Frequently Asked Questions

Dominant Businesses / Companies

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1. What is the section 47 prohibition about?

Under Section 47 of the Act, where a firm is dominant, or where a number of firms are collectively dominant, the firm(s) is/are prohibited from abusing the dominance in ways that are anti-competitive and work against long term economic efficiency. One example is the use of predatory pricing by a dominant firm, i.e. by lowering its prices below costs, to prevent a new and efficient competitor from competing on the merits of its goods and services, thereby deterring market entry and perpetuating its dominance in the long term.

2. What does 'dominant position' mean?

A dominant position exists when a firm has substantial market power. In general, market power exists where a firm does not face sufficiently strong competitive constraints and is able to profitably sustain prices above competitive levels or to restrict output or quality below competitive levels.

Generally, as an indication, a firm with market share of 60% or above is likely to indicate that it has a dominant position. However, high market share alone may not be indicative that a firm is dominant; similarly, low market share alone may not be indicative that a firm is not dominant. CCCS will also take into consideration other factors, such as entry barriers, the degree of innovation, product differentiation, buyer power and other relevant factors, when considering whether a firm is dominant. CCCS's assessment in a case will depend on its specific facts and circumstances.

3. Will my company breach the Competition Act if it is dominant?

Competition law does not prohibit firms from being dominant or seeking to increase their market shares by competing on their own merits. However, dominant companies have a special responsibility under competition law that they must not abuse their dominance in ways that are anti-competitive (such as blocking its competitors from competing) and which work against long-term economic efficiency. Whether a particular conduct amounts to an abuse of dominance will depend on the facts and circumstances of each case.

4. What types of behaviour may be considered an abuse of dominance?

The Act gives examples of conduct that may constitute an abuse of a dominant position. They include:

  • predatory behaviour towards competitors;
  • limiting production, markets, or technical development to the prejudice of consumers;
  • applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
  • making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of the contracts.

This list is not exhaustive and is for illustrative purposes only. More detailed examples of conduct which may be considered to be an abuse of a dominant position are given in the CCCS Guidelines on the Section 47 Prohibition.

5. Where can I get competition advice for my business to ensure that I am not infringing the Act?

You may refer to the CCCS Guidelines as a reference on how CCCS will interpret and give effect to the Competition Act. For a more detailed assessment, businesses, trade associations or professional bodies who are unsure whether their agreements or conduct infringe the Competition Act are encouraged to file Notifications for Decision or Guidance with CCCS because each case has to be evaluated on the basis of its particular facts and circumstances.

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