In administering and enforcing competition law in Singapore, CCCS is guided by the following philosophy:
Competition policy keeps markets competitive
Strong and vibrant economies have competitive markets at their core. In a competitive market, new ideas are constantly generated and new businesses set up, challenging the position of incumbents. As a result, businesses are spurred to be more efficient, innovative, productive and responsive, thereby becoming stronger over time. Businesses and consumers both stand to benefit from competitive markets. More importantly, Singapore will have a dynamic and robust business community that is able to respond to the needs of a changing world.
It is the aim of competition policy and law to ensure that markets are, and remain, competitive by protecting the competitive process. The competitive process empowers customers to exercise choice in switching to new products or new suppliers.
- Firstly, competition results in greater production and consumption. Competition leads to a greater variety of goods and services and brings benefits to consumers. More importantly, it ensures that a dynamic business community is able to respond to the needs of a changing world.
- Secondly, competition promotes efficiency and productivity. As firms compete for consumers, they will seek means to lower their costs and the best way to produce their goods and services. Therefore, the firms that are efficient and have the highest productivity thrive, and those which are inefficient will not. Across the economy, efficiency is enhanced and productivity rises.
- Thirdly, competition fosters innovation. Competition is not only the basis of protection to consumers, but it is the incentive to progress. When businesses compete with one another, they have to constantly come up with new ideas, services and product offerings. New businesses also find it easier to enter an open market to challenge the position of the incumbents. As a result, businesses are spurred to be more dynamic and innovative, thereby becoming stronger over time.
- Lastly, competition forces restructuring in sectors that have lost competitiveness. The competition for capital and resources by firms throughout the economy leads to resources flowing away from weak, uncompetitive sectors towards more competitive ones. Hence, competition directs resources to its most efficient use by freeing up resources for more productive use.
CCCS adopts a two-pronged approach: enforcement and advocacy
CCCS believes that enforcement and advocacy must go hand in hand towards building a pro-competition environment in Singapore. As part of its enforcement, CCCS will take action against agreements that prevent, restrict or distort competition, abuse of dominant position and mergers which substantially lessen competition. At the same time, CCCS advocates competition by working with other government agencies, the business community and consumer groups to promote pro-competition government policies, and raise greater awareness of the importance of competition amongst businesses and the general public.
Enforcement priority is on anti-competitive practices that have significant adverse impact on the economy
CCCS is cognisant that any regulatory intervention in the market imposes costs on businesses. It thus seek to balance regulatory and business compliance costs against the benefits from effective competition. Instead of attempting to catch all forms of anti-competitive activities, CCCS’s primary 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, due consideration will also be given to whether that action promotes innovation, productivity or longer-term economic efficiency. This approach will ensure that innovative and enterprising endeavours are not constrained inadvertently.
CCCS will prioritise its enforcement efforts based on:
- potential impact on the economy and society of the conduct (e.g. how significant is the industry in the Singapore economy, does the infringement have a great impact on business costs in Singapore, how large a consumer base the industry has, how much the infringement will it add to costs of living);
- severity of the conduct (e.g. is it hard-core price-fixing, serious abuse of dominance, mergers which substantially lessen competition);
- importance of deterring similar conduct (e.g. will other companies follow suit and engage in the same conduct if it is left unchecked);
- resource considerations (e.g. how many cases CCCS is handling, how resource-intensive the case is relative to the expected benefits);
- risk of over-intervention (e.g. when action by CCCS may inadvertently deter innovation and entrepreneurship).
CCCS will act in a graduated manner proportional to the culpability and degree of infringement in deciding whether to make a finding of infringement and intervene in a particular case. However, where CCCS is convinced of the merits of a case, it will pursue it uncompromisingly. CCCS is impartial in its treatment towards all businesses. However, in assessing the potential impact on the economy and society, the size and reach of the businesses will be a consideration.
Any intervention is aimed at achieving a better outcome
When CCCS intervenes, it is aimed at achieving a better competitive outcome for the industry and consumers. In this regard, CCCS’s mode of intervention and remedies will take into consideration the imperfections in the market, such as asymmetric/imperfect information, insufficient public education, high barriers to entry or a limited number of companies. Where prevention of anti-competitive behaviour is possible, CCCS endeavours to intervene ex-ante (i.e. before the event) rather than ex-post (i.e. penalise businesses afterwards). Where possible, CCCS will address the root of the issue. For instance, CCCS may pursue advocacy in addition to, or instead of, enforcement, to lower barriers to entry.
The results from CCCS’s intervention may not be immediately visible. However, in the longer term, the market will adjust to freer competition. For instance, a market that is used to price recommendations may find itself in unfamiliar grounds when price recommendations are removed. consumers will learn to search for the right supplier and businesses will adjust to competition based on quality and price. While CCCS will try to minimise any short term adverse impact, it may not be totally avoided. More importantly, CCCS will not seek to avoid short term disturbance at the expense of long-term benefits.
Active advocacy will go hand in hand with enforcement activities
CCCS seeks to generate broad-based awareness of competition law and build a pro-competition culture in Singapore, by working with government agencies, the business community and consumer groups.
Advocacy pursued with regards to businesses and consumer groups include dialogue sessions, conferences and seminars that help raise their awareness of the Competition Act.
In particular, with regard to government agencies, advocacy becomes critical to generate greater awareness among them so that unintended consequences on competition are minimised, and that competition plays a positive role just as other policy considerations in their policy/decision-making.