B24 CPL PDF

B24 CPL Learning objectives 1\. To provide candidates with an overview of the prohibitions regarding antitrust and merger control as administered by the CCCS under the Competition Act 2004. Competition law distinguished from Behavioural (Conduct) Part III, Division 2 Section **** Prohibition --...

B24 CPL Learning objectives 1\. To provide candidates with an overview of the prohibitions regarding antitrust and merger control as administered by the CCCS under the Competition Act 2004. Competition law distinguished from Behavioural (Conduct) Part III, Division 2 Section **** Prohibition -- anti-competitive **agreements (e.g. Cartel)** Elements \"**[Agreement]**\" includes \"gentleman\'s\" agreeemnt Even a meeting can amount to an \'agreement\' even though no agreement is signed i.e \'meeting of the minds\' Hardcore conduct (\"by object\" restrictions), **[where intent can be proven, regardless of the subjective intent of the parties]** Specturm of sensitive information CCCS 500/7002/14 -- CCCS Penalises Fresh Chicken Distributors for Price-fixing and CCS 700/002/13 -- CCS Fines Capacitor Manufacturers Involved in Global Cartel for Price-fixing and Information Exchange **[\[2.18\] Concerted Practice = cooperation between market players substituted the risks of competition with co-operation between them]** \[2.22\] \"Object\" or \"Effect\" are alternative, not cumulative requirements \[2.23\] By Object \[2.25\] Scenarios where there are **[no appreciable Adverse Effect]** if if the market share of each of the parties to the agreement **[does not exceed 25% aggregate market share 20% aggregate market share if it is unclear if parties are competitors or difficult agreement categories]** **[Exclusions]** [\[4.5\] If there is no appreciable adverse effect on competition] **[Statutory Exclusions]** **[Net Economic Benefit s9 to the Third Schedule]** Part III, Division 3 Section **** Prohibition -- **abuse of dominant** **position (e.g. Monopoly)** **[Three-step test]** 3\. Has there been **[abuse]** of the **[dominant]** position? Price and non-price exclusion cross referenced against Horizontal and vertical Foreclosure +-----------------------+-----------------------+-----------------------+ |   | **[Horizontal | **[Vertical | | | foreclosure]{.underli | foreclosure]{.underli | | | ne}** | ne}** | +-----------------------+-----------------------+-----------------------+ | **[Non-priced | **[Single | **[Discrimination]{.u | | exclusion]{.underline | branding] | nderline}** - | | }** | ** - | a refusal by a | | | an arrangement | dominant firm to | | | whereby a customer is | supply its | | | obliged to obtain all | subsidiaries | | | or most of its | competitors a key | | | requirements in | input required for | | | relation to a | downstream operations | | | relevant product from | may be viewed as anti | | | 1 supplier. | competitive | | | | exclusionary conduct, | | | **[Tying/Bundling]{.u | especially when the | | | nderline}** - | manufacturer has | | | a dominant firm | capacity and the | | | supplies a product on | buyer is prepared to | | | condition that the | pay market rates. | | | customers also buy | | | | another. | **[Constructive | | | | refusal]* | | | **[Line | * - | | | forcing]* | a dominant upstream | | | * -  | supplier offers to do | | | a form of sales where | business on such | | | in order to say, | restrictive terms, | | | obtain a must have | such as | | | product in a | unconventional, no | | | manufacturer range, | delivery conditions | | | the retailer is | that it is tantamount | | | required to stock all | to refusal to supply. | | | the products in that | | | | manufacturers range. | | | | | | | | **[Exclusive | | | | contracts]{.underline | | | | }** -  | | | | a retailer being | | | | required to stock all | | | | blends of a | | | | manufacturer\'s | | | | coffee beans | | | | | | | |   | | +-----------------------+-----------------------+-----------------------+ | **[Price based | **[Loyalty | Margin squeeze -  a | | exclusion]{.underline | rebates]* | vertically integrated | | }** | * - | firm dominant in the | | | structured anti- | supply of a key input | | | competitively | in a downstream | | | | market in which it | | | **[Predation]{.underl | also operates, sets a | | | ine}** | low margin between | | | - a dominant firm | its input price. In | | | sets its prices so | other words, its | | | low, especially below | wholesale price and | | | average variable | the price in the | | | cost, such that it | downstream market. | | | forces one or more | | | | competitor firms out | Constructive refusal | | | of the market. The | - | | | dominant firm may | | | | deliberately incur | | | | losses in the short | | | | run in order to force | | | | market exits with a | | | | view to extracting | | | | monopoly rent. | | +-----------------------+-----------------------+-----------------------+ **[4. Dominance (biggest or more than 60% market share), in itself, is not an offence in itself.]** Unliateral Conduct CCS 600/008/07 -- Abuse of a Dominant Position by SISTIC.com Pte Ltd **[Objective justification (prudence) defence]** E.g. Ramsey pricing, Long-run incremental costs **[Statutory Exclusions]** **[s47 does not apply if compliance to legal requirement is needed under s3(1) Third schedule Competition Act]** **[Chapter 3 pf the CCCS guidelines on Section 47]** Structure Part III, Division 4 Section 54 Prohibition -- **merger control** **["substantial lessening of competition"]** As a result, in defining the market for merger purposes, **[the relevant price level is the current price rather than the competitive price.]** Assessment to issue notice for market share Indicative thresholds: Merged entity will have market share of 40% Merged entity will have market share of between 20% and 40% \[6.9\] **[Three categories of]** **[Statutory Exclusions to s54 under Forth Schedule of the Competition Act]** What constitutes a merger? Where the ownership is between 30 to 50 % of the voting rights of the undertaking, there is a rebuttable presumption that decisive influence exists **[Assessment of mergers: 1. 40 % or more in market share of the relevant market or]** **[2. 20 % or more in market share of the relevant market where the three largest competitors or three largest competitors (CR3) in the market have an aggregate market share of 70 % or more of the market 3. In relation to merger, Chapter 6 of the CCCS Guidelines on market definition]** **[Counterfactual - An asessment of the marekt with and without the proposed merger To assess if a merger leads to SLC.]** **[Theories of harm]** **[Exclusions]** \[6.11\] Exclusion from anciallry Restrictions **[6(2) of the Third Schedule - Specified Activities not subject to section 54.]** **[Net economic efficiencies Exclusion]** The key issue is that efficiencies are assessed relative to what would have happened without the merger. Enforcement **[Penalties]** **[Merger could be unwound]** Powers of investigation **[Chapter 7 CCCS Guidelines]**