Competition law: What’s in it for you?

Competition law in Singapore aims to promote the efficient functioning of markets and to ensure all businesses can compete on a level playing field, free from artificial impediments to free and fair competition. This is important for all businesses, but especially so for small and medium enterprises (SMEs) who sometimes face obstacles in their attempts at trying to gain access to markets and customers, and having to compete against bigger businesses. 

 

The Competition Commission of Singapore (CCS) is focused on identifying and ensuring market access and removing any artificial barriers to competition. In this context, CCS reaches out to the SME community to achieve two goals: The first is to raise awareness of competition law among SMEs, so that they can assess if they are victims of potentially anti-competitive conduct, and raise these situations to the attention of the CCS. The second is to conduct market studies to see if there are opportunities to enhance market access for SMEs and increase competition in the respective markets.

 

An understanding of the Competition Act is particularly helpful to SMEs as it can enable you to understand what anti-competitive behaviour is and identify situations in which you can lodge a complaint to CCS. You can do so via the phone, the CCS website, email or by post[1]. Your business will benefit, as CCS has the power to order companies to stop anti-competitive activities, allowing for these obstacles of competition to be removed.

 

What can you do about anti-competitive conduct?

 

Apart from lodging a complaint, CCS operates a reward scheme for persons who come forward with useful information on cartel activity in Singapore. A monetary reward may be paid to individuals for information that leads to or reveals infringement decisions against cartels. A different scheme applies if you are currently involved in a cartel or collusive agreement, inadvertently or otherwise. In such cases, you can apply to CCS under our Leniency Program. The first leniency applicant who provides sufficient evidence of such activity before CCS starts an investigation can be granted a full waiver of financial penalties. As SMEs, these findings can be particularly helpful to you as it could help level the playing field in your market by ensuring that anti-competitive practices do not impede your business operations.

 

Does competition law offer any protection to SMEs in Singapore?

 

CCS has published a set of guidelines, the CCS Guidelines, which outline how CCS administers and enforces the Competition Act[2]. Certain clauses in these guidelines apply to and are useful for SMEs in particular. SMEs enjoy some degree of exemption from the Competition Act for each of the three main prohibitions in the Competition Act, as it is often unlikely that SMEs have an appreciable adverse effect on competition. In addition, there are also some exceptions which apply to SMEs. For instance, SMEs with a turnover below a certain threshold might not need to notify CCS of mergers they enter into. The CCS Guidelines set out the precise details of these exclusions and exceptions, which you might find useful to refer to for guidance.

 

What else should you know, and where can you find out more?

 

The CCS administers and enforces the Competition Act. Three activities are prohibited under the Competition Act: agreements, decisions and practices which prevent, restrict or distort competition (“the section 34 prohibition”); abuse of a dominant position (“the section 47 prohibition”); and mergers that substantially lessen competition (“the section 54 prohibition”).

 

Companies are sometimes unaware that some of their employees are engaged in anti-competitive conduct. In other situations, the illegal conduct might have been put in place by previous management, and might still be on-going. In yet other situations, some activities are viewed as industry “norms” or practices, and therefore viewed as acceptable.

 

SMEs should consider developing a compliance programme, particularly as ignorance is no bar to a finding of infringement[3]. A compliance programme can help businesses minimise the risk of infringing the Competition Act and help identify possible infringements at an early stage. More information is available on CCS’s website[4] and in CCS’s publication Better Business with Competition Compliance Programme[5]. 

 

Interview with Mr Toh Han Li, Chief Executive, Competition Commission of Singapore

 

1. Brief overview of some of CCS’s recent work/ decisions/ interventions

 

In 2015, Asia Pacific Breweries Singapore ended its exclusivity practices as a result of CCS’s intervention, and CCS issued a proposed infringement decision against 10 financial advisory firms for their involvement in an anti-competitive agreement to pressurise iFAST Pte Ltd to withdraw its offer of a commission rebate on life insurance products on the Fundsupermart.com website. These are a few examples of ways in which CCS is helping ensure that markets are competitive, to enable SMEs to compete with larger players. CCS also concluded an e-commerce market study in 2015, which aimed to understand how a level playing field could be achieved, to ensure that businesses in Singapore benefit from e-commerce, including SMEs.

 

2. Salient points of CCS’s priorities for 2016 for SMEs

 

For 2016, one of CCS’s priorities is to ensure market access for businesses, including SMEs. In order to do this, CCS invites SMEs to provide CCS with feedback on the markets they operate in, so that CCS is able to remove barriers to markets created due to anti-competitive conduct. CCS will also focus on helping SMEs tap on the ASEAN single market initiative.    

 

3. How can SMEs in Singapore remain viable in an increasingly competitive economy?

 

SMEs can leverage e-commerce platforms such as ezyCommerce, launched in March 2015 by SPRING Singapore and SingPost[6]. The platform provides support for SMEs’ digital strategies, enabling them to grow their businesses[7]. Eligible SMEs can also obtain a 70 per cent subsidy on all ezyCommerce monthly spend for six months. You can also consider regionalising your businesses when you are ready, so as to increase the size of your customer base.

 

4. What is CCS doing in helping SMEs expand outside Singapore?

 

CCS will have a part to play in the ASEAN Economic Community which will help SMEs with market access as competition laws are put into place in other ASEAN countries in the region, particularly if you are looking to expand your business. ASEAN’s population makes up the 3rd largest market in the world, providing SMEs with ample opportunities[8]. SMEs should, however, consider a range of government initiatives beyond the purview of CCS, such as schemes run by International Enterprise Singapore and free trade agreements such as the Regional Comprehensive Economic Partnership.

 

Interview with Mr Adrian Sim, Founder and CEO, 6DM

 

 

 1. How did your business start and what’s your vision?

 

I started my business with help from my Principal then, Foster’s Brewing International, and the vision was to become a premium distributor of beverages.

 

2. What is the competitive landscape of the beer market in Singapore and how has it developed over the years? 

 

I competed by focusing on high volume, low visibility outlets in areas such as Geylang and Joo Chiat. It took 5 years before we appeared in any of their paid surveys. It had to do with a lot of relationship building and creating unique selling propositions that the market had not tried before. An example was that beer used to be served at 4-6°C, in line with standards from Europe. However, we recognised that beer in this climate would warm up a lot faster, so we introduced technology such as the Streamline® system which kept beer cold all the way to the point of dispense giving us beer at 1°C. We have upgraded our use of technology and are still one of the few beer suppliers with an in-house technical team capable of building bespoke beer systems. Bespoke beer systems that we have built are our numerous cold room setups and specialised beer dispense systems such as a motorcycle beer font that we did for beer festival in 2012.

 

3. On 28 October 2015, the CCS announced that they were investigating Asia Pacific Breweries (Singapore) Pte. Ltd’s practice of supplying draught beer to retail outlets, on an exclusive basis, and had agreed to close the investigations after APBS agreed to cease this practice.

 

(i) As an SME, competing against bigger corporations in the beer industry, what is your view of these exclusivity practices? 

 

This exclusivity was meant to block out newcomers in the industry using unfair advantage. It would be better for the industry to use available resources for more creative and constructive endeavours than simply handing out money to buy market share.

 

(ii) How has CCS’s intervention impacted the sales of beer by your business, and competition in the broader beer industry as a whole? Please respond in terms of future likely impact if the impact has not been felt by your business yet. 

 

CCS’s intervention is supposed to level the playing field for newcomers meaning that smaller players should have more opportunity to put their beer taps in outlets after this intervention. However, the impact of CCS’s intervention has still not affected my business and the beer industry as a whole. We are still assessing the impact and observing how legally all this will pan out as well as the implementation of this policy following the announcement by CCS. I believe with the above scenario, it will lead to the market being more open with less emphasis on buying outlets, but more on building brands which retailers feel the need to stock. The consumer will have more choice and brand owners will have to work harder in creating unique selling points for their brands. It is very exciting to me.

 

4. Is there anything you wish to say to your fellow SME entrepreneurs?

 

Be committed but stay flexible. If possible, avoid hiring people who are too close such as friends, family, church members etc. It convolutes your own style of running your business. Stick to working with professionals.

 

International Chamber of Commerce’s SME Toolkit

 

The International Chamber of Commerce (ICC) has developed a toolkit for SMEs which can help you ensure that your company and your employees operate ethically and legally. It provides a brief overview of areas your business should be aware of and contains practical tips to assist you in building or reinforcing a credible approach to competition law compliance. It covers the ‘danger areas’ of competition law, five elements of compliance and ICC’s Top Ten Tips.

 

Danger areas

 

The three key danger areas mentioned in the ICC toolkit for SMEs to consider are:

 

1. Cartels and Collusion

2. Abuse of a position of dominance or market power, and

3. Restrictions in vertical agreements

 

The Competition Act in Singapore exempts vertical agreements, so this section does not apply to your business in Singapore. As mentioned in the first section of this article, cartels and collusion correspond to the section 34 prohibition in the Competition Act, while the abuse of a position of dominance or market power corresponds to the section 47 prohibition in the Competition Act.  

 

Five elements of compliance

 

1. Commitment: Ensure that the management of your company is committed to compliance.

2. Identify your risk profile: Consult the SME toolkit for a checklist to help you with this. See page 7.

3. Mitigate your risks: Ensure that appropriate controls are in place. Consult the SME toolkit for suggestions. See page 8.

4. Review: Ensure that a review process is in place to check that employees are complying with competition laws, and improve controls if required.

5, Keep it up: Ensure that a constant focus on compliance is part of normal business practice. 

 

Further details are available in the ICC toolkit, which can be accessed online[9]. 

 

 

[1] File a complaint. Available at: https://www.ccs.gov.sg/reporting-to-ccs/making-complaints/file-a-complaint

 

[2] CCS Guidelines. Available at: https://www.ccs.gov.sg/legislation/ccs-guidelines

 

[3] Paragraph 4.8, CCS Guidelines On Enforcement. Available at: https://www.ccs.gov.sg/legislation/~/media/custom/ccs/files/legislation/ccs%20guidelines/ccsguidelineenforcementjul07final.ashx

 

[4] Conducting a Compliance Programme. Available at: https://www.ccs.gov.sg/education-and-compliance/conducting-a-compliance-programme

 

[5] Better Business with Competition Compliance Programme. Available at: https://www.ccs.gov.sg/~/media/custom/ccs/files/education%20and%20compliance/conducting%20a%20compliance%20programme/better20business20with20competition20compliance20programme20english.ashx

 

[6] Making eCommerce accessible. Available at: http://www.spring.gov.sg/Inspiring-Success/Enterprise-Stories/Pages/Making-eCommerce-accessible.aspx

 

[7] SINGPOST TO LAUNCH EZYCOMMERCE TO HELP SMES SELL ONLINE, SCALE AND ENHANCE PRODUCTIVITY. Available at: https://www.singpost.com/media-centre/news-releases/565-singpost-to-launch-ezycommerce-to-help-smes-sell-online-scale-and-enhance-productivity.html

 

[8] ASEAN Economic Community at a Glance. Available at: http://www.asean.org/storage/2015/12/AEC-at-a-Glance-2015.pdf

 

[9] Why complying with competition law is good for business. Available at: http://www.iccwbo.org/advocacy-codes-and-rules/areas-of-work/competition/why-complying-with-competition-law-is-good-for-business/

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