Singapore, a bustling hub of commerce and innovation, thrives on a competitive marketplace. To ensure fair play and prevent anti-competitive practices that could harm consumers and businesses, the nation has a robust legal framework in place: the Competition Act 2004 (Cap. 50B). Understanding the fundamental principles of this law is not just good practice for businesses operating in Singapore, but a necessity for compliance and sustainable growth. 

The Competition Act is enforced by the Competition and Consumer Commission of Singapore (CCCS). Established to promote efficient market conduct and enhance the competitiveness of the Singapore economy, the CCCS is the key authority investigating and taking action against businesses that breach the Act’s provisions. 

The core of Singapore’s competition law revolves around the prohibition of three main types of anti-competitive conduct, often referred to as the “three prohibitions”:  

Section 34: Prohibiting Anti-Competitive Agreements

This section targets agreements, decisions by associations of undertakings, or concerted practices that have the object or effect of appreciably preventing, restricting, or distorting competition within Singapore. This is a broad prohibition that covers various forms of collusion between businesses that should be competing with each other. 

Common examples of conduct prohibited under Section 34 include:

  • Price Fixing: Competitors agreeing on pricing strategies, minimum prices, or price increases, instead of letting market forces determine prices.
  • Bid Rigging: Colluding during tender processes, where competitors agree amongst themselves who will win a tender and how the others will bid (e.g., submitting artificially high bids or withdrawing).  
  • Market Sharing: Dividing up customers or markets by geography, product type, or other means, to avoid competing in those segments.
  • Output Limitation: Agreements to limit the production or supply of goods or services, which can lead to shortages and higher prices. 

It’s crucial to understand that an agreement does not need to be in writing to fall under this prohibition. Informal understandings, ‘gentlemen’s agreements’, or even a pattern of behaviour indicating collusion can be sufficient evidence of a contravention.  

Section 47: Prohibiting Abuse of Dominance

This section addresses the conduct of businesses that hold a dominant position in a market in Singapore. While it is not illegal to be dominant, the law prohibits businesses from abusing that dominance to harm competition.

A dominant position exists when a business has substantial market power, allowing it to act to an appreciable extent independently of its competitors, customers, and ultimately, consumers. Abuse of this position can take many forms, such as:  

  • Predatory Conduct: Engaging in behaviour designed to eliminate competitors, such as selling products below cost.
  • Exclusionary Conduct: Actions that prevent or hinder competitors from entering or expanding in the market, such as imposing exclusive dealing arrangements without objective justification.
  • Discriminatory Conduct: Applying dissimilar conditions to equivalent transactions with different trading parties, placing some at a competitive disadvantage.
  • Tying and Bundling: Forcing customers to buy a less desirable product along with a more desirable one where there is no natural or technical connection.

Determining dominance and whether a conduct constitutes an abuse requires careful analysis of the relevant market and the impact of the behaviour on competition.

Section 54: Prohibiting Anti-Competitive Mergers

This section provides for the review and prohibition of mergers (including acquisitions and joint ventures) that may result in a substantial lessening of competition within any market in Singapore.

While not all mergers need to be notified to the CCCS, businesses are encouraged to seek guidance from the CCCS if their proposed merger raises potential competition concerns or meets certain transaction value or market share thresholds.The CCCS has the power to investigate mergers and can impose conditions or even block mergers if they are likely to harm competition significantly. The assessment considers whether the merger will lead to increased prices, reduced choices, or less innovation for consumers.  

Enforcement by the CCCS

The CCCS actively enforces the Competition Act through investigations, which can be initiated based on complaints or market surveillance. The CCCS has significant investigative powers, including the ability to require the production of documents and information, and to conduct inspections.  

If the CCCS finds that a business has infringed the Act, it can impose a range of penalties and remedies, including:

  • Financial Penalties: These can be substantial, calculated based on the turnover of the infringing business. 
  • Directions: The CCCS can issue legally binding directions requiring businesses to cease the anti-competitive conduct or to take specific actions to remedy the harm to competition.  
  • Acceptance of Commitments: Businesses under investigation may offer voluntary commitments to address the CCCS’s concerns, which can lead to the closure of the investigation.  

Businesses also face the risk of private legal action from parties who have suffered loss or damage as a direct result of an infringement of the Competition Act. 

Complying with competition law is essential for maintaining a fair and dynamic business environment in Singapore.Businesses should have internal compliance programs in place and seek legal advice when necessary to ensure their practices do not fall foul of the Competition Act. 

Navigating the complexities of competition law and ensuring your business practices are compliant can be a daunting task. If you require expert assistance or tailored advice on competition law matters in Singapore, the experienced team at Raffles Corporate Services Pte Ltd is here to help.

For further assistance or inquiries, you can contact the Raffles Corporate Services team via email at hello@rafflescorporateservices.com.  

 

Yours sincerely,

The editorial team at Raffles Corporate Services