OECD kpcdb

1. Scope

Section 34 of the Competition Act prohibits agreements, decisions by associations of undertakings or concerted practices which have as their object or effect the prevention, restriction or distortion of competition within Singapore.

 

Agreements prohibited under Section 34 include direct or indirect price-fixing, production control, market sharing, applying dissimilar conditions to equivalent transactions with other trading parties (thereby placing them at a competitive disadvantage), and subjecting the conclusion of a contract to the acceptance of supplementary obligations not related to the contract.

 

The CCS Guidelines on the Section 34 Prohibition clarify that the list of anti-competitive agreements in Section 34(2) is not exhaustive and other agreements may also fall within the Section 34 prohibition.

2. Assessment

The Guidelines provide for an indicative market share thresholds that the CCS uses to assess the adverse effect on competition. In general, the CCS considers that there is no appreciable adverse effect on competition where the parties to an agreement are competitors and the aggregate market share of those parties is less than 20%. Where the parties to an agreement are non-competitors, the CCS finds in general that there is no appreciable adverse effect on competition where the market share of each of the parties does not exceed 25% of the relevant markets.

 

Agreements between SMEs, which are defined in Singapore as having a fixed asset investment of less than SDG 15 million (for manufacturing) or less than 200 workers (in services), are also considered in general not to have an appreciable effect on competition.

 

An agreement between parties exceeding the threshold level does not necessarily constitute a prohibited agreement under Section 34.

 

However, direct or indirect price-fixing, bid-rigging, market sharing and limiting or controlling production or investment are considered to have an appreciable adverse effect on competition regardless of the market shares of the parties.

 

Section 34 prohibition does not apply to vertical agreements and agreements other than those that the Minister may by order specify.

 

Agreements that are directly related and necessary to the implementation of a merger (“ancillary restrictions”) are also excluded from the Section 34 prohibition.

 

Block exemptions: Following a recommendation of the CCS, the Minister may make an order to exempt certain categories of agreements that has a net economic benefit from the Section 34 prohibition (“block exemptions”).

 

The criteria used to determine block exemptions are: contribution to improving production or distribution, or promoting technical or economic progress. The agreement should not, however, impose restrictions to the parties concerned which are unnecessary for the attainment of those objectives and afford the parties the possibility of eliminating competition in a substantial part of the market.

 

Block exemption order may lay out conditions or obligations subject to which that block exemption will have effect.

 

Notification for guidance or decision

The Competition Act allows parties to an agreement to seek for a guidance (Section 43) or decision (Section 44) of the CCS on whether the agreement violates Section 34. However, notification for guidance or decision is not possible for prospective agreements. Where the CCS views that there is no breach, no further action is taken by the CCS and the CCS will not reopen a case. Where the CCS decides that the agreement has infringed the Section 34, it may give the parties directions as it considers appropriate to remedy, mitigate or eliminate any adverse effects of the infringement.

 

Where parties have notified an agreement for guidance or decision, no financial penalty shall be imposed in respect of any infringement which occurs from the date of notification and the date specified by the CCS in a notice.

 

Where the CCS has given guidance that an agreement is unlikely to infringe the Section 34 Prohibition or is likely to be exempt under a block exemption, immunity is conferred in that no further action may be taken with respect to the notified agreement in relation to the Section 34 Prohibition, unless certain conditions are met as set out under Section 45 (e.g., CCS has reasonable grounds to suspect that the information on which it based its guidance was incomplete, false or misleading in a material aspect)

3. Remedies and sanctions

Under Section 69, where the CCS has made a decision that parties have infringed Section 34, it may require the parties to an agreement to modify or terminate the agreement. Financial penalty may be imposed up to 10% of the turnover of the business of the undertaking in Singapore for each year of infringement (maximum three years).

4. Leniency

The CCS operates a leniency programme for businesses that are part of a cartel agreement or concerted practice or trade associations that participate in or facilitate cartels. Current guidance is set out in the CCS’s Guidelines on Lenient Treatment for Undertakings Coming Forward with Information on Cartel Activity 2016.

 

Total immunity is granted for the first to come forward with evidence before the outset of an investigation. A reduction of up to 100% of the financial penalties is made where the leniency applicant is the first to come forward but does so only after an investigation has commenced. For subsequent leniency applicants, a reduction of up to 50% of financial penalties may be granted.

 

To qualify for leniency, the undertaking must (a) provide the CCS with all the information, documents and evidence available to it regarding the cartel activity; (b) maintain continuous and complete co-operation throughout the investigation and until the conclusion of any action by the CCS arising as a result of the investigation; (c) refrain from further participation in the cartel activity from the time of disclosure of the cartel activity to the CCS except as directed by the CCS; (d) not have been the one to initiate the cartel; and (e) not have taken any steps to coerce another undertaking to take part in the cartel activity. Also, the undertaking must grant CCS a waiver of confidentiality in respect of leniency applications in other jurisdiction/with other authorities.

 

Marker system: The CCS allows a business to secure its place in the leniency “queue” for a certain period of time while the business gathers information and evidence necessary on the cartel activity.

 

Leniency Plus system: It grants an additional reduction in the financial penalties where a business under a cartel investigation in one market (the first market) co‑operates with the CCS by disclosing its participation in a completely separate cartel in another market (the second market). A business may benefit a total immunity or reduction of up to 100% of financial penalties in the second market and an additional reduction in the financial penalties in the first market.

 

Whistleblowing:

Whistleblowing is usually done by an informant, who can be eligible for a reward by CCS of up to $120,000.

 

 

* This information is based on Competition Law in Asia-Pacific: A Guide to Selected Jurisdictions (2018).