Competiton Law in Singapore - McEwin, Anandarajah & Chan

As long ago as 1862, the English poet Arthur Hugh Clough had proclaimed:

Thou shalt not covet; but tradition
Approves all forms of competition.

US legislators must have taken this advice to heart, for they enacted the Sherman Act in 1890. It took rather longer for competition law, or anti-trust law as it is known in the United States, to find a place in Singapore. Singapore enacted its Competition Act (Cap 50B) in 2004, on the recommendations of the Economic Review Committee.

Part II of the Act sets out the functions, duties and powers of the Competition Commission of Singapore ('CCS'), the statutory board tasked with implementation of the competition regime. Part III sets out the prohibitions. Three categories of activities are targeted:

1 Section 34 prohibits anti-competitive agreements which distort competition;

2 Section 47 prohibits abuse of a dominant position; and

3 Section 54 prohibits mergers that lessen competition (this prohibition comes into force on 1 July 2007).

Apart from block exemptions, there are exclusions provided in the Third Schedule for the ss 34 and 47 prohibitions, and in the Fourth Schedule for the s 54 prohibition.

The Singapore statute is modelled after the UK Competition Act 1998 and the UK Enterprise Act 2002, although the final product and how it will be applied are uniquely Singaporean.

Lawyers used to researching precedents based on comparable legislation elsewhere will need a new methodology. This area does not favour a legalistic approach with its emphasis on semantics. Inevitably, given that we have not yet developed our own jurisprudence in this area, we will have to look for guidance beyond our shores. Nonetheless, it must be borne in mind that the priorities and intentions that each jurisdiction has for its business environment differ. Questions of compliance or breach are not determined solely by legal arguments. Economic theories advancing the adopted economic policies of the land are crucial. In Singapore, the declared mission of CCS is to promote healthy competitive markets that will benefit the Singapore economy, by applying sound economic principles that take account of the nature of its various markets, its economic, industrial and commercial circumstances. The CCS will allow anti-competitive practices to stand if they bring about a net economic benefit to Singapore (see its 2007 decisions on the Qantas-British Airway agreement and the Qantas-Orangestar agreement, available on its website www.ccs.gov.sg).

The publication by LexisNexis of Competition Law in Singapore - Principles, Practice and Procedure is an important step in the development of this new branch of the law. It draws together the combined expertise of Dr Robert Ian McEwin, who is now the Chief Economist of the Competition Commission of Singapore, Ms Kala Anandarajah, a partner in Rajah & Tann and Mr Nicholas Chan, a partner in Squire, Sanders & Dempsey LLP.

The book is not your typical legal thesis. First, up to the time of publication, there were no decisions on any provision of the Act. The Final Notifications on the Qantas agreements mentioned above were issued by CCS only in February and March 2007, after the publication of the book. Business and lawyers, as do the authors, rely heavily on CCS Guidelines on how CCS would interpret and give effect to Part III of the Act (www.ccs.gov.sg/Guidelines/index.html). Still, the authors have done an admirable job illustrating the concepts by foreign examples. Second, as mentioned above, competition law is about economics. In some parts, this book reads like Economics 101. The authors cover a lot of ground in explaining potentially anti-competitive practices.

In the Introduction, Dr McEwin explains the function of economics in competition law. He also points out that analogical reasoning traditionally applied by lawyers is inappropriate for competition law, where the impact of certain conduct cannot be predicted this way. It has to be assessed by deductive reasoning, which is used by economists.

In the chapter on anti-competitive agreements, Ms Anandarajah expands on the CCS Guidelines in explaining terms like 'single economic entity', 'concerted practices' and 'net economic benefit'. Useful illustrations are drawn from jurisdictions with a longer track record of competition regulation. A few pages are devoted to the leniency programme for cartel members who are whistleblowers, the new darlings of corporate governance. The chapter also covers the important topic of block exemptions, particularly the block exemption for liner shipping which was granted at a time when its EU counterpart was facing increasing opposition. This example demonstrates that decisions on competition must be made for the local economy based on local conditions, not what other countries have done.

The chapter on abuse of dominant position is written by Dr McEwin. He demonstrates his grasp of this subject with an exposition on the economic doctrines that are applied in an assessment of suspected s 47 conducts. Diagrams are used to illustrate relevant economic theories, something not found in a typical legal text. There is an introductory history lesson on how other legislation dealt with abuse of dominance.

Dr McEwin also contributes the chapter on mergers. He points out that the 'substantial lessening of competition' test used in Singapore is the same as that used in the United Kingdom, United States and Australia. The current EU test is whether the merger 'significantly impedes effective competition', which Dr McEwin believes is close to the Singapore test. He is probably correct in the sense that any economic analysis of the data that are presented under s 54 is unlikely to draw a pedantic distinction between 'lessening competition' and 'impeding competition'. The chapter contains informative material on market definition and the factors that determine how the merger will affect the level of competition.

Ms Anandarajah contributes a practical chapter on how a business can ensure compliance with competition law. She takes a helpful step-by-step approach that business undertakings should be able to follow.

The objectives and operation of the CCS, and related enforcement agencies, are explained next by Mr Nicholas Chan. The CCS is all-important, carrying out multi-tier functions. It prescribes, it educates, it investigates, it decides and it sanctions. The author mentions that the decisions of the CCS can be appealed to the Competition Appeal Board, and the decisions of the Board can be further appealed to the High Court and Court of Appeal on limited grounds. Not much more can be said about these as there have been no appeals of any sort to-date.

Mr Nicholas Chan rounds up the book with a chapter putting competition laws in a global context. There is an overview on the competition laws of different countries. The author provides interesting perspectives on the 'conflict' of competition laws, which may have a political dimension as well.

This is a compact but substantive book. The chapters ably discuss the main components of the Act. Readers might perhaps have benefited from an overview of the framework of the Act, such as the Practical Guide to the Competition Act that the CCS helpfully publishes on its website. This, however, does not detract from the tremendous scholarship that is crammed into 182 pages. The book, being the first on the Singapore competition regime, will provide comfort to practitioners and in-house counsel faced with this new feature of the Singapore legal landscape.

Chan Leng Sun
Ang & Partners