Singapore: CCCS releases guidance note on business collaboration for public consultation
Like Previously reported, the Competition and Consumer Commission of Singapore (CCCS) will issue a Guidance Note on Business Collaboration (“The guidance note“) to provide companies with more clarity on common horizontal, vertical and lateral collaborations between competitors. The draft guidance also aims to encourage collaborations that have pro-competitive effects. It covers six common types of business collaborations: information sharing, joint production, joint marketing, joint purchasing, joint research and development, and standardization.
The draft guidance note further explains how professional associations can support collaborative initiatives among their members. It also reminds companies involved in cross-border collaboration of the extraterritorial application of competition law (Cap 50B) (“ActEven if an agreement is made outside Singapore, or any party to the agreement is outside Singapore, the law could still apply where competition in a market in Singapore is affected.
CCCS’s public consultation exercise seeking feedback on the draft guidance note closes August 27, 2021.
This is a welcome development. This is the first guidance note issued by CCCS that applies to business collaborations for all types of products and services, and it has no expiration period.
His predecessor, the Guidance Note on Competitor Collaborations in Response to the COVID-19 Pandemic (“COVID-19 Guidance Note“) expired on July 31, 2021. The COVID-19 Guidance Note was issued following the COVID-19 pandemic which has disrupted the supply of essential goods and services around the world, including in Singapore. The disruptions have forced competitors to temporarily collaborate to maintain or improve the supply of essential goods and services to/from Singapore. The COVID-19 guidance note applied to collaborations that fell within the “applicable period”, i.e. February 1, 2020 to July 31, 2021.
The draft guidance note covers six common types of business collaborations: information sharing, joint production, joint marketing, joint purchasing, joint research and development, and standardization. The draft guidance note also explains how CCCS will take into account relevant assessment factors (e.g. market shares and market structure) in determining whether each type of business collaboration complies with Article 34. of the law ; when they raise competition concerns; and the conditions under which competition concerns are unlikely to arise. Article 34 of the law prohibits agreements, decisions and practices which prevent, restrict or distort competition.
The market share thresholds proposed in the draft guidance note are as follows:
- 20% for collaboration between competitors (actual or potential)
- 25% for collaboration between non-competitors
- 20% if it is unclear whether a collaboration is between competitors or non-competitors
These are the same thresholds CCCS currently uses to determine whether an agreement has a materially adverse effect on competition. Similarly, the CCCS points out that where any of these six types of business collaborations facilitate price fixing, bid rigging, production limitation and market sharing, it will always be considered to have a material adverse effect. on the competition.
In addition to highlighting the extraterritorial application of the law, the CCCS also reminds companies in the guidance note that “local collaborations could also be subject to competition law in relevant foreign markets, including within countries of the Association of Southeast Asian Nations (ASEAN),” and businesses should refer to the “ASEAN Expert Group on Competition website which contains useful information on the law and the competition regime(s) in the various ASEAN countries”. This is the second case where the CCCS makes direct reference to compliance with competition law in Singapore and other jurisdictions in ASEAN – the first being in the Handbook on Competition and E-Commerce in ASEAN published in 2017, which contains a checklist for businesses engaged in e-commerce in ASEAN.
This is a timely reminder, because as ASEAN moves towards greater economic integration, business operations in more economic sectors will become increasingly cross-border.
A copy of the draft guidance note can be viewed here.
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