Results of the CCCS-ESS Essay Competition 2020

2^nd Prize

Mr Low Jia Rong (NUS)

Abstract:
This essay is divided into 3 parts. In Part I, I briefly discuss the objectives of competition law and argue that even though considerations of equality should be irrelevant to whether a practice is anticompetitive under the law, such considerations can nevertheless be relevant to policy design. Potential recommendations include allowing larger firms to independently sue for antitrust injury which will free up the CCCS’s resources to pursue other claims. In Part II, I discuss network effects and how they are relevant to the risk of anticompetitive foreclosure in digital markets. I also recommend an update to the substantive guidelines on merger control to reflect the risk of “killer mergers”. Finally, I propose that the requirement of pre-existing dominance for prohibition of abusive conduct under Section 47 be abolished in light of novel methods of monopolisation. In Part III, I argue that consumer protection under the CPFTA chronically under-deters unfair trade practices to the detriment of consumers and I advocate for significant reform centred upon granting the CCCS wider powers.

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3^rd Prize

Mr Choo Jun Kai (Allen & Gledhill LLP) & Ms Siow Xian Qi Natalie (LVM Law Chambers LLC)

Abstract:
Compared with traditional market structures, many digital markets are prone to tipping and exhibit entrenched positions of power. While market concentration may generate efficiencies, economic theory has long cautioned against the potential for fettering competition and stifling innovation. Consumer trust also risks erosion as the capacity of consumers to make informed choices may be impaired with the evolution of complex technologies. To help inform optimal government policy in the digital economy, this paper begins by discussing the effectiveness of existing competition and consumer protection tools. The casework of many jurisdictions indicate that current competition regimes are generally versatile enough to tackle anticompetitive conduct in digital markets. Some jurisdictions, such as Germany, have elected to inject greater certainty into digital antitrust by updating their competition legislation. Moreover, consumer protection law is often technologically neutral and broad enough to cover new business models. On closer analysis, however, one can identify at least three shortcomings in existing competition and consumer regimes which could allow market failures to perpetuate in the digital landscape.

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Merit

Ms Shirley Yong Woon Yee

Abstract:
An indispensable part of safeguarding Singapore’s economy lies in ensuring that our competition and consumer protection policies function as they should in enhancing market efficiency. However, the rise of the digital economy with its attendant challenges has upset the sense of equilibrium. This paper examines why there is a fundamental need for governmental intervention in competition and consumer protection in today’s free market, before analysing the sufficiency of current policies in tackling market failures precipitated and exacerbated by the digital age. First, it argues that there is scope for increased intervention in competition policies to preserve the competitive process. Specifically, the method of determining market definition should be broadened to measure the effects of data flows on market power to give effect to the value of data in business models of the digital economy. In addition, there is cause to contend that the blanket exclusion of vertical agreements from the ambit of the Competition Act should be reconsidered. Second, this paper considers that apart from certain necessary clarifications on the ambit of the Consumer Protection (Fair Trading) Act in light of the increase in consumer-to-consumer transaction platforms, current levels of consumer protection policy efforts ranging from domestic and cross-border enforcement efforts to empowering consumers with digital skills are adequate to address market failures. Finally, it acknowledges that not all challenges can be adequately addressed with competition and consumer protection policies. Instead, these policy areas must be harnessed in conjunction with other existing regulatory tools, including the Personal Data Protection Act and the Unfair Contract Terms Act.

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Merit

Mr Lee Jia Ming & Mr Yeo Jiong Han (University of California, Berkeley)

Abstract:
Advancements in technology and the recent COVID-19 pandemic have led to the rapid growth of the digital economy. In Singapore, the digital economy can be credited with reducing barriers to entry in many traditional markets, providing consumers with increased choice, and alleviating information asymmetry. Currently, the Competition Act prohibits anti-competitive behaviour from firms, while the Consumer Protection Act protects consumers from unreasonable and deceptive sales practices. CCCS has applied these laws to new cases about competition and consumer protection in digital markets to much success, showing they might be broadly generalizable. Nevertheless, any one-size-fit-all legislation will never be fully adequate for the complex and multi-faceted digital economy. This paper highlights five potential areas of concern. Firstly, companies which operate digital ecosystems may abuse their market dominance to take over related industries, or lock users in with restrictive data controls, creating high barriers to entry. Second, increased availability in pricing data and advances in machine learning may facilitate collusion between rival companies, or worse still, cases of unintended collusion. Third, the rise of cross-border transactions has surfaced gaps in consumer protection legislation, as consumers have little remedy in the case of defective or misrepresented products. Fourth, the use of online platforms in marketing has led to deceptive online sales tactics, and the emergence of insidious dark patterns which exploit human fallibilities. Last, despite the Personal Data Protection Act, consumers remain unaware of how their data is acquired and used, and firms continue to resell data illegally. 

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Merit

Ms Valerie Chuang Zhen Jin (University of Cambridge)

Abstract:
Singapore’s competition and consumer protection landscape has shifted considerably in recent years. This essay takes stock of policy developments on these two fronts, and characterises an optimal level of government protection that is aligned with the realities of policy-making. It argues that Singapore’s existing regulatory framework represents a departure from both the caveat emptor doctrine and the free market principle of minimal government intervention. This approach rightly recognises the radical remoulding of economic and legal paradigms in this field, as well as the unique role occupied by the public sector. It is an approach that has served Singapore well. For the most part, she is home to robust competition, honest market conduct and a coherent policy programme. While Singapore has much to thank the Competition and Consumer Commission of Singapore (“CCCS”) for, any discussion of her progress on this front would be incomplete without a consideration of the contributions made by other institutions. Hence, this essay also draws attention to the role that other public bodies and organisations play in protecting consumers’ interests, sustaining competition and promoting public awareness. It concludes by reflecting on concerns laid bare by the COVID-19 pandemic, and proposing possible policy revisions.

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2^nd Prize

Ms Fiona Xiao Jingyi & Mr Wang Dingzheng (Raffles Institution)

Abstract:

Government intervention is needed in order for markets to operate efficiently and optimally. Yet, the role of the government is not to supplant market mechanisms, but to support its optimal operation, by correcting and preventing market failures. Government intervention must be targeted, specific and constantly revised as economic and technological conditions change. One important change Singapore is facing is the rapid development of the digital economy. Though the digital economy presents opportunities for Singapore, we must also beware of the challenges, such as the new forms of market failure, that the digital economy can bring us. In this essay, we will examine if our current government interventions are sufficient to address these new forms of market failure, and hence, protect consumers and competition, thereby creating an optimal and efficient environment for digital markets to flourish. In Section 1, we will lay out a cost-benefit framework to evaluate the optimal extent of government intervention. We will be applying this framework throughout the essay. In Section 2, we will assess the prevalence of market dominance and information asymmetry in the big data economy, and its detrimental effects on consumer privacy and welfare. We will argue that current data protection laws under the Personal Data Protection Act can be further tightened to correct consumers’ inherent cognitive biases, hence necessitating greater intervention. In Section 3, we will assess the effects pre-emptive acquisitions have on potential levels of competition in digital markets. We will argue that current merger laws are unable to sufficiently protect potential competition against the anti-competitive threat of pre-emptive acquisitions. Hence, greater intervention is needed. Finally, in the conclusion, we will draw general lessons from the two case studies we presented, and advocate for a future-proof approach towards government intervention.

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3^rd Prize

Mr Ling Young Loon (National Service)

Abstract: 

Government intervention differs in its mechanism, agents, and objectives. An intellectual property regime seeks to incentivise research by rewarding firms with sole ownership of an innovation. Labour market policies aim at increasing mobility of worker supply, especially in tandem with our industrial policies. Sector-specific regulatory policies, such as taxing road usage through the Electronic Road Pricing system, often deals in remedies to subsidise for competition, or set the boundaries of competition. Traditional economic theory would suggest that competition policy is a set of laws that ensure competition in the marketplace is not restricted in a way that reduces economic welfare, and that consumer protection policies enhance buyers’ trust in and thus the legitimacy of free markets. However, the delineation of policy functions is an ephemeral matter, and the aims and scope of competition and consumer protection policies further differ from country to country. US antitrust laws, for example, primarily serve to protect consumer welfare, and are often tempered by political changes, while competition policy in the EU holds economic integration as its dominant objective. Hence, a recommendation addressing the form and extent of consumer and competition policy in Singapore is only proper when it accounts for our overarching economic objectives, and studies the entire system of governmental policies it is embedded within.

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Merit

Ms Peng You Yun & Ms Chang Yu Qing (Dunman High School)

Abstract:

Although the advent of the digital economy has accorded significant benefits, through providing new goods and services, increasing consumer choice and allowing for greater internal economies of scale, in other ways it also poses a significant threat to competition and consumer welfare. As a result of greater ease of scalability and the presence of the network effect in online platforms, large firms benefit disproportionately in such markets, reducing market contestability. These trends have also given rise to the zero-price business model, for which traditional competition law tools have difficulty in identifying anti-competitive behaviour through measuring market share. Algorithmic pricing has also been utilised by firms to engage in unfair price discrimination that has been difficult to detect, and greater asymmetric information in the digital economy has allowed for new avenues of consumer exploitation. Given these changes that have occurred rapidly in the past decade, current frameworks have a limited ability to effectively regulate the market. To address these limitations, we propose to create new data collection methods to better identify anti-competitive practices, legal frameworks to address new concerns brought about the digital economy, as well as greater global cooperation in addressing related challenges, given that markets are becoming more internationalised. In enacting such measures, since the ease of scalability has increased the marginal benefit of anti-competitive behaviour, and its adverse impacts can manifest in many different facets, we propose that the government intervenes more heavily to exact a higher marginal cost, and also on a broader scale to target the various facets in which the digital economy poses a challenge to competition and consumer welfare.

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Merit

Mr Oh Ming Song & Mr Choo Kai Jie Daniel (Currently serving National Service)

Abstract:

Government intervention is essential to promote competition and protect consumers, both of which might be neglected if left to natural market forces. The digital economy is largely characterised by three factors: the use of data as a key competitive tool, network externalities and large economies of scale. The digital economy revolves around data, transforming it into a commodity indispensable to digital firms. Due to the difficulty in placing a monetary value on data, coupled with the fact that the digital economy tends to tip towards a natural monopoly, we believe that competition and consumer protection laws must be dynamic and involve value judgement rather than number-crunching. In addition, the crafting of digital laws must be participatory in nature - governments should consult stakeholders and experts to better frame digital laws which are still in the nascent stages. Under competition laws, we identify algorithms as a facilitator of collusion, and propose the creation of a regulatory sandbox for companies to test the compliance standards of their algorithms. Greater attention must also be placed on keeping markets contestable by ensuring the portability of data and considering non-price factors of competitions when assessing mergers. Under consumer laws, we identify two main areas of concern - privacy of data and unregulated content. Digital companies must provide greater clarity to users with regards to how user data is collected and used, and to place a monetary value on their services for users who are unwilling to disclose their data. Companies must also take greater responsibility with regards to regulating the content on their platforms. In ambiguous cases, assessments by the CCCS should err on the side of competition and consumer protection. Singapore should also work with regional and even international bodies to harmonise global efforts in intervening in the digital economy.

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Merit

Mr Kenneth Poh & Ms Megan Yeo Shu'en (Raffles Institution)

Abstract:

This essay will forward that in today’s rapidly digitalising economy, CCCS is adapting to the growing threat to competition and consumers but still requires a more robust response. Hence, the extent and range of government intervention must increase to attain an optimal level. In Chapter 1, the context of a rapidly digitalising Singapore is set. We further outline the main objectives of government intervention: minimising anti-competitive and anti-consumer behaviour while not stifling growth and innovation. Chapter 2 analyses the emerging dangers from the digital economy-- increased risk of collusion through pricing algorithms, increased risk of market consolidation, use of data that threatens consumer welfare and the need for cross-border collaboration. Next, we analyse CCCS’ response in 3 key areas-- Identification, Intervention and International Collaboration (3Is). We conclude in Identification that while CCCS considers a wide range of metrics in identifying market failures, it still lacks a clear framework for non-quantifiable metrics and lacks digital expertise. In Intervention, we find that while current methods of intervention have worked previously, the voluntary notification system and degree of punishments remained problematic. In International Collaboration, we observe that despite CCCS’ commitment to tackling transnational market failures, there is a lack of an ASEAN-wide digital economy response for competition and consumer protection. Chapter 3 uses the same 3Is to propose methods to achieve the optimal level of intervention. In Identification, we support more metrics for quantifying market power and defining markets. In Intervention, we propose reconsidering the voluntary notification system, harsher punishments, improved data protection and more stringent technological regulation. In International Collaboration, we suggest the creation of ASEAN-wide agreements for the digital economy alongside existing regional guidelines on competition policy. We also address the concerns with increased extent and range of government intervention, namely reduced innovation, lowered economies-of-scale and increased costs.

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