Singapore: Competition Commission

With increased anti-globalisation and protectionist sentiments driving politics and policies across the world, the need to promote competitive markets has taken on a new urgency.

The Competition Commission of Singapore’s (CCS) mission is to make markets work well to create opportunities and choices for businesses and consumers in Singapore where rigorous enforcement and effective advocacy work hand in hand.

In August 2016, we also welcomed three new commissioners to augment our board with expertise and industry experience in fields such as economics, business, entrepreneurship, professional accounting and corporate finance.¹

Rigorous enforcement

In 2016, the CCS issued a proposed infringement decision against 13 fresh chicken distributors for price-fixing and agreements not to compete. The conduct was industry-wide as these distributors controlled more than 90 per cent of the supply of fresh chicken products in Singapore and their total annual turnover was approximately A£500 million. The CCS is currently reviewing the chicken distributors’ representations.

In the financial services sector, the CCS issued an infringement decision against 10 financial advisers for pressurising a competitor to withdraw an online insurance product that offered a 50 per cent commission rebate. The competitor’s offer was innovative and reached out to a wide client base, allowing consumers to enjoy significant savings. Penalties close to S$1 million were imposed against the infringing advisers. We emphasised in our communications on the case that incumbents should not be allowed to deter new and innovative players from accessing markets and competing fairly.

We concluded an abuse of dominance (AOD) case involving restrictive industry practices in the maintenance of lifts in Singapore’s public housing estates, which comprise 80 per cent of the housing market in Singapore. While the majority of over 20,000 lifts installed are maintained by original equipment manufacturers, third-party maintenance contractors offered maintenance costs at more competitive prices. However, the inability of third-party maintenance contractors to source original parts from original equipment manufacturers or their sole distributors poses significant operational issues for them. One of the investigated parties, E M Services Pte Ltd, voluntarily provided commitments to supply relevant lift spare parts to third-party lift maintenance contractors. We considered that the commitments addressed the competition concerns and accordingly ceased our investigation. The industry-wide investigation against other parties continues.

In another AOD case involving the growing online food delivery industry, where players in the market² listed a combined total of over 3,500 restaurants on their platforms, investigations were closed after assessing that competition has not been harmed as the industry continued to grow with several new entrants gaining market share aggressively. In the course of our investigations, we noted the use of exclusive agreements by online food delivery providers as one method to gain market share. We issued a communication to state that we will continue to closely monitor the market as such exclusive agreements can be problematic in future should an online food delivery provider become dominant (which can occur quite rapidly in digital markets because of network effects).

In 2016, we reviewed seven merger notifications under our self-assessment voluntary regime (six of which were cross-border in nature) spanning different industries, including manufacturing, financial services and transportation. Competition concerns were raised in a merger involving suppliers of airfield lighting who accounted for more than 80 per cent market share in the supply. The merger was cleared following the acceptance of commitments, which included commitments on non-exclusivity and the supply of spare parts to address the competition concerns.

Post-merger study and review of Guidelines

A post-merger study of the kidney dialysis market showed that the CCS’s decision to clear the merger of two dialysis service providers with a high combined market share in December 2012 was sound, as it did not lead to any adverse effect on competition in the market. The CCS also commenced a study into the retail petrol market in Singapore in 2015 and studied the factors affecting the movement of petrol prices in Singapore since 2010. Based on the information gathered, there is no evidence to suggest collusion in petrol pricing, even though petrol companies monitor and react to each other’s published prices.

A two-year review of the CCS Guidelines³ was completed in November 2016, and took into account international best practices, stakeholder feedback and CCS decisional practice. One of the reforms includes a new Fast Track Procedure, which will allow businesses under investigation to enter into an agreement with the CCS where they will admit their liability early, by acknowledging their participation in an anticompetitive activity, in return for a reduction on the financial penalty. Other reforms include a change in the reference year for the calculation of relevant turnover for financial penalties, and enhancements to our leniency programme and substantive assessment of mergers.

Effective advocacy

The CCS’s advocacy efforts include outreach to both government and private stakeholders. To ensure the CCS’s outreach collaterals remain relevant, its collaterals were revamped to help key stakeholders better understand the Act.⁴

A second run of the CCS-ESS Essay Competition,⁵ on the topic ‘Disruptive Innovation and Competition Policy: Friend or Foe?’, attracted some 71 entries. A number of the winners discussed the relationship between regulators and innovators, and how authorities could design policies to cater to the dynamic and unpredictable nature of disruptive innovations.

The CCS has held a number of outreach sessions with government agencies to raise awareness on the detrimental impact of bid-rigging on public procurement and how tenders can be designed to promote competition.

Under the new Research and Publication Unit within the CCS, at least 10 papers⁶ were authored and published in journals such as the Asian Journal of Law and Economics, the CPI Antitrust Chronicle and the Journal of Competition Law and Economics.

Regional and international efforts

The ASEAN Economic Community Blueprint 2025 was adopted by ASEAN leaders at the 27th ASEAN summit in 2015. The Blueprint provides directions for ASEAN’s next phase of economic development from 2016 to 2025, with competition policy being one of the pillars. The CCS plays an active role in the ASEAN’s Expert Group on Competition (AEGC) and currently chairs the work group on developing strategy and tools for regional competition advocacy. A toolkit on strategies and tools for regional competition advocacy was launched at the 2016 ICN Annual Conference alongside a revamped AEGC website (www.asean-competition.org).

The CCS chaired the negotiations of the competition chapter for the Regional Comprehensive Economic Partnership FTA to establish a high-standard chapter that will help build a regional competition regime to facilitate economic integration. The CCS was also involved in the China–Singapore Free Trade Agreement upgrade that will provide Singapore’s businesses with enhanced trade facilitation and greater investment protection in China. The CCS is also involved in the Sri Lanka–Singapore Free Trade Agreement.

We remain active at both the OECD and the ICN. The ICN Annual Conference was hosted in Singapore for the first time. The CCS welcomed more than 500 participants from over 80 jurisdictions. Heads of competition-related agencies in ASEAN, Australia and New Zealand also met on the Conference sidelines and discussed key challenges faced by national competition authorities, including ways to increase coordination and information exchange in the region.

As the CCS is also taking on a broader spectrum of cross-border cases, we are currently examining the possibility of establishing cooperation agreements with our counterparts to facilitate deeper information exchange and enforcement cooperation.

Looking ahead

As the e-commerce sector will play a key role in cross-border trade among ASEAN member states, the CCS will develop a handbook for government agencies in the member states providing best practices on implementing Competition Policy and Law relating to e-commerce. Alongside, the CCS will also commission a research paper, to examine potential competition issues relating to Big Data.

At the same time, competition authorities need to refocus on advocating the benefits of competitive markets in this post-globalisation era.

Notes

1. The new Commissioners are Professor Euston Quah, Head of the Department of Economics at the Nanyang Technological University and President of the Economic Society of Singapore, Professor Wong Poh Kam from the National University of Singapore School of Business and Mr Kan Yut Keong, a retired accountant formerly of PricewaterhouseCoopers.
2. Such as Deliveroo, FeastBump, Foodpanda, Gourmet To Go, What To Eat and UberEats.
3. The revised Guidelines and Fast Track Procedure came into effect on 
   1 December 2016.
4. Topics covered include the essentials of the Act and its key prohibitions, the Competition Compliance Programme for businesses, as well as the impact of government participation on competition in the market.
5. Organised in partnership with the Economic Society of Singapore (ESS), the aim of the essay competition is to raise public awareness and encourage debate on competition policy and law issues in Singapore.
6. The papers covered a variety of topics including: recent developments in antitrust enforcement and competition advocacy in Singapore; retail MFN clauses’ impact on competition; designing auctions to protect competition; commitment decisions in antitrust cases; public interest considerations in merger control; and preserving pro-competition benefits of disruptive technology in new regulatory rules, etc.