CPL 1 - Overview PDF

Andrew Yip (00:01) Hello, my name is Darren Shao. I am a partner at Allen and Gladhill and have been practicing competition law since the Competition Act regime was introduced in Singapore. There are four lectures in my Part B Competition Law module, an introduction, Behavioural Prohibitions, othe...

Andrew Yip (00:01) Hello, my name is Darren Shao. I am a partner at Allen and Gladhill and have been practicing competition law since the Competition Act regime was introduced in Singapore. There are four lectures in my Part B Competition Law module, an introduction, Behavioural Prohibitions, otherwise known as Antitrust, Structural Prohibitions, otherwise known as Merger Control, and the topic of Enforcement by the CCCS. I will now start on the first of the four lectures, an introduction to Competition Law in Singapore. Competition law protects the process of competition, basically demand and supply. The key assumption in competition law is the economic theory that free market forces will lead to efficient allocation of resources. The invisible hand, as expressed by philosopher Adam Smith. An efficient allocation of resources will in turn result in an increase in choice for goods and services for consumers and at lower prices. However, free market forces will sometimes fail to operate efficiently due to natural causes. For example, a global shortage of a key input due to climate change. This is a faultless market failure. However, when markets fail to operate efficiently due to anti -competitive behaviour by market parties, such market players could be punished under competition law. The objective of competition law is therefore to correct market failure caused by anti -competitive behaviour. Competition law has grown at a phenomenal rate in recent years. Like other specialist practices such as intellectual property law and tax law, competition law is now a fundamental consideration in structuring of deals and commercial arrangements. Over 125 jurisdictions worldwide have competition law regimes. You may have heard in the news of antitrust cases involving tech giants such as Google, Facebook, Alibaba and Tencent being regulated by competition agencies in the US, Europe, China and other countries. This module will be about competition law in Singapore. The Competition and Consumer Commission of Singapore or the Triple CS is Singapore\'s main competition authority. It is a statutory board of the Ministry of Trade and Industry. I would highlight two features of the CCCS approach which may not be immediately apparent from the Competition Act and the CCCS guidelines. First, it is important to note that because the CCCS takes a confidential approach to investigations, only cases which result in a proposed infringement decision will be made public. cases which are successfully defended will remain confidential. I will be alluding generally to some of these confidential cases in the course of this lecture. Second, the Triple CS does intervene in foreign -to -foreign mergers and global cartel or monopoly cases so long as there is a possible effect in Singapore. This will be apparent as you look the CCCS public register, the link is shown on the slide, which I encourage you to In looking at the public register contained in the previous slide, I wish for you to understand the scale and scope of competition law cases in Singapore. You are not expected to read all the cases, which will take you at least a year or more. The cases you should be familiar with will be reflected as core knowledge in your learning plan. The public register is the tip of the iceberg and does not reflect cases confidentially investigated by the CCCS and successfully defended by competition lawyers. On this slide is the legislation which this module covers, the Competition Act and the CCCS guidelines. Again, the parts of the Act and the guidelines you will be expected to be familiar with will be reflected in the learning Statutory exclusions are contained in Schedules 3 and 4 of the Competition Act. Please read the schedules. Significantly, behavioural mergers that are regulated by sectoral regulators with a competition law regime will generally be dealt with by those regulators and not the CCCS as regards competition law. Examples include telecommunications and media licences which are regulated by the IMDA, and Electricity and Gas Licencies, which are regulated by the Energy Market Authority of Singapore. I will point out other exclusions in the following lectures. The scope of this module will not cover the actual content of the sectorial regimes, except to the extent that they have been excluded from the Competition Act. Competition law should be distinguished from unfair competition laws. Examples of unfair competition laws are the Unfair Contract Terms Act and the Common Law Concept of Misrepresentation. Competition laws strive to achieve economic efficiency, whereas unfair competition laws strive to achieve economic equity. The objectives of competition law and consumer rights laws are aligned differently. In consumer rights laws, the focus is on the consumer. However, in competition law, the focus is on the competitive process. The philosophy behind protecting the competitive process is that if markets function competitively, not just consumers, but also competitors will benefit. In recent years, CCCS has taken on the function of administering the Consumer Protection Fair Trading Act. However, you will not be tested on this aspect of the CCCS\'s jurisdiction in this module. The term Undertakings is used across the Competition Act and the CCCS guidelines. The Competition Act regulates Undertakings. Undertakings include individuals, businesses, companies, partnerships, regardless of whether they are foreign or Singapore owned. Simply put, in general, so long as a person or an entity engages in economic activity, the Competition Act shall apply to such person or entity unless an exclusion or an exemption applies. The Singapore government consists of ministries and statutory boards. These ministries and statutory boards also own companies with a range of functions. Such companies fall within the purview of the Act so long as they are engaged in any commercial or economic activity. I will end this lecture by touching on the policy objectives of competition law in Singapore. There are generally three types of objectives that jurisdictions with a competition law regime will seek to achieve from a policy perspective. These are consumer welfare, total welfare and public interest. Regulations such as those in Europe, UK and Australia, just to give a few examples. use the consumer welfare approach which seeks to maximize consumer welfare. Singapore competition policy however seeks to maximize total welfare. Total welfare is the sum of the producer surplus and consumer surplus. This will be further explained in the next slide. This is a market demand curve which many of you will be familiar It tracks the relationship between price and supply. The demand curve is as labelled. Producer surplus and consumer surplus are represented by the areas below the demand curve. Producer surplus is the profit a producer makes by selling goods above the cost of production. Consumer surplus is the difference between what consumers would be prepared to pay for goods and they in fact do pay. A competition policy concerned with consumer welfare rather than total welfare would focus on the transfer of surplus from consumers to producers and consider this to be harmful. However, total welfare may be maximized by such a transfer if the overall value generated by the economy is increased. In other words, a competition policy which focuses on total welfare, recognises that while increased prices in the short term may lead to lower consumer demand, such prices will self -correct when new entrants, in the absence of artificial exclusionary barriers, enter the market to claim the difference between monopoly prices and the cost of goods. The concepts in Singapore\'s competition law regime contained in the Competition Act and the Triple CS Guidelines can be very new to some of you. I have therefore decided to divide the teaching into what I call behavioral and structural prohibitions. The behavioral prohibitions regulate market behavior, whereas the structural prohibition regulates changes to market structures. which may substantially lessen competition. In the next lecture, I will start by talking about market behaviour prohibitions or what is otherwise known to competition practitioners as antitrust. That brings me to the end of this introductory lecture. Thank you. B24 CPL - 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]**