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Under what circumstances is a transaction caught by merger control legislation?

Mergers that have resulted, or may be expected to result, in a substantial lessening of competition within any market affecting Singapore will be caught by the prohibition under Section 54 of the Competition Act.

Pursuant to Section 54(2) of the Competition Act, a merger is deemed to occur where:

  • two or more previously independent undertakings merge;
  • one or more persons or other undertakings acquire direct or indirect control of the whole or part of one or more other undertakings; or
  • an acquisition by one undertaking (the first undertaking) of the assets (including goodwill), or a substantial part of the assets, of another undertaking (the second undertaking) places the first undertaking in a position to replace or substantially replace the second undertaking in the business or the part of the business in which the second undertaking was engaged immediately before the acquisition.

The prohibition under Section 54 of the Competition Act can also apply to joint ventures.

The following are excluded from the prohibition under Section 54 of the Competition Act:

  • mergers that are:
    • approved by any minister or regulatory authority (other than the Competition Commission of Singapore) pursuant to any requirement imposed by written law;
    • approved by the Monetary Authority of Singapore pursuant to any requirement imposed under any written law; or
    • under the jurisdiction of another regulatory authority under any written law or code of practice relating to competition;
  • mergers involving any undertaking relating to any specified activity as defined in Paragraph 6(2) of the Third Schedule to the Competition Act; and
  • mergers resulting in net economic efficiencies (eg, lower costs, greater innovation, greater choice or higher quality).

Do thresholds apply to determine when a transaction is caught by merger control legislation?

There are no jurisdictional safe harbours where mergers which do not trigger specified quantitative thresholds are exempt or excluded from Section 54 of the Competition Act.

Generally, the Competition Commission of Singapore (CCS) is likely to give further consideration to the merger if it meets the following quantitative thresholds:

  • The merged entity has a market share of 40% or more; or
  • The merged entity has a market share of between 20% and 40% and the post-merger market share of the three largest firms (ie, the concentration ratio of the three largest firms) is 70% or more.

The quantitative thresholds are based on the relevant markets defined in accordance with the rules set out in the gazetted CCS Guidelines on Market Definition, and can be broadly defined as local (ie, Singapore), regional or global.

The CCS also considers mergers that satisfy the following de minimis thresholds to be of more concern:

The turnover in Singapore (ie, turnover booked in Singapore as well as turnover from customers in Singapore) in the financial year preceding the transaction of at least one of the parties exceeded S$5 million; or
The combined worldwide turnover in the financial year preceding the transaction of all of the parties exceeded S$50 million.

The CCS has stressed that it may also investigate transactions that fall below the indicative quantitative thresholds and the de minimis thresholds. Parties must conduct a self-assessment to establish whether their merger could give rise to a substantial lessening of competition within any market affecting Singapore and should therefore be notified to the CCS.

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