3. Competition Act & Dominance in Singapore
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3. Competition Act & Dominance in Singapore

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Questions and Answers

What may be considered a factor in assessing market dominance?

  • Market entry barriers
  • Sunk costs (correct)
  • Brand loyalty
  • Consumer preferences
  • Which of the following practices is NOT classified as an abusive use of market power?

  • Price discrimination
  • Price matching (correct)
  • Predatory pricing
  • Exclusive contracts
  • What is the presumption of dominance based on market share percentage?

  • 50 percent
  • 80 percent
  • 60 percent (correct)
  • 70 percent
  • Which of the following is an example of price-based exclusionary conduct?

    <p>Loyalty rebates</p> Signup and view all the answers

    In the context of unilateral conduct, which behavior involves leveraging market power through preferential treatment?

    <p>Preferential leveraging</p> Signup and view all the answers

    Which of these pricing strategies may constitute predatory behavior?

    <p>Pricing below average variable cost</p> Signup and view all the answers

    What is a common characteristic of loyalty rebates as part of a market strategy?

    <p>Incentives to purchase exclusively</p> Signup and view all the answers

    Which conduct is classified under vertical restraints?

    <p>Exclusive purchasing</p> Signup and view all the answers

    What is the main purpose of Section 47 of the Competition Act?

    <p>To prevent the abuse of dominant market positions</p> Signup and view all the answers

    Which step is NOT part of the three-step test for determining abuse of dominant position?

    <p>Analyzing the pricing strategy of the dominant firm</p> Signup and view all the answers

    What is the first step in the three-step test for unilateral conduct under the Competition Act?

    <p>Defining the relevant product and geographic markets</p> Signup and view all the answers

    Which of the following is NOT a component when defining the relevant product market?

    <p>Assessing consumer preferences over time</p> Signup and view all the answers

    In the context of competition law, what does the acronym SSNIP stand for?

    <p>Small but Significant Non-transitory Increase in Price</p> Signup and view all the answers

    What is the consequence of being in a dominant position in a market according to the Competition Act?

    <p>It is not an offense unless abused</p> Signup and view all the answers

    Which division of the Prohibitions Regime deals specifically with merger control?

    <p>Part III, Division 4</p> Signup and view all the answers

    What must occur for conduct to be considered abusive under Section 47 of the Competition Act?

    <p>There must be a clear dominant position in the relevant market</p> Signup and view all the answers

    What was a significant issue investigated regarding Coca-Cola Singapore Beverages in 2013?

    <p>Exclusivity conditions in supply agreements</p> Signup and view all the answers

    What conduct was identified in the SISTIC.com case related to market power?

    <p>Exclusive agreements and artificial perpetuation of dominance</p> Signup and view all the answers

    Which of the following did Coca-Cola Singapore Beverages agree to eliminate from their supply agreements?

    <p>No exclusivity restrictions</p> Signup and view all the answers

    What did the circular theory of harm in the SISTIC.com case rest upon?

    <p>Concurrent effects of discounts and exclusive agreements</p> Signup and view all the answers

    In the context of unilateral conduct, what aspect does conditional rebate imply?

    <p>Rebates given only with the purchase of certain items</p> Signup and view all the answers

    What outcome can be inferred from the CCCS's approach in the SISTIC.com case?

    <p>Willingness to establish independent theories on market conduct</p> Signup and view all the answers

    What was one of the findings from the investigation into Coca-Cola Singapore Beverages’ agreements?

    <p>Exclusivity conditions were seen as anti-competitive</p> Signup and view all the answers

    What benefit is often derived from exclusive agreements in the context of monopolies?

    <p>Creation of barriers for new entrants</p> Signup and view all the answers

    What is one of the limitations set by Coca-Cola Singapore Beverages regarding cooler space?

    <p>Retailers can use up to 20% of cooler space for other brands.</p> Signup and view all the answers

    Which rationale is associated with Ramsey Pricing?

    <p>Adjusting prices based on the price elasticity of demand.</p> Signup and view all the answers

    In the case study regarding SATS Ltd, which type of market segment is NOT categorized under the provision of contract food services?

    <p>Retail grocery</p> Signup and view all the answers

    What is a key characteristic of 'long-run incremental costs'?

    <p>Considers the long-term costs associated with providing an output.</p> Signup and view all the answers

    Which of the following is NOT mentioned as a category of market segmentation in contract food services?

    <p>Hospitality</p> Signup and view all the answers

    What aspect does the CCCS consider when evaluating responses from customers in contract food services?

    <p>Specific requirements of customers.</p> Signup and view all the answers

    What type of pricing strategy might involve raising individual prices above marginal cost?

    <p>Ramsey Pricing</p> Signup and view all the answers

    Which of the following phrases best describes the market definition mentioned for the acquisition case of SATS Ltd?

    <p>Customer-driven market segments.</p> Signup and view all the answers

    Study Notes

    The Section 47 Prohibition

    • The Competition Act prohibits conduct that amounts to the abuse of a dominant position in any market in Singapore.

    Unilateral Conduct: Three-Step Test

    • The three-step test for identifying abuse of dominant position:
      • Define the relevant market.
      • Determine if there is a dominant position within the relevant market.
      • Determine if there has been abuse of the dominant position.
    • Dominance is not an offense itself.
    • The presumption of dominance is at 60% market share.

    Relevant Market Definition

    • The relevant product market includes all products buyers consider reasonable substitutes to the focal product.
    • The relevant geographic market considers where buyers are willing to purchase reasonable substitutes for the product.

    Establishing Dominance

    • Dominance is assessed as:
      • The ability to profitably sustain prices above competitive levels.
      • The ability to restrict output or quality below competitive levels.
    • Factors that may be considered in dominance assessment:
      • Sunk costs
      • Economies of scale
      • Economies of scope
      • Network effects
      • Purchasing efficiencies
      • Innovation
      • Production differentiation

    Abusive Conduct

    • Abuse of dominant position includes conduct exemplified by:
      • Predatory behaviour
      • Pricing below cost
      • Fidelity discounts
      • Price discrimination
      • Margin squeeze
      • Vertical restraints, including:
        • Exclusive purchasing
        • Tying and bundling
        • Preferential leveraging of market power
        • Refusal to supply
        • Essential facilities

    Abusive Conduct: Horizontal and Vertical Foreclosure

    • Horizontal foreclosure: Practices that exclude competitors from the same market, including:
      • Non-price based exclusion:
        • Single branding
        • Tying/bundling
        • Line forcing
        • Exclusive contracts
      • Price-based exclusion:
        • Loyalty rebates
        • Predation
    • Vertical foreclosure: Practices that exclude competitors from different, but linked, markets, including:
      • Discrimination
      • Margin squeeze
      • Constructive refusal

    Case Study - Loyalty-Inducing Rebates

    • Loyalty inducing rebate schemes can be abusive.
    • Factors to consider are:
      • The structure of the scheme, including:
        • Retroactive rebate schemes: These schemes offer discounts based on past purchase volume.
        • Discounts on specific volumes: These schemes offer discounts proportionate to specific purchase volumes.

    Case Study: SISTIC.com

    • In CCS 600/008/07, SISTIC.com Pte Ltd was found to have abused its dominant position.
    • The CCCS relied on the "circular theory of harm" which states that exclusive agreements and discounts can combine to artificially perpetuate dominance.
    • Specifically, SISTIC.com's actions involved:
      • Exclusive agreements with venues and promoters: This restricted competition in the ticket sales market.
      • Reaping monopoly benefits from ticket buyers.

    Case Study: Coca-Cola Singapore Beverages

    • In 2013, the CCCS investigated Coca-Cola Singapore Beverages' supply agreements with on-premise retailers.
    • The investigation found:
      • Restrictive provisions, such as:
        • Exclusivity conditions
        • Conditional rebates
    • Coca-Cola amended their agreements to remove potentially anti-competitive provisions and gave an undertaking to the CCCS that included:
      • No exclusivity restrictions.
      • No right of first refusal.
      • No loyalty-inducing rebates.
      • No exclusive use of display space.
      • Allowance for retailer use of up to 20% of cooler space for other brands.

    Objective Justification Defence

    • An undertaking can defend against allegations of abusive conduct by demonstrating an objective justification for their actions.
    • Examples of potential objective justifications:
      • "Ramsey Pricing": The practice of setting individual product prices above marginal cost based on price elasticity of demand.
      • "Long-run Incremental Costs": Examines the long-run cost of providing an output, rather than a short-term per-unit basis.

    Case Study: Market Definition

    • In CCCS 100/1303/08, SATS Ltd. acquired Singapore Food Industries Limited.
    • SATS submitted that the relevant product market included:
      • Provision of contract food services
      • Supply of processed foods
      • Wholesale distribution of food products
    • The CCCS examined these markets and found that provision of contract food services could be further categorized into segments including:
      • Business industrial (e.g. factories, hotels)
      • Education (e.g. schools, colleges)
      • Healthcare (e.g. hospitals, nursing homes)
      • Uniformed (e.g. Singapore Armed Forces, Policy Academy, Civil Defence Force)
    • The CCCS recognized that customers in each of these segments often have specific requirements.

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    Description

    This quiz covers key concepts of the Competition Act in Singapore, focusing on the prohibition of abusing a dominant market position. It includes details on the three-step test for identifying such abuse, the definition of relevant markets, and how dominance is established. Test your understanding of these regulatory measures.

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