Scope of the Competition Act

The idea of a Competition Act was mooted by the Economic Review Committee as part of a slew of measures to ensure the continued growth and development of the Singapore economy.

A generic competition law was recommended to create a level playing field for businesses, big and small, to compete on an equal footing, enabling a more conducive business environment.

After rounds of public consultation, a draft Bill was tabled in Parliament and finally passed in October 2004. The Competition Act established the Competition Commission of Singapore (CCS) as a body corporate on 1 January 2005. The section 34 and section 47 prohibitions of the Competition Act came into force on 1 January 2006. The section 54 prohibition on mergers and acquisitions came into force on 1 July 2007. CCS was renamed the Competition and Consumer Commission of Singapore (CCCS) as it took on the additional role of administering the Consumer Protection (Fair Trading) Act on 1 April 2018.

Other than certain activities that are excluded under the Third and Fourth Schedules, the Competition Act applies to commercial and economic activities carried out by private sector entities in all sectors, regardless of whether the business is owned by a foreign entity, owned by a Singapore entity, or is a state owned enterprise or private limited company where the Government or a statutory board is a shareholder.

As the intent of the Competition Act is to regulate the conduct of market players, it does not apply to any activity, agreement or conduct undertaken by the Government, a statutory board or any person acting on their behalf. 

The activities that have been excluded from the section 34 and 47 prohibitions, under the Third Schedule, include those: 

• relating to services of general economic interest; 

• necessary to comply with legal requirements or to avoid conflict with Singapore's international obligations; 

• exempted by Minister's order, due to exceptional or compelling reasons of public policy; 

• relating to vertical agreements; 

• goods and services regulated by other competition law; 

• agreements or conduct directly related and necessary to the implementation of a merger;

• agreements or conduct that result in, or if carried out would result in a merger; and 

• agreements with net economic benefit (such agreements will only enjoy exclusion from the s.34 prohibition)

Specifically, the following activities are also excluded from the section 34 and 47 prohibitions: the supply of ordinary letter and postcard services; piped potable water; wastewater management services; scheduled bus services; rail services; cargo terminal operations; and clearing house activities by specified persons.

The exclusion of some of these sectors is based on public interest considerations such as national security, defence and other strategic interests. The other exclusions are for sectors or activities which already have sectoral competition frameworks. These sectors are in transition from a previously monopolistic situation to a more competitive environment today. Under such circumstances, more active market regulation and intervention is needed. Moreover, there are various technical matters affecting competition in these areas. Hence, the sector-specific regulators, with their industry knowledge and expertise, which are equipped with both ex-ante and ex-post regulatory powers, are in a better position to handle such issues.

One key change was the amendments made to the Competition Act by the Competition (Amendment) Bill 2007. The Bill amended the Competition Act’s merger regime to allow businesses to notify anticipated acquisitions, enable CCCS to accept commitments for mergers and empower CCCS to direct interim measures in merger situations. Another key change in 2007 was to empower CCCS to obtain documents or information for market inquiries and notifications.

Vertical agreements are arrangements between businesses at different levels of the production or distribution chain, for example, agreements between a manufacturer and a retailer, or between a dealer and a retailer. CCCS recognises that most vertical agreements have pro-competitive effects, which outweigh the potential anti-competitive effects. To reduce the compliance costs imposed on businesses to determine whether their vertical agreements infringe the law, vertical agreements are excluded from the Act.

CCCS will conduct periodic reviews on the scope of the exclusion and may recommend changes if any particular type of vertical agreement gives cause for concern. The Minister may, by order, bring such a type of agreement under the provisions of section 34 of the Act.

The exclusion for vertical agreements does not apply to agreements whose primary object is related to intellectual property rights. IPR agreements, such as IP licensing agreements, will be assessed according to the framework set out in the CCCS Guidelines on the Treatment of Intellectual Property Rights in Competition Cases.

The Act deals with the anti-competitive conduct of businesses, which are not related to merit, innovation or efficiency. Examples include price fixing, bid-rigging and market sharing amongst competitors. The aim is to promote healthy competitive markets.

The CPFTA deals with unfair trade practices that result in a consumer being deceived or misled, or which take advantage of a consumer who is not in a position to protect his own interests. Examples of unfair trade practices include misrepresentation, use of small print to conceal a material fact from the consumer, exerting undue pressure on the consumer to enter into a transaction etc.

Both the CPFTA and Competition Act bring benefits to consumers, but in different ways. With the Competition Act, consumers benefit from more choices, lower prices and better products and services when businesses compete on merit. The CPFTA protects consumers from misleading or deceptive tactics that some businesses use when consumers enter into transactions with them.