-sharing. The CCS will continue its support and contribute to these networks for 2014.
On the regional front, ASEAN is looking to establish the ASEAN Economic Community (AEC) by 2015. This will see ASEAN transform into a single market and production base, with free movement of goods, services, investment, skilled labour, and a freer flow of capital in the region. A recent survey by the ASEAN Business Advisory Council showed that most businesses see ASEAN economic integration as an opportunity, and more business are adopting an ASEAN strategy in approach to expansion, marketing and branding. In this regard, the ASEAN Expert Group on Competition (AEGC), supported by the ASEAN secretariat, will continue to play an important role in achieving AEC 2015 as competition policy and law is one of the pillars of AEC 2015. Currently, the CCS is chairing the AEGC Working Group on Regional Advocacy. Among others, some key deliverables include the development of an interactive AEGC web portal and the conceptualisation of materials to conduct advocacy campaigns in the areas of competition policy and law for ASEAN member states.
The CCS is also involved in a number of important multilateral free trade agreements (FTAs) such as the Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership. The CCS will be involved in the competition chapter negotiations in the realisation of these important FTAs.
Finally, the CCS will celebrate its 10th anniversary on 1 January 2015. Even as we celebrate this important milestone, it may be timely at this 10-year mark to reflect on what could have been done better in the past 10 years, and review our strategies to take the CCS forward in the next decade.