Antitrust & Merger Control - Lecture 2 PDF

Corporate and Commercial Practice Competition Law Antitrust and merger control (2) Section 34 Prohibition Copyright © 2024, Singapore Institute of Legal Education 2 Anti-competitive agreements Copyright © 2024, Singapore Institute of Legal Education 3 Anti-co...

Corporate and Commercial Practice Competition Law Antitrust and merger control (2) Section 34 Prohibition Copyright © 2024, Singapore Institute of Legal Education 2 Anti-competitive agreements Copyright © 2024, Singapore Institute of Legal Education 3 Anti-competitive agreements Copyright © 2024, Singapore Institute of Legal Education 4  Prohibitions Regime (Singapore) Behavioural Structural Part III, Division 2 Part III, Division 3 Part III, Division 4 Section 34 Section 47 Prohibition – Section 54 Prohibition – Prohibition – abuse of dominant merger control anti-competitive position “substantial lessening of agreements competition” Copyright © 2024, Singapore Institute of Legal Education 5 Anti-competitive agreements Section 34 of the Competition Act 2004 (the “Competition Act”) prohibits agreements between undertakings, decisions by associations of undertakings or concerted practices which have as their object or effect the prevention, restriction or distortion of competition within Singapore. Copyright © 2024, Singapore Institute of Legal Education 6 Anti-competitive agreements Section 34 Prohibition agreement object or effect prevention, restriction or distortion of competition Copyright © 2024, Singapore Institute of Legal Education 7 Anti-competitive agreements Other risk areas Hardcore conduct (“by object” restrictions) (potential “by effect” restrictions) Price-fixing Information sharing (non-price Market-sharing or historical information) Bid-rigging Standardisation agreements (e.g. adoption of standard Output limitation terms that limits competition) Information exchanges on Conduct in the context of individual future prices, output or production industry associations Copyright © 2024, Singapore Institute of Legal Education 8 Anti-competitive agreements Such agreements shall be presumed to always have an appreciable adverse effect on competition: 1. Price-fixing Includes discussion on components of price, e.g. pricing policy, promotions. Includes discussion on maximum or minimum prices. 2. Market sharing Involves allocating geographical areas or categories of consumers/services. 3. Bid-rigging Includes cover pricing, bid-suppression, bid-rotation and market division. 4. Output limitation Includes fixing production levels or use of quotas. 5. Information sharing Includes sharing particularly sensitive information includes price, cost, capacity, proprietary data/information and commercial plans. Regardless of the subjective intent of the parties for any reason! Copyright © 2024, Singapore Institute of Legal Education 9 Anti-competitive agreements Sharing certain types of information may be considered anti-competitive o “exchange of information may however have an appreciable adverse effect on competition, where it serves to reduce or remove uncertainties inherent in the process of competition”. Types of exchangeable information (not exhaustive): o Publicly available o Non-commercially sensitive – Non-strategic – Sufficiently historic – Sufficiently aggregated Copyright © 2024, Singapore Institute of Legal Education 10 Anti-competitive agreements Dangerous Acceptable Copyright © 2024, Singapore Institute of Legal Education 11 Anti-competitive agreements The Vertical Agreements Exclusion under Section 34. Parties in a vertical relationship with each other does not preclude the finding of a horizontal agreement or concerted practice o Even if agreements are entered into with a upstream manufacturer, or a downstream distributor/retailer. o The key is the nature of the agreement, rather than the nature of the relationship between the parties to the agreement. o Example: Hub-and-spoke practices. o Non-horizontal agreement does not mean an excluded vertical agreement. Copyright © 2024, Singapore Institute of Legal Education 12 Anti-competitive agreements Case: Information exchange CCCS 500/7002/14 – CCCS Penalises Fresh Chicken Distributors for Price-fixing and Non-compete Agreements The Straits Times 9 March 2016 Copyright © 2024, Singapore Institute of Legal Education 13 Anti-competitive agreements Case: Information exchange CCCS 700/002/14 – CCCS Issues Infringement Decision against the Exchange of Commercially Sensitive Information between Competing Hotel The Straits Times 3 August 2018 Financial Penalties: S$1,522,354 Copyright © 2024, Singapore Institute of Legal Education 14 Anti-competitive agreements Case: Price-fixing CCS 700/002/13 – CCS Fines Capacitor Manufacturers Involved in Global Cartel for Price-fixing and Information Exchange Financial Penalties: S$19,552,464 Copyright © 2024, Singapore Institute of Legal Education 15 Anti-competitive agreements Case study: Public distancing CCS 500/001/11 – Price fixing of monthly salaries of new Indonesian Foreign Domestic Workers by Employment Agencies The Restriction of Competition Passive participation “… 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” Copyright © 2024, Singapore Institute of Legal Education 16 Anti-competitive agreements Case: Price-fixing CCS 500/003/08 – Express Bus Agencies Association (“EBAA”) case Minimum selling prices Fuel and insurance charges Copyright © 2024, Singapore Institute of Legal Education 17 Anti-competitive agreements Case study: Price-fixing In 2008, customers pay up to $16 for the EIC coupon, depending on destinations. Copyright © 2024, Singapore Institute of Legal Education 18 Anti-competitive agreements Exclusions The Net Economic Benefit Exclusion o Paragraph 9 of the Third Schedule of the Act o The Section 34 Prohibition does not apply to agreements with net economic benefit. Copyright © 2024, Singapore Institute of Legal Education 19 Copyright Notice Copyright © 2024, Singapore Institute of Legal Education. All rights reserved. The Course materials are developed by the Singapore Institute of Legal Education, based on the content, syllabus, and guidance provided by the Chief and Principal Examiners and their teams. No direct or indirect reproduction, publication, communication to the public, adaptation or any other use (that is prohibited and/or proscribed by copyright laws) of the Course materials in whole or in part in any form or medium is allowed without the written permission of the Singapore Institute of Legal Education. Part B Candidates should refer to the Code of Conduct for more information, particularly, the sections on conduct and behaviour, and the use of SILE resources. 20