Revised Competition Guidelines in Singapore

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Revised Competition Guidelines in Singapore

The Competition and Consumer Commission of Singapore (“CCCS”) has revised and published a number of Guidelines on the Competition Act 2004 (the “Act”) which have taken effect as of 1 February 2022. These revisions take into account amendments made to the Act in 2018, findings and recommendations from the CCCS’s E-commerce Platforms Market Study, the CCCS’s experience in applying the Act since the Guidelines were last revised, international best practices, and responses received from two public consultations held in 2020 and 2021.[1] The revised Guidelines provide greater clarity and guidance to businesses and competition practitioners on the analytical and procedural frameworks used by the CCCS in applying the Act.

CCCS Guidelines on the Section 47 Prohibition

Section 47 of the Act prohibits any conduct on the part of one or more undertakings, which is an abuse of a dominant position, in any market in Singapore. These Guidelines have been revised to provide greater clarity on issues relating to the assessment of market power and types of potentially abusive conduct in the digital era.

For example, the CCCS has added a paragraph titled ‘Preferential Leveraging of Market Power’,[2] which highlights the possibility for abusive preferencing to occur when a dominant undertaking leverages its market power in one market, and accords favourable treatment to itself or other undertakings, resulting in harm to competition in another market. The revised Guidelines provide an example of a dominant e-commerce platform which leverages its market power at the upstream level, causing harm to competition in its downstream market, to illustrate this type of abuse of dominant position.[3]

CCCS Guidelines on Substantive Assessment of Mergers 

These Guidelines have been revised to better guide businesses, consumers, and competition practitioners on issues relating to the CCCS’s assessment of mergers, such as that for conglomerate mergers and the relevance of proprietary rights and data as barriers to entry or expansion.

The CCCS has made an amendment to the non-exhaustive list of examples of structural barriers to entry.[4] The Guidelines now clarify that ‘difficulties in accessing key production or supply inputs’ includes access to physical assets, proprietary rights or data.[5]

The revised Guidelines also include examples of ‘potential non-coordinated effects’ which arise when there is a loss of competition between the merging parties and the merged entity finds it profitable to raise prices and/or reduce output, or quality or innovation. One example of such effect is where a merged entity leverages its strong market position from one market to another by tying or bundling its products, thereby reducing their rivals’ ability or incentive to compete.[6]

CCCS Guidelines on Merger Procedures

These Guidelines have been revised to enhance and clarify the process of notifying mergers to the CCCS, and to provide clarity on the CCCS’s practices in relation to notification of mergers. These amendments are intended to ensure that the practices which the CCCS has already introduced are reflected, to reduce business costs for merger parties submitting information to the CCCS, to facilitate information sharing between the CCCS and other competition authorities, and to provide clarity on certain procedural aspects of Singapore’s merger regime.[7]

For example, the amendments clarify the format requirements for materials to be submitted to the CCCS during the merger notification process.[8] Forms M1 and M2 and their supporting documents are to be provided electronically in the format as specified on the CCCS’s website.[9] In addition, Form M1 now requires information to be provided on each merger parties’ top ten (instead of top five) customers[10] in Singapore and worldwide (if applicable) where there is an overlap of goods and/or services between the merger parties.

CCCS Guidelines on Market Definition

These Guidelines have been revised to provide greater clarity on issues related to market definition that may be relevant in the digital era. Most notably, the revisions introduce the concept of multi-sided platforms which are common characteristics of digital platforms, to incorporate findings from the CCCS’s E-commerce Platforms Market Study. The Guidelines now recognise the practical complexities related to the market definition in cases involving multi-sided platforms[11] and describe various types of externalities which the CCCS may consider when assessing multi-sided platforms. For example, indirect network effects and usage externalities are common features of multi-sided platforms.[12]

CCCS Guidelines on Directions and Remedies

These Guidelines were previously known as the CCCS Guidelines on Enforcement. The Guidelines have been renamed to give effect to legislative amendments to the Act relating to commitments and remedies, and to provide clarity on the CCCS’s practices on substantive and procedural matters in assessing commitments and remedies.

The Act was amended in 2018 to allow the CCCS (then named the Competition Commission of Singapore, “CCS”) to accept binding and enforceable commitments for cases involving anti-competitive agreements (section 34 prohibition) and abuse of dominant position (section 47 prohibition). The CCCS is empowered to cease investigations upon accepting the offered commitments. The Guidelines now stipulate the requirements for these commitments proposals including timeframes and information to be submitted in the proposals, as well as the processes involved in the CCCS’s assessment of such proposals.[13] The revised Guidelines also introduce a section on remedies, which may be implemented either by the CCCS’s acceptance of commitments or by directions issued by the CCCS.[14]

CCCS Guidelines on the Appropriate Amount of Penalty in Competition Cases

These Guidelines have been revised to clarify the list of mitigating factors in the calculation of financial penalties for infringement of section 34 of the Act (which prohibits anti-competitive agreements). Where the CCCS considers there to be mitigating factors, the financial penalty may be decreased.
An additional example is now included in the non-exhaustive list of mitigating factors in relation to the roles of undertakings. Namely, in the context of a section 34 infringement, where the undertaking (a) provides evidence that its involvement in the infringement was substantially limited, and (b) demonstrates that, during the period in which it was party to the infringement, it actually avoided applying it by adopting competitive conduct in the market.[15]

In addition to this, a paragraph has been added to clarify the CCCS’s policy position on the treatment of undertakings that did not play a leader, instigator or pro-active participant role in an infringement. This fact will not, in itself, be regarded as a mitigating factor.[16]

CCCS Guidelines on the Treatment of Intellectual Property Rights

These Guidelines have been revised due to the changes in the intellectual property rights legal landscape, and to provide greater clarity on the interface between intellectual property and competition law.

Firstly, the revised Guidelines now provide definitions for the different types of intellectual property rights including patents, copyrights, trade marks and registered designs. The Guidelines also introduce new legal concepts and explain their implications in terms of competition law. For example, the Guidelines assert that the refusal by a holder of a standard essential patent (“SEP”) to license its technology on Fair, Reasonable and Non-Discriminatory (“FRAND”) terms may give rise to competition concerns in relation to the section 47 prohibition on abuse of dominance.[17] In addition, the Guidelines explain the situations in which IP settlement agreements may infringe the section 34 prohibition on anti-competitive agreements.[18]

CCCS Guidelines on the Major Competition Provisions and the CCCS Guidelines on the Section 34 Prohibition

For the purpose of consistency, these two sets of Guidelines have been revised to make consequential amendments to reflect the same changes made to the other guidelines above.

[1] The first public consultation was held between 10 September 2020 and 23 October 2020 on the proposed changes to six of the Guidelines, and the second public consultation was held between 16 July 2021 and 12 August 2021 on the proposed changes to the CCCS Guidelines on the Appropriate Amount of Penalty in Competition Cases.

[2] Paragraph 11.33 of the CCCS Guidelines on the Section 47 Prohibition.

[3] This amendment reflects the recommendation put forth by the CCCS’s E-commerce Platforms Market Study regarding ‘self-preferencing’. Self-preferencing occurs when a company gives preferential treatment to its own products and/or services when they are competing with other products and/or services that are supplied using the company’s platform. The CCCS has recognised self-preferencing conduct to be a subset of leveraging market power in its response to the public consultation.

[4] Structural barriers are one type of entry barrier. Entry barriers are factors that allow an undertaking to profitably sustain supra-competitive prices in the long term, without being more efficient than its potential rivals.

[5] Paragraph 6.36 of the CCCS Guidelines on Substantive Assessment of Mergers.

[6] Paragraph 7.26 of the CCCS Guidelines on Substantive Assessment of Mergers.

[7] Annex E of the Public Consultation on Proposed Changes to Competition Guidelines.  

[8] Singapore has a voluntary merger notification regime, and it is the responsibility of the merger parties to carry out their own assessment to determine whether or not notification may be appropriate (paragraph 2.3 – 2.5 of the CCCS Guidelines on Merger Procedures).

[9] Paragraph 4.28 of the CCCS Guidelines on Merger Procedures.

[10] Paragraph 31 of Form M1.

[11] Paragraph 5.14 of the CCCS Guidelines on Market Definition.

[12] Paragraph 5.15 of the CCCS Guidelines on Market Definition.

[13] Section 3 of the CCCS Guidelines on Directions and Remedies.

[14] Section 2 of the CCCS Guidelines on Directions and Remedies.

[15] Paragraph 2.15 of the CCCS Guidelines on the Appropriate Amount of Penalty in Competition Cases.

[16] Paragraph 2.16 of the CCCS Guidelines on the Appropriate Amount of Penalty in Competition Cases.

[17] Paragraphs 4.9 – 4.11 of the CCCS Guidelines on the Treatment of Intellectual Property Rights.

[18] Paragraphs 3.39 – 3.42 of the CCCS Guidelines on the Treatment of Intellectual Property Rights.