The Competition Commission of Singapore (“CSS”) has issued amendments to its competition law guidelines for public consultation. The proposed guidance seek to clarify the substantive assessment of merger provisions, introduce a fast track procedure for investigations and extend the scope of the leniency regime for entities which disclose cartel conduct.
Substantive Assessment of Mergers
Similar to in Australia, the merger regime in Singapore is a voluntary one. Companies must self-assess whether the merger is likely to result in a substantially lessening of competition. The proposed guidelines seek to clarify what constitutes a merger and when a merger is likely to result in a substantial lessening of competition (“SLC”).
The proposed guidelines state that a merger is more likely to lead to a SLC if the merger creates, maintains or enhances market power. A merger may also result in a SLC if the merged entity has the ability, either unilaterally or in coordination with others, to exercise market power when buying products or services.
The process and criteria for the CSS’s assessments of the effects of mergers is also outlined in the guidelines. Importantly:
- the CSS is not limited to one theory of harm, but may develop multiple theories, and
- the counterfactual is not limited to looking at the status quo, but will take into account likely and imminent changes to the structure of competition in the market.
New Fast Track Procedure
The CSS proposes to introduce a new fast track procedure for entities that have breached section 34 or section 47 of Competition Act (Cap. 50B) (“Act”). These sections are similar, respectively, to section 45, which prohibits contracts, arrangements of understandings that restrict dealings or affect competition, and section 46, which deals with misuse of market power, of the Competition and Consumer Act (Cth)). The purpose of the procedure is to allow the CSS to deal with investigations more effectively and efficiently. The process allows parties to liability and be eligible for a fixed percentage reduction in the amount of financial penalty they have to pay.
Use of the procedure is voluntary and either the CSS or the party being investigated may decide to drop the fast track procedure and revert to the normal procedure at any stage. Ultimately, as under the normal procedure, the CSS will issue either an infringement decision or a proposed infringement decision. A decision granted under the fast track procedure will provide for a 10% reduction in the financial penalty. The infringing party may also be eligible for a discretionary reduction for leniency discussed below.
Review of Leniency Regime
The CCS’s leniency program allows companies to disclose the existence of cartels to the CSS, and in return be granted immunity from or a reduction in the financial penalty they would otherwise be liable to pay.
The draft guidelines propose to extend the scope of the program to permit coercers and initiators of cartel activities to seek leniency (although they will only be able to access a reduction in the amount of penalty and not immunity).
Under the proposed changes, leniency applicants will need to satisfy more conditions in order to succeed in their application, including making an unconditional admission of prohibited conduct and providing a waiver of confidentiality to the CSS.
Information exchanges and disclosure of information
The draft guidelines also make clear that in considering the effect of agreements, a restriction of competition by object is regarded as a restriction of competition. This concept is drawn from EU legislation which distinguishes “restrictions by object” from “restrictions by effect”. This distinction reflects the fact that some agreements, by their very nature, have the potential to damage the functioning of normal competition. Under this doctrine, once an agreement is found to have restriction of competition as its object, it is not necessary for the CSS to prove the negative effects of the agreement.
The draft guidelines state that this concept applies to information exchanges in addition to agreements. The CSS clarifies that information exchanges include an unilateral disclosure of information by one entity in response to a request by the receiving entity, or where the receiving entity accepts that information. If this information exchange has the object of restricting competition, it will constitute an infringement of the Act.