- Why did Singapore decide to enact a competition law?
- What is the policy objective of the competition law?
- To whom will the Competition Act apply?
- What are the prohibited activities under the Competition Act?
- Who will administer and enforce the Competition Act?
- What are the sectoral activities excluded under the Third and Fourth Schedules; and what is the basis for their exclusion?
- What is the appeal process under the Competition Act?
- What are the provisions for rights of private action?
- How will the competition law be applied to activities of firms such as agreements or decisions already in place?
- How does the Competition Commission intend to interpret "appreciable adverse effect", "market", "dominant position", and other terms?
Competition is a key tenet of Singapore's economic strategy. Market competition spurs firms to be more efficient, innovative, and responsive to consumer needs. Consumers enjoy more choices, lower prices, and better products and services. The economy as a whole benefits from greater productivity gains and more efficient resource allocation. Therefore, wherever appropriate, Singapore has opened up sectors of the economy to market competition.
In February 2003, the Economic Review Committee noted that while we have rules against anti-competitive activities in specific sectors like energy and telecommunications, there is no national competition law that covers the other sectors. The Committee thus recommended that a national competition law be enacted to create a level playing field for businesses big and small to compete on an equal footing. This will make for a more conducive business environment.
The Government accepted the Committee's recommendation, as a national competition law will help to reinforce our pro-enterprise and pro-competition policies, enhance the efficiency of our markets, and strengthen our economic competitiveness.
The objective of the competition law is to promote the efficient functioning of our markets and hence enhance the competitiveness of our economy. The law seeks to prohibit anti-competitive activities that unduly prevent, restrict or distort competition. We recognize that any regulatory intervention in the markets may impose costs. Therefore, we will need to balance regulatory and business compliance costs against the benefits from effective competition. Instead of attempting to catch all forms of anti-competitive activities, our principal focus will be on those that have an appreciable adverse effect on competition in Singapore or that do not have any net economic benefit. In assessing whether an action is anti-competitive, we will also give due consideration to whether it promotes innovation, productivity or longer-term economic efficiency. This approach will ensure that we do not inadvertently constrain innovative and enterprising endeavours.
Other than the matters or mergers excluded as specified in the Third and Fourth Schedules, the Competition Act will apply to commercial and economic activities carried on by private sector entities in all sectors, regardless of whether the undertaking* is owned by a foreign entity, a Singapore entity, the Government or a statutory body.
However, as the intent of competition law is to regulate the conduct of market players, it will not apply to the Government, statutory bodies or any person acting on their behalf.
[* undertaking means any person, being an individual, a body corporate, an unincorporated body of persons or any other entity, capable of carrying on commercial or economic activities relating to goods or services.]
- The section 34 prohibition: This section prohibits agreements, decisions and practices which prevent, restrict or distort competition in Singapore. These include agreements between competing firms to fix prices, reduce the quantity of goods and services sold, or share markets. The provision(s) of any agreement or any decision that infringes this prohibition will be rendered void on or after the date the section 34 prohibition comes into force to the extent of the infringement.
However, section 36 of the Competition Act empowers the Minister to make an order, following the recommendation of the Competition Commission, to exempt certain categories of agreements from the section 34 prohibition. This is provided that they improve production or distribution, or promote technical or economic progress, without imposing undue restrictions or substantially eliminating competition.
- The section 47 prohibition: This section prohibits firms from abusing market power in ways that are anti-competitive and which work against longer-term economic efficiency, for example, predatory behaviour towards competitors.
- The section 54 prohibition: This section prohibits mergers and acquisitions which substantially lessen competition and have no offsetting efficiencies.
The Competition Commission of Singapore administers and enforces the competition law. The Competition Commission has the power to investigate and adjudicate anti-competitive activities. The Competition Commission is also empowered to impose sanctions, such as requiring the offender to modify or terminate the agreement or conduct, pay a financial penalty, and carry out structural remedies. Structural remedies will be calibrated based on the redress needed to stop the anti-competitive activity in question.
Please refer to the table.
Cross-sectoral competition matters will be dealt with by the Competition Commission, in consultation with the sectoral regulators.
The sectoral exclusions are not intended to be permanent. After the competition law has been in place for some time, we will review the need for such sectoral exclusions, taking into account market developments.
Under the Competition Act 2004, the Competition Appeal Board will hear appeals against the decisions of the Competition Commission of Singapore. The Competition Appeal Board is an independent body comprising members appointed by the Minister. The current Chairman of the Appeal Board is retired Supreme Court Judge, Mr Thean Lip Ping. The current Secretary to the Appeal Board is Director (Research and Enterprise Division, MTI), formerly Director (Enterprise Division, MTI).
Only parties which the Competition Commission has made a decision against may appeal to the Competition Appeal Board. The parties may make further appeals against the decisions of the Competition Appeal Board to the High Court, and thereafter to the Court of Appeal, but only on points of law and the amount of the financial penalty.
Parties who wish to appeal to the CAB may send their applications* addressed to:
Secretary to the Competition Appeal Board
100 High Street
The Treasury #04-04
Singapore 179434 *The application should be accompanied by a cheque of $500 (fee for filing appeal) addressed to "Ministry of Trade and Industry/AG"
For more information, you can refer to the Competition (Appeals) Regulations 2006.
Please click here to view members of the CAB.
Please click here to to visit the Competition Commission of Singapore website.
Violators of the Competition Act are liable to be sued by parties who suffered loss or damage directly as a result of the infringement of the prohibitions under the law. Such rights of private action can only be exercised after the Competition Commission has made its determination and the appeal process exhausted.
The policy intent is that after the prohibition provisions come into effect, if there is a continuing effect from such activities; or if the undertaking engages in anti-competitive activities; and these are found to have infringed the prohibitions under the law, the Competition Commission will take the necessary enforcement action.
This is clarified in the guidelines developed by the Competition Commission.
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