A block exemption exempts a category of agreements from the section 34 prohibition on anti-competitive agreements, decisions and practices. The Minister for Trade and Industry may make such an order, on CCCS’s recommendation, if a particular category of agreements contributes to improving production or distribution, or promoting technical or economic progress, without imposing undue restrictions, or possibly eliminating competition in respect of a substantial part of the goods or services in question.
There is currently one block exemption order in force, namely the Block Exemption Order for Liner Shipping Agreements, which is valid until 31 December 2021.
Block Exemption Order
Section 36 of the Competition Act (Cap. 50B) empowers the Minister for Trade and Industry (the “Minister”) to make an order, following the recommendation of CCCS, to exempt certain categories of agreements from the section 34 prohibition. This is known as a block exemption, which is granted on the basis that a category of agreements fulfil the criteria set out under section 41 of the Act. Specifically, the criteria are that the agreements contribute to:
(a) improving production or distribution; or
(b) promoting technical or economic progress;
but do not:
(i) impose on the undertakings concerned restrictions which are not indispensable to the attainment of such objectives; or
(ii) afford the undertakings concerned the possibility of eliminating competition in respect of a substantial part of the goods or services in question.
Competition (Block Exemption for Liner Shipping Agreements) Order
On 14 July 2006, the Minister issued the Competition (Block Exemption for Liner Shipping Agreements) Order (“Block Exemption Order”), which exempted a category of liner shipping agreements from the section 34 prohibition of the Act until 31 December 2010. The Minister subsequently extended the Block Exemption Order in 2010, 2015 and 2020 (see below).
On 26 August 2020, the Minister extended the Block Exemption Order in its current form for one year until 31 December 2021. The COVID-19 pandemic has resulted in contractions in manufacturing and trade globally. Disruptions in global supply chains and a dip in global demand have created significant market uncertainties and affected the outlook for the maritime sector internationally and in Singapore.
Given the highly uncertain times brought about by the COVID-19 pandemic, the Minister has decided to extend the Block Exemption Order in its current form for one year until 31 December 2021. As the prevalence and importance of liner shipping agreements may evolve arising from the pandemic, it is necessary to account for such developments in assessing the appropriate approach for Singapore in the longer term.
CCCS supports the Minister’s decision to extend the Block Exemption Order for an additional year. Prior to its expiry on 31 December 2021, CCCS will assess and make a recommendation to the Minister on the Block Exemption Order.
Please refer to the Competition (Block Exemption for Liner Shipping Agreements) (Amendment) Order 2020 and the Block Exemption Order, which are to be read together with the accompanying explanatory note for more information.
Under paragraph 5(2)(b) of the Block Exemption Order, parties to liner shipping agreements with an aggregate market share of above 50% are required to file their agreements and any variation or amendment thereto with CCCS, in addition to the fulfilment of other conditions and obligations in the Block Exemption Order, to qualify for the block exemption from the section 34 prohibition.
Parties who are not sure if their agreements fall within the Block Exemption Order may wish to seek legal advice or apply to CCCS for a Notification for Guidance or Decision. Parties to agreements that do not fall within the Block Exemption Order and who are uncertain as to the status of their agreements may also do the same.