CPL2: Competition Act: Section 34

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson
Download our mobile app to listen on the go
Get App

Questions and Answers

In the context of Singapore's Competition Act 2004, which of the following scenarios most definitively contravenes Section 34 concerning anti-competitive agreements 'by object'?

  • Competing pharmaceutical companies concurrently announce identical price increases for a non-patented essential drug, citing rising raw material costs and supply chain disruptions.
  • Leading construction companies in Singapore enter into a pact to divide upcoming public infrastructure projects geographically, ensuring each secures a predetermined share of the market. (correct)
  • Several boutique hotels in a locality decide to jointly promote the region as a tourist destination, sharing marketing costs and visitor data, leading to a marginal increase in average room rates.
  • Two major telecommunication firms agree to standardize network protocols to enhance interoperability, inadvertently creating higher barriers to entry for nascent competitors.

Under Singapore's Section 34 Prohibition, an agreement between undertakings will invariably escape scrutiny if the parties involved are in a vertical, rather than horizontal, relationship, irrespective of the agreement's demonstrable anti-competitive effects.

False (B)

Critically evaluate the evidentiary threshold required by the Competition and Consumer Commission of Singapore (CCCS) to establish a violation of Section 34 based on 'anti-competitive effect,' as distinguished from 'anti-competitive object'.

To establish a Section 34 violation based on 'anti-competitive effect,' the CCCS must demonstrate that the agreement, while not inherently anti-competitive in objective, demonstrably prevents, restricts, or distorts competition within Singapore. This necessitates a detailed market analysis to prove actual or likely appreciable adverse effects on competition, contrasting with 'by object' infringements where anti-competitive intent is presumed, requiring less direct proof of impact.

According to prevailing interpretations of Section 34, mere _________ by an undertaking in a meeting with an anti-competitive purpose, without explicit and demonstrable disassociation, can be construed as tacit approval and thus a violation.

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

Match the following types of information exchange with their relative risk of contravening Section 34 of Singapore's Competition Act:

<p>Organised exchange of sensitive data (prices, discounts) = Highest Risk Occasional exchange of sensitive data = Medium-High Risk Exchange of historical data that cannot influence future market behaviour = Low Risk Exchange of data in the public domain = Negligible Risk</p> Signup and view all the answers

Consider a scenario where two ostensibly independent companies, operating in a downstream retail market, utilize a common upstream manufacturer. If these retailers engage in concerted practices regarding pricing strategy, which of the following best characterizes the nature of potential Section 34 infringement?

<p>Primarily a horizontal agreement infringement, notwithstanding the vertical element. (C)</p> Signup and view all the answers

Information sharing agreements are per se legal under Singaporean Competition Law if the exchanged data is exclusively non-price related, such as historical sales volumes or aggregated market trends.

<p>False (B)</p> Signup and view all the answers

Articulate the 'Net Economic Benefit Exclusion' under Singapore's Competition Act and discuss the critical factors that undertakings must demonstrate to successfully invoke this exclusion against a Section 34 Prohibition.

<p>The 'Net Economic Benefit Exclusion' (Paragraph 9 of the Third Schedule) exempts agreements from Section 34 Prohibition if they generate net economic benefits. To invoke this, undertakings must prove the agreement contributes to improving production or distribution, or promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and not imposing restrictions indispensable to achieving these objectives, nor eliminating competition substantially.</p> Signup and view all the answers

In the context of bid-rigging, '_________ pricing' is a collusive tactic where a designated bidder submits a deliberately high bid to ensure a pre-selected competitor wins the auction.

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

Which of the following information exchanges between competitors is LEAST likely to be scrutinized under Section 34 of Singapore's Competition Act?

<p>Publicly available aggregated industry sales statistics published by a recognized market research firm. (D)</p> Signup and view all the answers

Under Section 34, agreements aimed at standardizing product dimensions across an industry sector are automatically deemed anti-competitive due to their potential to limit product differentiation and innovation.

<p>False (B)</p> Signup and view all the answers

Explain the concept of 'hub-and-spoke' practices in the context of anti-competitive agreements and analyze how such arrangements can violate Section 34, particularly concerning vertical and horizontal dimensions.

<p>'Hub-and-spoke' practices involve a central 'hub' (often a common supplier or platform) facilitating collusion between ostensibly independent 'spokes' (competitors). Though seemingly vertical, they can create horizontal anti-competitive effects if the hub serves as a conduit for exchanging sensitive information or coordinating strategies among competitors, violating Section 34 by restricting competition at the horizontal level.</p> Signup and view all the answers

Agreements that involve allocating geographical areas or categories of consumers/services are classified as _________ sharing, a type of hardcore conduct under Section 34.

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

In assessing whether an information exchange has an 'appreciable adverse effect on competition,' which factor would the CCCS likely consider MOST critical?

<p>The demonstrable reduction or removal of uncertainties inherent in the process of competition. (C)</p> Signup and view all the answers

For an agreement to be considered 'anti-competitive by object' under Section 34, it is mandatory for the CCCS to prove that the parties explicitly intended to restrict competition; absence of demonstrable intent negates 'by object' classification.

<p>False (B)</p> Signup and view all the answers

Discuss the implications of the phrase 'regardless of the subjective intent of the parties for any reason!' in the context of hardcore restrictions under Singapore's Section 34.

<p>This phrase underscores that the prohibition of hardcore restrictions, such as price-fixing or market sharing, is absolute and not contingent on the motivations or justifications offered by the undertakings. Even if parties claim benign intentions or pro-competitive rationales, agreements classified as hardcore 'by object' are automatically deemed illegal.</p> Signup and view all the answers

In the EBAA case, the Express Bus Agencies Association was found to have engaged in price-fixing by establishing _________ selling prices and coordinating fuel and insurance charges.

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

Which scenario most accurately exemplifies 'bid-suppression' in the context of anti-competitive bid-rigging?

<p>One bidder agrees to withdraw a genuinely competitive bid to allow a pre-selected competitor to win. (D)</p> Signup and view all the answers

Under Singaporean Competition Law, concerted practices, unlike formal agreements, are immune to Section 34 Prohibition due to their informal and non-binding nature.

<p>False (B)</p> Signup and view all the answers

Contrast 'price-fixing' with 'information sharing' as categories of anti-competitive agreements under Section 34, highlighting the distinct legal and economic considerations for each.

<p>Price-fixing is a 'by object' hardcore restriction, directly manipulating price competition and presumed illegal. Information sharing, while not always 'by object,' can be 'by effect' if it reduces market uncertainty, requiring a nuanced economic analysis to determine appreciable adverse effects on competition. Price-fixing is per se unlawful; information sharing requires contextual assessment of its competitive impact.</p> Signup and view all the answers

Output limitation, another form of hardcore conduct, directly restricts competition by _________ production levels or use of quotas.

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

In the CCCS 700/002/14 case involving hotels, the infringement was primarily based on the exchange of:

<p>Confidential, customer-specific, commercially sensitive information on corporate room rates. (A)</p> Signup and view all the answers

The penalties imposed by the CCCS for Section 34 infringements are solely punitive and do not incorporate any element of disgorgement of ill-gotten gains derived from anti-competitive conduct.

<p>False (B)</p> Signup and view all the answers

Explain how 'information exchanges on individual future prices, output or production' are considered a hardcore conduct under Singapore's Section 34 and why they are treated with such severity.

<p>Exchanges of future pricing, output, or production plans are hardcore conduct because they directly undermine the fundamental competitive process of independent decision-making. By sharing such forward-looking strategic information, undertakings eliminate market uncertainty, facilitate collusion, and effectively pre-determine market outcomes, negating competition.</p> Signup and view all the answers

The CCCS 500/7002/14 case penalized fresh chicken distributors for engaging in both price-fixing and _________-compete agreements.

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

In the context of Section 34 of the Competition Act 2004 (Singapore), which of the following scenarios most definitively constitutes an agreement with the 'object' of preventing, restricting, or distorting competition?

<p>Competing firms explicitly collude to establish fixed minimum resale prices for their products, documented in internal communications and implemented uniformly across the distribution network. (D)</p> Signup and view all the answers

Under Singapore's Section 34 Prohibition, an agreement between undertakings can only be deemed anti-competitive if it demonstrably 'prevents, restricts or distorts competition' in terms of its actual effects on the market, irrespective of the parties' intentions.

<p>False (B)</p> Signup and view all the answers

Critically evaluate the proposition that information exchange between competitors is inherently anti-competitive. Under what specific conditions, if any, might such exchange be permissible without contravening Section 34 of Singapore's Competition Act?

<p>Information exchange is not inherently anti-competitive. Permissible exchanges typically involve publicly available, non-commercially sensitive, non-strategic, sufficiently historic, and sufficiently aggregated data. Exchanges become problematic when they reduce strategic uncertainty in the market, facilitating collusion or coordinated behaviour.</p> Signup and view all the answers

Agreements considered 'hardcore restrictions' under Singapore competition law, often categorized as ‘by ______’ restrictions, are presumed to have an appreciable adverse effect on competition without needing extensive market analysis.

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

Match the following categories of anti-competitive agreements with their corresponding descriptions under Singapore's Competition Act:

<p>Price-fixing = Agreements to directly or indirectly set, maintain, or manipulate prices, including discussions on price components, minimum or maximum prices, or pricing policies. Market-sharing = Agreements to divide markets by allocating geographical areas, customer segments, or other classifications to reduce competitive overlap. Bid-rigging = Collusive tendering practices, including cover pricing, bid suppression, bid rotation, and market division schemes in procurement processes. Output limitation = Agreements to restrict or control production, output, technical development, or investment to manipulate supply and prices.</p> Signup and view all the answers

Consider a scenario where two companies in a vertical supply chain, a manufacturer and a distributor, enter into an agreement. Which of the following best elucidates the applicability of Section 34 prohibition to this vertical agreement?

<p>While vertical agreements are generally less likely to be problematic, Section 34 can apply if the agreement, despite the vertical relationship, has the object or effect of restricting competition, particularly if it facilitates horizontal collusion or foreclosure. (B)</p> Signup and view all the answers

The 'Net Economic Benefit Exclusion' under Paragraph 9 of the Third Schedule of the Competition Act provides a blanket exemption for any agreement that demonstrably leads to an increase in overall economic efficiency, irrespective of any concurrent anti-competitive effects.

<p>False (B)</p> Signup and view all the answers

Explain the 'hub-and-spoke' theory of collusion in the context of anti-competitive agreements. How does this concept relate to the enforcement of Section 34, particularly concerning vertical relationships?

<p>Hub-and-spoke collusion involves a central entity (the 'hub') facilitating collusion between ostensibly independent firms (the 'spokes'). In vertical relationships, a supplier or platform could act as the hub, enabling horizontal collusion amongst its distributors or participants through information exchange or coordinated policies, thereby violating Section 34.</p> Signup and view all the answers

In the CCS 500/001/11 case concerning price-fixing of monthly salaries for Indonesian Foreign Domestic Workers, the concept of 'passive participation' leading to 'tacit approval' underscores that mere presence in anti-competitive meetings, without explicit __________, can be construed as a violation of Section 34.

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

In the CCS 700/002/14 case involving hotels exchanging commercially sensitive information, what was the primary nature of the information exchanged that led to the infringement decision under Section 34?

<p>Confidential, customer-specific details regarding corporate room rates, including discount percentages and negotiation strategies. (A)</p> Signup and view all the answers

According to the principles illustrated in the 'Express Bus Agencies Association (“EBAA”) case', agreements solely addressing fuel and insurance surcharges are generally considered outside the ambit of Section 34 prohibition, as these are pass-through costs and not core pricing elements.

<p>False (B)</p> Signup and view all the answers

Illustrate, using a fictitious but realistic scenario in the Singaporean market, how 'information sharing (non-price or historical information)' might still constitute a 'by effect' restriction under Section 34. What specific market conditions or information characteristics would make such exchange problematic?

<p>Imagine three major logistics firms in Singapore regularly exchanging detailed, anonymized data on their operational capacities and real-time utilization rates. In a market with high barriers to entry and inelastic demand, this 'non-price' information sharing could reduce uncertainty about rivals' ability to absorb surges in demand, enabling tacit coordination to avoid price competition, especially during peak seasons. The market concentration and strategic nature of capacity data make this exchange problematic.</p> Signup and view all the answers

In contrast to 'hardcore' restrictions, 'by effect' restrictions necessitate a more granular analysis of the _________ context and the actual or likely impact on competition to determine a violation of Section 34.

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

Which of the following agreements is LEAST likely to be scrutinized under Section 34 of Singapore's Competition Act?

<p>A voluntary code of conduct, established by an industry association of food manufacturers, recommending uniform 'best before' date labeling standards for packaged foods. (C)</p> Signup and view all the answers

Under Singapore's Competition Act, for an agreement to infringe Section 34, it is mandatory to prove that all parties involved had a subjective 'anti-competitive intent'. If subjective intent cannot be established, the agreement cannot be deemed unlawful.

<p>False (B)</p> Signup and view all the answers

Flashcards

Section 34 Prohibition

Section 34 of the Competition Act 2004 prohibits agreements between undertakings, decisions by associations of undertakings, or concerted practices that prevent, restrict, or distort competition within Singapore.

Hardcore conduct

Includes price-fixing, market-sharing, bid-rigging, output limitation and information exchange on future prices, output or production.

Information Sharing

Involves sharing particularly sensitive information that includes price, cost, capacity, proprietary data/information, and commercial plans.

Other risk areas

Information sharing (non-price or historical information), standardisation agreements (e.g., adoption of standard terms that limits competition) and conduct in the context of industry associations.

Signup and view all the flashcards

Agreements effect on competition

Agreements that have an appreciable adverse effect on competition are presumed, regardless of the subjective intent of the parties involved.

Signup and view all the flashcards

Price Fixing

Includes discussion on components of price, e.g. pricing policy, promotions and discussion on maximum or minimum prices.

Signup and view all the flashcards

Nature of the agreement

The key consideration is the nature of the agreement, rather than the nature of the relationship between the parties.

Signup and view all the flashcards

Net Economic Benefit Exclusion

The Net Economic Benefit Exclusion states the Section 34 Prohibition does not apply to agreements with net economic benefit.

Signup and view all the flashcards

Public Distancing

The mere participation by an undertaking in a meeting with an anti-competitive purpose, without expressing manifest opposition to or publicly distancing itself from, the same is tantamount to a tacit approval of that unlawful initiative.

Signup and view all the flashcards

Hotel Collusion: Exchange of Info

Such agreements include the discussion and exchange of "confidential, customer-specific, commercially sensitive information".

Signup and view all the flashcards

Exchangeable Information

Types of exchangeable information (not exhaustive) includes anything that's publicly available, non-commercially sensitive, non-strategic, sufficiently historic and sufficiently aggregated

Signup and view all the flashcards

Market Sharing

Involves allocating geographical areas or categories of consumers/services.

Signup and view all the flashcards

Bid Rigging

Includes cover pricing, bid-suppression, bid-rotation, and market division.

Signup and view all the flashcards

Output Limitation

Includes fixing production levels or use of quotas.

Signup and view all the flashcards

Study Notes

  • Section 34 of the Competition Act 2004 prohibits agreements between undertakings, decisions by associations of undertakings, or concerted practices.
  • The agreements, decisions, or practices must have the object or effect of preventing, restricting, or distorting competition within Singapore to be prohibited.
  • The Prohibitions Regime in Singapore is divided into Behavioural and Structural aspects

Section 34 Prohibition: Key Elements

  • The prohibition targets agreements, the object or effect of which is to prevent, restrict, or distort competition.

Hardcore Conduct Restrictions

  • Price-fixing is a type of hardcore conduct that is restricted.
  • Market-sharing, where competitors divide markets among themselves, is prohibited.
  • Bid-rigging activities are considered hardcore restrictions.
  • Output limitation strategies are examples of hardcore conduct.
  • Information exchanges on individual future prices, output, or production can be restricted. Imagine several construction companies agreeing to limit the amount of cement they each produce to keep prices high; this would be an output limitation.

Other Risk Areas (Potential "By Effect" Restrictions)

  • Information sharing, especially if it involves non-price or historical information, requires careful consideration. For instance, sharing data about future pricing strategies could stabilize the market, reducing competition.
  • Standardisation agreements, especially if they lead to the adoption of standard terms that limit competition, are a risk. For example, if several tech companies agree to adopt a single, proprietary technology standard, it could stifle innovation and competition by excluding alternative technologies.
  • Conduct within the context of industry associations can be problematic.

Agreements Presumed to Have Adverse Effects

  • Certain agreements are presumed to significantly harm competition. these include:
    • Price-fixing: discussions on price components or setting maximum/minimum prices. Suppose several bakeries in a town secretly agree to set the price of a loaf of bread at a certain level, including discussions about the costs of ingredients.
    • Market sharing: allocating geographical areas or customer categories. Imagine two telecommunication companies agreeing to split a city, with one focusing on residential customers and another on business clients.
    • Bid-rigging: cover pricing, bid suppression, bid rotation, and market division. For example, contractors collude to ensure that a specific contractor always wins government tenders by submitting intentionally high bids.
    • Output limitation: fixing production levels or using quotas. If a group of coffee farmers colludes to limit the amount of coffee each produces to drive up market prices, regardless of the actual production capacity.
    • Information sharing: exchanging sensitive data like price, cost, capacity, proprietary data, and commercial plans. Imagine several airlines sharing their pricing and route planning information.

Information Sharing Considerations

  • Sharing certain types of information may be considered anti-competitive if it reduces or removes uncertainties in the competitive process.
  • Types of exchangeable information: Publicly available information and non-commercially sensitive data (non-strategic, sufficiently historic, and sufficiently aggregated).

Vertical Agreements

  • The Vertical Agreements Exclusion under Section 34 states that parties in a vertical relationship do not preclude a finding of a horizontal agreement or concerted practice. A manufacturer cannot dictate the retail price, for example.
  • Agreements with an upstream manufacturer or a downstream distributor/retailer may be scrutinized, focusing on the nature of the agreement rather than the relationship between parties.
  • Hub-and-spoke practices: Non-horizontal agreement does not ensure vertical agreement is excluded.

Penalties and Enforcement

  • It's crucial to consider anti-competitive behaviour regardless of the parties' subjective intent.
  • Companies, even if passively participating with manifest opposition, might be seen as tacit approval of unlawful initiatives.

Case Examples

  • A case involved fresh chicken distributors penalized for price-fixing and non-compete agreements, where prices were discussed and coordinated.
  • Another case saw hotels penalized for exchanging commercially sensitive information, specifically room rates offered to companies.
  • Capacitor manufacturers were penalized for engaging in global price-fixing and information exchange.
  • Express Bus Agencies Association ("EBAA") case: Minimum selling prices and fuel and insurance charges were subject to scrutiny.
  • In 2008, customers end up paying $16 for a particular bus ticket coupon, depending on the desired destination when price-fixing happened.

Exclusions

  • If an anti-competitive collusion provides net economic benefit, then Section 34 prohibition does not apply
  • Paragraph 9 of the Third Schedule of the Act details the Net Economic Benefit Exclusion if an anti-competitive collusion provides net economic benefit.

Prohibitions Regime

  • Part III, Division 2 addresses Section 34 Prohibition regarding anti-competitive agreements. (Behavioural)
  • Part III, Division 3 addresses Section 47 Prohibition regarding abuse of dominant position.(Behavioural)
  • Part III, Division 4 addresses Section 54 Prohibition regarding merger control and "substantial lessening of competition." (Structural)

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Quiz Team

Related Documents

More Like This

Competition Act
5 questions

Competition Act

ProsperousJaguar avatar
ProsperousJaguar
Competition Act, 2002 India
12 questions
Competition Act 2002: Objectives and Regulations
45 questions
Use Quizgecko on...
Browser
Browser