An extract from The Dominance and Monopolies Review - 7th edition

Abuse

i Overview

The test for abusive conduct was set out by the Singapore Competition Appeal Board (CAB) in its hearing of the appeal arising from SISTIC. Specifically, the CAB held that 'an abuse will be established where a competition authority demonstrates that a practice has, or [is] likely to have, an adverse effect on the process of competition'. In making this assessment, the CCCS conducts an economic effects-based assessment that will generally be centred on the degree to which the conduct in question forecloses (or has the potential to foreclose) the competitors of the dominant undertaking from being able to compete effectively in the relevant market. At present, there are no types of arrangements or conduct that are considered to constitute abusive conduct on a per se, or restriction by object, basis.

Where an undertaking can advance an objective commercial justification for its conduct, this will be taken into account in the CCCS's assessment, and may constitute a defence. However, the dominant undertaking is still required to demonstrate that it has behaved in a proportionate manner and should not take more restrictive measures than necessary.

With respect to intellectual property rights, legitimate exercise of these, even by a dominant undertaking, will not generally be regarded as an abuse. The CCCS cautions that the way in which an intellectual property right is exercised may give rise to concerns in relation to infringing the Section 47 Prohibition if, for instance, it is used to leverage market power.

ii Exclusionary abuses

It is clear that exclusionary conduct is the primary conduct that the CCCS will investigate as potentially amounting to an abuse of dominance. To date, exclusive contracting by dominant undertakings has been a common feature in the cases pursued by the CCCS. However, the Section 47 Guidelines contemplate that the following types of conduct potentially amount to an abuse of dominance, depending on all the facts and circumstances:

  1. predatory behaviour;
  2. loyalty-inducing discounts or rebates;
  3. price discrimination;
  4. margin squeeze;
  5. refusal to supply access to an essential facility or good; and
  6. exclusive contracting.

The above list is not exhaustive, and the CCCS would not be restricted from finding an abuse that arises from any other form of exclusionary conduct.

iii Discrimination

Discrimination is not identified in the Section 47 Guidelines as an abusive practice in and of itself, but instead could constitute an abuse insofar as it results in an exclusionary or foreclosure effect. For example, a dominant undertaking providing discriminatory access pricing to an essential facility (favouring its own affiliates in a downstream market) could give rise to foreclosure concerns that may amount to abusive conduct.

iv Exploitative abuses

The Section 47 Guidelines are silent as to whether exploitative abuses can constitute the abuse of a dominant position. However, it is noteworthy that the Section 47 Prohibition makes no reference to unfair prices or unfair trading conditions (unlike Article 102 of the Treaty on the Functioning of the European Union on which the Section 47 Prohibition was modelled). In other words, references to unfair prices and trading terms were specifically removed (and replaced instead with an explicit reference to 'predatory behaviour towards competitors') when the Section 47 Prohibition was drafted.

It is also noteworthy that the CCCS has not publicly pursued any Section 47 cases involving purely exploitative conduct, and has also previously made public statements that it is not within the CCCS's purview to oversee or regulate prices.