WWLegal.com :: Official Launch Of The Competition Commission Of Singapore

Official Launch Of The Competition Commission Of Singapore
Posted on Tuesday, August 02, 2005 - 12:00 AM

In a speech by Mr Lim Hng Kiang, Minister For Trade And Industry, at the official launch of the Competition Commission Of Singapore (?CCS?) and Competition Law Conference 2005 on Tuesday, 2 August 2005, at Suntec Convention Centre, the Minister highlighted that initially the CCS will pay greater attention to hard core offences that are blatantly anti-competitive. This includes cartels that engage in price-fixing, market-sharing, and bid-rigging.

Text of Speech:

1. It is my pleasure to join you this morning, for the inaugural Competition Law Conference, and to officially launch the Competition Commission of Singapore.

Competition Law in Singapore

2. Competition has always been fundamental to Singapore?s economic policies. Our commitment to free trade, openness to foreign investments and a stable macro-economic environment has helped Singapore to succeed in the global economy. Singapore is ranked the third most competitive economy globally, in the World Competitiveness Yearbook 2005.

3. However, the World Competitiveness Yearbook also ranked Singapore, number 20 in terms of efficiency in preventing unfair competition. There is clearly room for us to improve in this aspect, especially if we want to develop Singapore into a more entrepreneurial economy.

4. Competition law is important to provide a level playing field for all players, big and small, where companies compete based on the quality of their goods and services, and not by colluding, bullying or coercing. This creates a business environment conducive to start-ups and entrepreneurial pursuits. It also encourages firms to be more resourceful, innovative and responsive to consumer needs. Firms will become more competitive, while consumers will enjoy greater choices, lower prices and better quality. Overall, we will have more efficient and dynamic markets, and a stronger economy.

5. It is with these benefits in mind that our Competition Act was passed in November last year. The Act prohibits activities that unduly prevent, restrict or distort competition. Let me briefly outline the three main categories.

6. The first category comprises anti-competitive agreements, decisions and practices. Adam Smith, founder of modern economics and author of the ?Wealth of Nations? observed more than 200 years ago, that ?People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices?. These tendencies have not totally disappeared today. Anti-competitive agreements, decisions and practices can take many forms. This includes agreements among competitors to fix prices, limit the quantity of goods on sale, rig bids, or carve up a market among themselves.

7. The second category of anti-competitive activities involves the abuse of a dominant position. This can take the form of predatory pricing, where a dominant firm prices below cost to prevent a new and more efficient competitor from entering. It can also occur as tying, where a firm who has dominance in one product market forces its customers to buy a second product.

8. The third category is mergers and acquisitions that substantially lessen competition in Singapore. Firms can merge to create or reinforce a dominant position and strengthen their collective market power, so as to drive out competitors from the market. Such mergers and acquisitions will not be allowed.

9. The provisions of the first two categories on anti-competitive agreements, decisions and practices, and the abuse of dominance will come into force on 1 January 2006. Provisions relating to mergers and acquisitions, which are more complex, will follow one year later. This phased approach will give businesses more time to prepare for the implementation of our Competition Law.

Role of CCS

10. The launch of the Competition Commission of Singapore, or CCS for short, marks a significant milestone in the implementation of Competition Law here. Its mission is to administer and enforce the Competition Law so as to promote healthy competitive markets that will benefit the Singapore economy.

11. Since its formation in January this year, CCS has cascaded the broad provisions in the Competition Act into more specific guidelines. These guidelines set out the conceptual and procedural framework for enforcement, and provide businesses with greater clarity on how the law will be implemented. The CCS has also conducted a series of public consultations on the draft guidelines, to gather the views of businesses before finalizing them. This will make the guidelines more robust and user-friendly. These guidelines are targeted to be completed and published in the gazette by end this year.

CCS? enforcement activities in 2006

12. The CCS is now gearing up to undertake its enforcement role when the anti-competitive agreements and abuse of dominance provisions come into force on January next year. For a start, CCS will pay greater attention to hard core offences that are blatantly anti-competitive. This includes cartels that engage in price-fixing, market-sharing, and bid-rigging. Such behaviors are against the spirit of competition, and must not be condoned.

13. Let me share with you how cartels can be harmful to the economy. Studies in the US have shown that bid rigging in the construction industry could raise prices by as much as 36%. In the international vitamin cartel that was exposed in 1999, it was estimated that consumers have been overcharged by about 30%, or US$8.8 to 11.5 billion over a period of 10 years. Cartels lead to increased costs for consumers and businesses by sustaining prices above competitive levels. Overall, the economy will suffer. Thus, CCS will pay special attention to cartel behaviors and take firm action.

14. In enforcing the Act, CCS will consider whether the anti-competitive conduct in question has net economic benefit. This means whether the conduct is able to improve production or distribution, promote economic or technical progress, without distorting competition unduly. For example, competitors may agree to work together to conduct research that promotes technical progress. These arrangements generate longer term efficiencies and productivity, where their economic benefits outweigh the negative effects of competitors coming together. Such agreements will thus, not contravene the Competition Law.

15. CCS will be highly transparent in its enforcement processes, while recognizing the sensitivity of commercial secrets. Where there is a case that sets a precedent or raises issues of public interest, CCS will publish fully reasoned decisions so as to help businesses better understand its considerations.

Appeals to Competition Appeal Board

16. If parties are not satisfied with the decisions of CCS, they can appeal to a Competition Appeal Board. This is an independent body comprising members drawn from wide ranging fields, such as lawyers, economists, accountants, and representatives from the banking and business sectors. Beyond that, the parties can further appeal to the High Court and Court of Appeal on points of law and size of financial penalty.

Conclusion

17. The CCS by itself, cannot achieve its vision of healthy competitive markets. It needs the partnership of key stakeholders such as the business community, legal profession, and consumer groups. CCS will continue its public education and outreach efforts to all stakeholders through briefings and dialogue sessions. The official launch of CCS is deliberately held in conjunction with the Competition Law Conference to raise awareness of Competition Law, and reach out to all stakeholders.

18. This conference brings together many distinguished speakers from established competition authorities and private sector practitioners. It presents participants with a great opportunity to learn first-hand from the speakers? experiences, and gain insights into how competition law is practised in other jurisdictions.

19. On this note, I am delighted to officially launch the CCS and declare the Competition Law Conference open. I am fully confident that CCS will be successful in meeting the challenges that lie ahead, with the vision and commitment of its management and staff. Finally, I wish all participants a fruitful conference.

20. Thank you.

News