CCS Investigates Restrictive Industry Practices in the Supply of Lift Spare Parts in HDB Estates

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1.    The Competition Commission of Singapore (“CCS”) is investigating restrictive industry practices in the supply of lift spare parts^[1] in Housing & Development Board (“HDB”) estates. These lift parts are required for the maintenance and servicing of lifts installed in HDB estates.

2.    In Singapore, town councils are required to carry out regular lift maintenance for lifts installed in HDB estates.^[2] There are, typically, multiple brands of lifts installed in each HDB estate. Town councils can choose to either appoint the original lift installers of the respective brands to undertake the maintenance services, or to call for a tender to invite companies, including third-party lift maintenance contractors to provide lift maintenance services for all the lift brands of lifts within the estate. CCS understands that there could potentially be cost savings in engaging a third-party lift maintenance contractor for multiple brands as compared to having to procure lift maintenance services from each original lift installer. Lift contractors that wish to tender for lift maintenance projects, which include multiple lift brands, would require brand-specific lift spare parts.

3.    Town councils select their lift maintenance contractors based on many factors. Aside from price, town councils should also consider the technical competency of the contractors especially the understanding of maintenance and upkeep of safety features and operating system, availability of genuine spare parts (as this may affect safety and normal operation), response time, relevant experience of service personnel and track record of the company. If the third-party lift maintenance contractors cannot obtain the lift spare parts for each lift brand, town councils would be reluctant to choose third-party lift maintenance contractors (which may be able to provide the lift maintenance services at lower cost and better service quality) as compared to the original lift installer.

4.    In general, a supplier has the freedom to decide with whom it wants to do business. However, a refusal by a dominant or sole supplier to supply certain essential products or services, that cannot otherwise be obtained, can be illegal and in breach of section 47 of the Competition Act (Cap. 50B). Refusal to provide proprietary but essential lift spare parts to third-party lift maintenance companies by any lift company or distributor may prevent other lift maintenance contractors from effectively competing for contracts to maintain and service lifts of that particular brand in Singapore.

5.    Following a complaint received, CCS commenced investigations into the allegation that several companies were refusing to supply lift spare parts for maintenance of lifts in HDB estates. On 12 May 2016, E M Services Pte. Ltd. (“E M Services”) came forward to CCS to provide commitments to supply BLT lift spare parts in Singapore to third-party lift maintenance contractors in Singapore. Following feedback from a public consultation, CCS considers the commitments fully address the competition concerns raised by CCS. The full terms and conditions of the commitment can be found in Annex A.

6.    Mr. Toh Han Li, Chief Executive of CCS, said:

 “CCS notes that the majority of the over 20,000 lifts installed in HDB estates across Singapore are currently being maintained by the Original Equipment Manufacturers (“OEMs”). The inability of third-party lift maintenance contractors to source for original parts, for example lift motherboards, poses significant operational issues for them. CCS understands that other lift maintenance companies including the OEMs may also be involved in such potentially anti-competitive practices.  The commitment to supply BLT lift spare parts to third-party lift maintenance contractors was provided voluntarily by E M Services. This will provide more options for HDB lift maintenance, as town councils can choose to call for a single tender for lift maintenance across various lift brands, in lieu of contracting with multiple parties. CCS will continue its other investigations to ensure access to essential lift spare parts for third-party lift maintenance contractors and to effectively compete for lift maintenance of these other brands of lifts.”

7.    Businesses that are unsure as to whether their business conduct fully complies with the Competition Act should seek independent legal advice or consider applying for guidance or a decision from CCS.

8.    CCS encourages all businesses to proactively put in place competition compliance programmes to ensure their business conduct fully complies with the Competition Act.

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About The Competition Commission of Singapore (CCS)

CCS is a statutory board established under the Competition Act (Chapter 50B) on 1 January 2005 to administer and enforce the Act. It comes under the purview of the Ministry of Trade and Industry. The Act empowers CCS to investigate alleged anti-competitive activities, determine if such activities infringe the Act and impose suitable remedies, directions and financial penalties. More information on the Act, as well as on how to file a complaint or notification for guidance or decision, can be found on CCS’s website at www.ccs.gov.sg.

^[1] These are proprietary spare parts such as electronic controllers and control boards. These spare parts are required for the maintenance, servicing and repairs of the lifts.

^[2] The Building Maintenance and Strata Management (Lift and Building Maintenance) Regulations 2005 require all lifts to be maintained in accordance to the recommendation of Singapore Standard CP2:2000 (Code of Practice for installation, operation and maintenance of electric passenger and goods lifts).