On 28 May 2015, the Competition Commission of Singapore (the “CCS”) issued a Proposed Infringement Decision (“PID”) against 10 financial advisory companies (the “Parties”) licensed under the Financial Advisers Act, and who are members of the Association of Financial Advisers (Singapore) (the “AFA”), for causing a securities dealer and a financial adviser (the “Company”) to withdraw its offer of a 50% commission rebate on life insurance products on the Fundsupermart.com website (“Fundsupermart Offer”).
The Parties have six weeks from the receipt of the PID to make their representations before the CCS issues its final decision.
If the CCS confirms the infringement, it may impose a financial penalty which is subject to a statutory maximum amount under the Competition Act (the “Act”) and this is set at 10% of the turnover of the business of the infringing party in Singapore for each year of infringement, up to a maximum of three years.
Offer withdrawn within a few days of launch
The CCS has provisionally found that there was an agreement during an AFA meeting and further coordination among the Parties to apply pressure on the Company to withdraw its Fundsupermart Offer within a few days of launching the offer on the Fundsupermart.com website. Specifically:
- 30 April 2013: The Company launched the Fundsupermart Offer on the Fundsupermart.com website
- 2 May 2013: AFA meeting among the Parties
- 3 May 2013: Withdrawal of Fundsupermart Offer
The CCS had then noted media reports about the withdrawal of the offer in May 2013 and also received a complaint. Investigations were subsequently commenced under the Act.
Under section 34 of the Act, business entities are generally prohibited from entering into any agreement with the object or effect of preventing, restricting or distorting competition within Singapore.
Brief background of entities involved
The Parties provide financial advisory services and distribute various financial products, including life insurance products and unit trusts. They were also users of the Company’s business-to-business distribution platform that provides administration and transactional services to financial institutions such as financial advisers. Collectively, the Parties had contributed significantly to the Company’s revenues in Singapore.
The Company distributes investment products such as unit trusts through the Fundsupermart.com platform to investors and was not a member of the AFA at the time of the Fundsupermart Offer. It also offers investment products through the same distribution platform which the Parties were using.