The Singapore system as an example of voluntary

Singapore is a relatively small economy which introduced merger control only from 1 July 2007. Even though Singapore does not have a long experience with respect to competition law, as its first Competition Act³⁴⁹ was passed only in October 2004, its Competition Act seems well-considered and is based on a review of best practices in various jurisdictions, including the US, UK, EU, Australia and Ireland.³⁵⁰

In choosing voluntary merger notification system, the Competition Com-mission of Singapore (CCS) argued that “some degree of market rationalisation, especially given Singapore’s small and open economy, is necessary to enable businesses to reap efficiencies of scale and scope. The CCS expects that only a minority of mergers will raise competition concerns, and will focus its efforts on these.”³⁵¹ Hence, the CCS found a voluntary system to be appropriate for

346 Examples of prejudicial action may include dismissal of employees and sharing of information about customers and sales.

347 UK Merger Guidelines, section 4.10.

348 Freeman, pp. 11–13.

349 Singapore Competition Act, adopted on 19.10.2004, Chapter 50B of Singapore Statutes. Available online: http://statutes.agc.gov.sg/ (last visited 15.05.2009).

350 Kin, Lim Chong; Clements Scott: “Singapore: Competition Law Update 2008”, in Asia-Pacific Antitrust Review 2008, Global Competition Review, p. 75.

351 Competition Commission of Singapore: “Public Consultation on Proposed Merger Regime”, October 2006, section 5. Available online:

Singapore, as most mergers in Singapore are unlikely to raise competition con-cerns, which is for a mandatory system could impose undue business costs.³⁵² Compared with the UK system, Singapore notification system is simpler and involves only one assessing authority, the CCS. Article 54(1) of the Singapore Competition Act simply prohibits mergers which may result in substantial lessening of competition. The CCS has indicated so called “safe harbour”

thresholds, below which it is unlikely to intervene and find an infringement: (i) the merged entity will have a market share of 40% or more; or (ii) the merged entity will have a market share of between 20% to 40% and the post-merger combined market share of the three largest firms (CR3) is 70% or more.³⁵³ There is no mandatory requirement, but merging firms are allowed to notify their merger situations to the CCS and apply for a decision as to whether the Article 54 prohibition has been or will be infringed by the merger situation.³⁵⁴ The CCS may also investigate a merger on its own initiative.³⁵⁵

The application can be made either with respect of an anticipated or a completed merger. Merging firms intending to make an application may approach the CCS for pre-notification discussions, to facilitate preparing their application and expedite the review process.³⁵⁶ Unlike in the UK system, the Singapore system does not entail a non-binding informal guidance procedure.

Such guidance procedures were initially planned, but left out, as according to the CCS “[t]he experience of competition authorities in Australia and the UK indicates that confidential guidance provides minimal added-value to busi-nesses, as third party views cannot be sought due to the confidential nature of guidance. Such guidance is unlikely to meet the needs of businesses for certainty, as the merger can be re-assessed if there is a third-party complaint.”³⁵⁷ Where the CCS finds that the merger infringes the Article 54 prohibition, it may require that the anticipated merger be stopped or that the completed merger be unwound.³⁵⁸ The CCS has rather wide powers of enforcement. Firstly, it can impose interim measures, i.e., directions as it considers appropriate, to prevent the merger parties from taking any action that might prejudice the CCS’s ability to consider the merger situation further and to impose the appropriate remedies.

Interim measures may, for example, comprise of directions that impose obligations as to the carrying on of any activities or as to the safeguarding of any assets; require supervision over any activities, prohibit proceeding with the

http://www.ccs.gov.sg/NR/rdonlyres/5C5EF8CB-51AA-445C-A55B-87971D837FEA/11773/ConsultDoc_Merger_20102006.pdf (last visited 15.05.2009).

352 Ibid., section 9.

353 Competition Commission of Singapore: “Guidelines on Merger Procedures” July 2007, section 3.4 Available online: http://www.ccs.gov.sg/Guidelines/index.html (last visited 15.05.2009), (CCS Guidelines on merger procedures).

354 Ibid., section 2.3.

355 Singapore Competition Act, Article 62.

356 CCS Guidelines on merger procedures, section 3.7.

357 CCS: “Public Consultation on Proposed Merger Regime”, section 13.

358 CCS Guidelines on merger procedures, section 2.5.

transaction. These interim measures may be imposed as soon as the CCS has reasonable grounds for suspecting that a merger is likely to infringe the prohibition, however, the fact that the CCS has imposed interim measures does not rule out eventual clearance of the merger situation.³⁵⁹ If a direction imposing interim measures has not been complied with, the CCS may apply to register the direction with a court, whereas failure to comply with a registered direction may be found to be in contempt of court with respect to which sanctions such as fines and even imprisonment may be applied.³⁶⁰

Secondly, where the CCS finds that a merger infringes the Article 54 prohibition, it may, at any time before making a final decision, accept commitments that remedy the SLC arising from the merger on the proposal of the merging firms. In this case, the CCS will clear the merger.³⁶¹ However, where no such negotiated remedies are agreed, the CCS may issue following directions:

− prohibiting of an anticipated merger or requiring a merger to be dissolved or modified in such manner as the CCS may direct;

− requiring the merging firms to enter into such legally-enforceable agree-ments as may be specified by the CCS to prevent or lessen the anti-competitive effects which have arisen;

− requiring the merger parties to dispose of such operations, assets or shares of a firm in such manner as may be specified by the CCS; and

− providing a performance bond, guarantee or other form of security on such terms and conditions as the CCS may determine.³⁶²

The enforcement of such directions can be ensured in a similar manner as in the case of interim measures.³⁶³

Finally, the CCS may impose also a financial penalty if a merger has infringed the prohibition and the infringement was committed intentionally or negligently.³⁶⁴ The financial penalty may amount up to 10% of the turnover of

359 Ibid., 3.50–3.54. Before giving a direction imposing interim measures, the CCS must give written notice to the persons to whom it proposes to give the direction, indicating the nature of the direction it proposes to give and the reasons for deciding to give it. Such persons may make representations to the CCS and appeal against the CCS’

directions.

360 Ibid., sections 3.56–3.58.

361 Singapore Competition Act, Article 60A.

362 CCS Guidelines on merger procedures, sections 3.68 and 5.14.

363 Ibid., section 5.17–5.19.

364 Infringement is intentional if the merging firms were aware, or could not have been unaware, that the merger infringed the prohibition; infringement is negligent if the merging firms ought to have known that the merger would, or was reasonably likely to, infringe the prohibition. This may be the case for instance, where after having received a prohibition decision from the CCS in respect of an anticipated merger, the merging parties proceed with an allegedly different merger which is simply a sham restructuring of the anticipated merger (see CCS Guidelines on merger procedures, section 5.23).

each relevant merger party in Singapore for each year of infringement for a maximum period of three years.³⁶⁵

The CCS’s practice after more than a year of controlling mergers has shown that the notification procedure is relatively straightforward and, in most cases, the CCS is able to review notified merger fairly quickly.³⁶⁶ By autumn 2008, altogether 11 mergers had been notified, all of which were cleared by the CCS as having no adverse impact on competition in Singapore. However, two cases were cleared after the merging firms had accepted commitments vis-à-vis overseas competition authorities (European Commission and the US DOJ), as the CCS considered these commitments sufficient to remedy its concerns.³⁶⁷ However, the CCS has indicated that not all commitments given to overseas competition authorities will automatically address the competition concerns in future cases, as the issues in each jurisdiction will have to be assessed based on its own merits.³⁶⁸

3.2.4. Choice of a notification system for small economies