February 2017

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This newsletter is intended to provide general information and may not be reproduced or transmitted in any form or by any means without the prior written approval of Drew & Napier LLC. It is not intended to be a comprehensive study of the subjects covered, nor is it intended to provide legal advice. Specific advice should be sought about your specific circumstances. Drew & Napier has made all reasonable efforts to ensure the information is accurate as of 28 February 2017.

WELCOME MESSAGE

In this issue, we round up some of the major

developments in competition law from around the

world during the last quarter of 2016.

In a legal update released earlier this month, we

surveyed the key developments in Singapore’s

competition law during 2016, ranging from cases

probed by the Competition Commission of

Singapore (“CCS”), through to personnel changes

within the organisation itself. In case you missed it,

we have included it again in this quarterly update

as our feature article.

The release of this update should also coincide

with this year’s regional marquee competition law

event: The Global Competition Review Live

Singapore 6th Annual Asia-Pacific Law Leaders

Forum Conference, co-hosted by our Practice

Group Head Mr Lim Chong Kin. The event will

focus on updates in competition law enforcement

and policy within the ASEAN region. This year’s

conference will also feature a new technology

segment, where market leaders and competition

authorities will come together to discuss

competition law and intellectual property issues in

e-commerce, Big Data, and disruptive technology.

This year’s event will also play host to delegates

from competition law authorities from seven

ASEAN countries, who will discuss capacity

building, the development of competition laws in

the region, the differing treatment of key

commercial conduct, and the differing approaches

to competition law enforcement, in the eagerly

anticipated ASEAN Competition Authorities

Roundtable session. For more details about the

event, please click here.

For more details on the Drew & Napier

Competition Law and Regulatory Practice, please

click here.

IN THE NEWS: AT A

GLANCE SINGAPORE Singapore clears joint venture between

Deutsche Lufthansa AG and Singapore

Airlines Limited

On 12 December 2016, the CCS gave a positive

decision in respect of a notification made by

In this issue

Welcome Message 1

In The News: At A Glance 1

– Singapore 1

– Around The World 2

Singapore Competition Law Watch 3

Articles & Commentaries: Updates From Around the World 3

– Anti-competitive Agreements 3

– Abuse of Dominance 6

– Regulatory Updates 9

Feature Article 9

2016 Singapore Competition Law Year-In-Review

2

Singapore Airlines Limited and Deutsche

Lufthansa AG, involving the joint venture relating

to scheduled air passenger services between

several European Countries (Germany, Austria,

Switzerland and Belgium) and several Asia/Asia-

Pacific countries (Singapore, Indonesia, Malaysia

and Australia). The positive decision was issued

following the acceptance of voluntary capacity

commitments relating to the Singapore-Zurich and

Singapore-Frankfurt routes. For more details,

please click here.

AROUND THE WORLD

China concludes abuse of dominance probe in

food packaging industry

On 16 November 2016, China’s State

Administration for Industry and Commerce

(“SAIC”) fined Tetra Pak and several of its

subsidiaries 668 million yuan (S$138m) for

abusing its dominant position in the food

packaging product industry. To date, this is the

first abuse of dominance penalty imposed by the

SAIC. For further details, please click here.

South African Competition Commission raids

six shipping companies

On 28 September 2016, the Competition

Commission of South Africa announced that it was

conducting dawn raids on the premises of six

shipping companies as part of its investigations

into whether they had colluded to fix their

incremental rates for cargo shipments between

Asia and South Africa. For further details, please

click here.

Ukraine Anti-monopoly Committee fines seven

petrol station operators UAH204m for

collusion

On 28 October 2016, it was reported that the

Ukrainian Anti-monopoly Committee had fined

seven petrol station operators UAH204m

(S$10.7m) for colluding to set petrol and fuel

prices, following its investigations commencing in

2013. For further details, please click here.

First trial under the United Kingdom’s

Competition Appeal Tribunal’s fast-track

procedure

The United Kingdom Competition Appeal Tribunal,

heard its first case (Socrates Training Limited v

the Law Society of England and Wales [2016] CAT

10) under the fast-track procedure, which came

into effect in October 2015. The hearing took place

from 8 to 11 November 2016. Judgment is

pending. For further details, please click here.

European Commission fines Austrian waste

management company €6,105,000 (S$9.08m)

for abuse of dominance

On 20 September 2016, the European

Commission (“EC”) adopted a decision against

Austrian waste management company, Altstoff

Recyling Austria Aktiengesellschaft (“ARA”), for

abuse of its dominant position in the market for the

exemption of household packaging waste. The

fine was reduced by 30% to a sum of €6,105,000

(S$9.08m) due to ARA’s cooperation with the EC,

and in particular, ARA’s acknowledgment of its

infringement as well as its suggestion of a remedy

to prevent similar infringements in the future. For

further details, please click here.

Commission sends Statement of Objections to

Brussels Airlines and TAP Portugal for anti-

competitive code-sharing

On 27 October 2016, the European Commission

issued a Statement of Objections to Brussels

Airlines and TAP Portugal, alleging that both

airlines had pursued an anti-competitive strategy

under their code-sharing arrangements on the

Brussels-Lisbon route. For further details, please

click here.

Italy opens twin telecom abuse probes

On 9 November 2016, the Italy Antitrust Authority

began investigations into Telecom Italia and

Vodafone, following allegations that the mobile

network operators had abused their dominant

positions in the upstream Short Message Service

(“SMS”) termination services market, by setting

certain pricing strategies that created a margin

squeeze for competitors in the downstream bulk

SMS market. For further details, please click here.

More auto-part fines in Korea

On 1 November 2016, the South Korea Fair Trade

Commission (“FTC”) fined Mitsubishi Heavy

Industries Ltd and Denso Corporation a total of

11.1bn won (S$11.3m) for rigging a bid in a

General Motors’ tender for scroll compressors in

2009. The decision represents the eighth time the

FTC has punished companies implicated in the

international auto-parts cartel. For further details,

please click here.

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Google rejects Directorate-General for

Competition’s charges

On 4 and 11 November 2016 respectively,

Google filed official responses to the European

Commission’s statement of objections: with the

first response being in relation to its shopping

comparison services and search advertising

practices, and the second being in relation to its

contractual practices in the mobile operating

system market. For further details, please click

here.

South Africa’s Competition Tribunal imposes

credit guarantee remedy for predatory pricing

On 6 September 2016, the South African

Competition Tribunal imposed a Credit

Guarantee Remedy on Media24 for engaging in

predatory pricing. The Credit Guarantee Remedy

requires Media24 to allow rival publications in the

Goldfield area 90 days’ credit to use the printing

and distributing services of sister companies

owned by Media24’s holding company, Naspers.

For further details, please click here.

FEATURE ARTICLE 2016 Singapore Competition Law Year-In-

Review

Drew & Napier’s Competition & Regulatory

Practice Group looks back at the key highlights of

Singapore’s competition law scene in 2016. We

round up the developments in Singapore

competition law over the past year, and highlight

some changes within the CCS itself. For more

details, please click here.

ARTICLES & COMMENTARIES: UPDATES FROM AROUND THE WORLD ANTI-COMPETITIVE AGREEMENTS Singapore clears joint venture between Deutsche Lufthansa AG and Singapore Airlines Limited

On 12 December 2016, the Competition

Commission of Singapore (“CCS”) gave a positive

decision in respect of a notification made by

Singapore Airlines Limited (“SIA”) and Deutsche

Lufthansa AG (“Lufthansa”), involving the joint

venture relating to scheduled air passenger

services between several European Countries

(Germany, Austria, Switzerland and Belgium) and

several Asia/Asia Pacific countries (Singapore,

Indonesia, Malaysia and Australia) (“Proposed

JV”). The positive decision was issued following

the acceptance of voluntary capacity commitments

relating to the Singapore-Zurich and Singapore-

Frankfurt routes.

The commitments were found to address any

competition concerns that would arise as a result

of the joint venture, and that would result in net

economic benefits for Singapore. The voluntary

commitments made by the parties were to:

(i) maintain seat capacity levels on the

Singapore-Frankfurt and Singapore-Zurich

routes, at levels that existed prior to the

Proposed JV;

(ii) increase seat capacity on the Singapore-

Zurich route and Singapore-Frankfurt routes

by specified amounts, by certain specified

dates;

(iii) carry a minimum number of Singapore

passengers on the Singapore-Frankfurt route

and Singapore-Zurich route respectively, in

each calendar year; and

SINGAPORE COMPETITION LAW WATCH

Score Board

Number Status

Concluded Pending

Notified Agreements or Conduct

16 16 0

Notified Mergers or Anticipated Mergers

59 57 2

Infringement Decisions

11 11 0

Appeals 13 12 1

Table 1: Singapore Competition Law Watch Scoreboard (Accurate as at 28 February 2017)

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(iv) appoint an independent auditor to monitor

compliance with the above, and report

periodically to the CCS.

The Proposed JV will see the airlines coordinating

their actions in respect of pricing, sales, marketing,

and inventory management. For several routes

that involve non-stop or direct services, the airlines

will also coordinate their schedule and capacity, as

well as share their revenue. The Proposed JV also

involves certain airlines affiliated to SIA and

Lufthansa.

The media release from the CCS was issued on

12 December 2016 and is available here.

South African Competition Commission raids six shipping companies

On 28 September 2016, the Competition

Commission of South Africa (“CompCom”)

announced that it was conducting dawn raids on

the premises of six shipping companies operating

in the Western Cape and Kwazulu-Natal provinces

as part of its investigations into whether they had

colluded to, inter alia, fix their incremental rates for

cargo shipments between Asia and South Africa.

The raid was reportedly conducted following a tip-

off from the public.

The raided companies were Maersk South Africa

(Pty) Ltd and its sister company Safmarine (Pty)

Ltd, Mediterranean Shipping Company (Pty) Ltd,

Pacific International Line South Africa (Pty) Ltd,

Hamburg Sud South Africa (Pty) Ltd and CMA

CGM Shipping Agencies South Africa (Pty) Ltd.

These raids follow a recent investigation direction

of the CompCom into the shipping sector and

associated supply chains. CompCom

Commissioner Tembinkosi Bonakele has stated

that, “South Africa is a strategic hub for the trade

of goods in and out of the southern African region.

Any cartel by shipping liners in this region results

in inflated prices for cargo transportation. Cartels

of this nature increase the costs of trading in the

region and render the region uncompetitive in the

world markets. Such cartels have the effect of

significantly derailing the economic growth of the

region”.

In Singapore:

The CCS is empowered to conduct unannounced

site inspections, usually referred to as “dawn

raids”, pursuant to its powers under the

Competition Act (Cap.50B). The CCS generally

has the power to search premises under a court

issued warrant, and (inter alia) to take copies of

documents appearing to be relevant to the subject

matter specified in the warrant. To date, the CCS

has conducted several dawn raids in its

investigations.

Ukraine Anti-monopoly Committee fines 7 petrol station operators UAH204m (S$10.7m) for collusion

On 28 October 2016, it was reported that the

Ukrainian Anti-monopoly Committee had fined

seven petrol station operators UAH204m

(S$10.7m) for colluding to set petrol and fuel

prices, following its investigations commencing in

2013. The entities fined were OKKO Naftoproduct,

WOG Retail LLC, Alliance Holding LLC, Zoloty

Ekvator (Golden Equator) LLC, AMIC Ukraine

(previously known as Lukoil Ukraine), Socar

Petroleum LLC, and Parallel LLC.

The Anti-monopoly Committee found that: “[I]n

January 2013 through January 2016 the defenders

synchronously or almost synchronously (with an

interval of several days) changed retail prices of A-

95 petrol and diesel fuel on the display panels of

their filling stations. These actions allegedly

resulted in removal of price competition between

oil traders and forced other market players to set

their retail prices at the unjustifiable level. This

resulted in the reduction of competition on the

market in general."

Some commentators consider the decision

controversial because in coming to its decision,

the Anti-monopoly Committee relied on:

(i) only a correlation analysis which studied the

prices each defendant operator paid for

petrol/fuel and other cost factors; and

(ii) a provision under Ukrainian anti-monopoly

law that allows it to presume that the similar

pricing strategies adopted by the defendant

operators were anti-competitive in the

absence of justifications for these similarities

by the defendant operators.

The latter provision was relied upon in a previous

case involving similar pricing strategies by several

petrol stations in 2011. On appeal, the 2011

decision was partially overturned by the Kyiv

Commercial Court on the grounds that the Anti-

monopoly Committee had failed to consider the

effects of discounts and other factors that result in

display prices not always reflecting the true cost

paid by the consumer.

5

In Singapore:

The Competition Act (Cap.50B) does not contain a

specific presumption that requires the investigated

party to prove the absence of collusion.

The CCS has conducted two market studies on

the retail petrol industry in Singapore (the first

study was completed in 2011 whilst the second

study is still on-going as at February 2017).

Results from both the 2011 study as well as the

provisional findings of the most recent study, the

CCS did not find any evidence of collusion or anti-

competitive arrangements within the industry.

Commission sends Statement of Objections to Brussels Airlines and TAP Portugal for anti-competitive code-sharing

On 27 October 2016, the European Commission

issued a Statement of Objections to Brussels

Airlines and TAP Portugal in respect of their code-

sharing arrangements on passenger services

between Brussels and Lisbon (during the period

2009 to 2012).

Following from investigations commencing in

2011, the Commission has expressed concerns

that both companies had, by way of a code-

sharing agreement, pursued an anti-competitive

strategy on the Brussels-Lisbon route by:

discussing a capacity (number of seats)

reduction and an alignment of their pricing

policy on the route;

granting each other the right to sell an

unlimited number of seats of almost all

categories (Business, Economy) on each

other’s flights on the route (where they were

previously the only two competing airlines);

and

implementing these arrangements by actually

reducing capacity, completely aligning their

fare structures and ticket prices on the route.

The Commission’s preliminary view is that this

combination of practices infringes Article 101 of

the TFEU, which prohibits anti-competitive

agreements between undertakings, by eliminating

competition on price and capacity between both

airlines on the Brussels-Lisbon route, leading to

higher prices and reduced choice for consumers.

Both companies now have the opportunity to

examine the documents in the Commission’s

investigation file, submit a written reply, and

request an oral hearing to present their arguments

before the Commission and the relevant national

competition authorities.

In Singapore:

Whilst plain-vanilla code-sharing arrangements

have not previously been considered by the CCS

in isolation, airline alliances that involve close

coordination such as fare harmonization or

schedule coordination may potentially infringe

section 34 of the Competition Act (Cap. 50B),

prohibiting agreements between undertakings,

decisions by associations of undertakings, or

concerted practices which have as their object or

effect the prevention, restriction or distortion of

competition within Singapore. Accordingly, many

airline alliances have sought a positive decision

from the CCS via a notification made under

section 44 of the Competition Act., before being

fully implemented.

More auto-part fines in Korea

On 1 November 2016, the South Korea Fair Trade

Commission (“FTC”) fined Mitsubishi Heavy

Industries Ltd (“Mitsubishi”) and Denso

Corporation (“Denso”) a total of 11.1b won

(S$11.3m) for rigging a bid in a General Motors’

tender for scroll compressors in 2009. Scroll

compressors are designed to compress air or

refrigerant in vehicle air conditioning systems.

Mitsubishi and Denso had reportedly met up on

multiple occasions in Japan before the tender, and

were aware that one of the two companies was

likely to be successful in the bid. The companies

tacitly agreed to bid at a significantly higher price

for the first year of the contract, as compared to

Mitsubishi’s bid in a separate tender for

compressors in 2007, while offering limited

discounts of 1% in the subsequent years.

Mitsubishi, after winning the tender, supplied

General Motors with approximately one million

compressors that were installed in its Spark and

Aveo vehicles. Mitsubishi and Denso were fined

7.4b won (S$8.96m) and 3.7b won (S$4.48m)

respectively, for the effect the scheme had on

General Motors.

This decision marks the eighth time the FTC has

sanctioned companies for anti-competitive conduct

associated with the international auto parts cartel.

The first decision, made in January 2014, resulted

in a fine for Denso and four other companies for

bid-rigging on Hyundai-Kia Motors’ tenders for the

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supply of dashboard systems and windscreen

wipers.

Elsewhere, the Mexico Federal Economic

Competition Commission had fined Mitsubishi and

Denso €3.4m (S$5.16m) for similar conduct, while

Mitsubishi and its US subsidiary have pleaded

guilty in a US district court for rigging the General

Motor bids.

In Singapore:

Agreements that have as their object or effect an

appreciable prevention, restriction or distortion of

competition are prohibited under section 34 of the

Competition Act (Cap. 50B). As set out in the

Section 34 Guidelines, bid-rigging is regarded as

having, by its very nature, the effect of appreciably

restricting competition.

ABUSE OF DOMINANCE

China concludes abuse of dominance probe in food packaging industry On 16 November 2016, China’s State

Administration for Industry and Commerce

(“SAIC”) fined Tetra Pak and five of its

subsidiaries 668 million yuan (S$138m) for

abusing its dominant position in the food

packaging product industry. To date, this is the

highest fine issued by the SAIC.

Tetra Pak is a food packaging and processing

company, and was found by the SAIC to have

engaged in abusive conduct with respect to

markets related to machinery, technical service

and cartons. In particular, Tetra Pak was found to

have implemented various tie-in sales

arrangements, exclusive dealing arrangements,

and loyalty discount arrangements.

Amongst other things, Tetra Pak was found to

have required the use of its own cartons within its

machinery purchased, in order for guarantees and

warranty periods to apply, and as a condition for

technical service. The SAIC also found that Tetra

Pak had imposed exclusivity on a supplier of

brown paper (used as an input in the production of

its cartons), preventing Tetra Pak’s competitors

from purchasing it.

In imposing the fine, SAIC took into account Tetra

Pak’s 2011 turnover instead all four years of the

infringement. The fine of 668 million yuan

(S$138m) constituted 7% of its 2011 turnover in

mainland China. This case is significant as it

marks the first abuse of a dominance penalty

imposed by the SAIC.

Tetra Pak has since indicated that it was

“disappointed with the decision but have decided

to accept it and do not intend to appeal”.

In Singapore:

Section 47 of the Competition Act (Cap. 50B)

prohibits the abuse of a dominant position. To

date, the CCS has only issued one infringement

decision in respect of an abuse of dominance

against SISTIC.com Pte. Ltd. in respect of its

exclusive arrangements with event promoters and

venue operator partners. The CCS has indicated

that its assessment is effects-based, with an

abuse established where the CCS demonstrates

that a practice has, or is likely to have, an adverse

effect on the process of competition.

European Commission fines Austrian waste management company €6,105,000 for abuse of dominance On 20 September 2016, the European

Commission (“EC”) found that Altstoff Recyling

Austria Aktiengesellschaft (“ARA”), a company

that provides a service which collects and recycles

packaging waste in households, had abused its

dominant position (from 1 March 2008 until at least

2 April 2012).

In Austria, producers of goods are legally obliged

to collect and recycle packaging waste which

results from the use of their products. ARA

“exempts” the producers of goods of their legal

obligation due to the nature of its services in

exchange for a licence fee.

Reportedly, under Austrian law, during the period

of infringement (i.e., from 1 March 2008 until at

least 2 April 2012), any company that wished to

enter the household exemption market had to

prove a nationwide coverage of the collection

system in order to obtain the necessary system

authorisation from the Austrian Federal Ministry of

Agriculture, Forestry, Environment and Water

Management. The EC established that ARA, the

company with the only comprehensive household

waste collection infrastructure during the period of

infringement, abused its dominant position by

refusing to share its infrastructure, is one that

could not be duplicated. In particular, ARA

imposed unjustified access conditions on its

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competitors to a shared use of its household

collection infrastructure.

In fixing the quantum of the fine imposed on ARA,

the EC considered the gravity and the duration of

the infringement. As a result of ARA’s cooperation

with the EC, the fine was reduced by 30% to a

sum of €6,105,000 (S$9.08). In this regard, ARA

acknowledged its infringement but in addition also

suggested a remedy to the situation i.e., the

divestment of part of its household collection

infrastructure to prevent similar infringements in

the future.

In Singapore:

Section 47 of the Competition Act (Cap. 50B)

prohibits the abuse of a dominant position. To

date, the CCS has only issued one infringement

decision relating to an abuse of dominant position

against SISTIC.com Pte. Ltd. (“SISTIC”), a

ticketing agent, in respect of its exclusive

agreements with event promoters and venue

operator partners such as Esplanade Co. Ltd and

the Singapore Sports Council. Whilst the finding of

liability was upheld on appeal, the fine imposed

against SISTIC was reduced by 20% (inter alia on

account of SISTIC’s cooperation).

Italy opens twin telecom abuse probes On 9 November 2016, the Italy Antitrust Authority

began investigations into Telecom Italia and

Vodafone, following allegations that the mobile

network operators had abused their dominant

positions in respect of upstream Short Message

Service (“SMS”) termination services, by setting

certain pricing strategies that created a margin

squeeze for competitors in the downstream bulk

SMS market.

The allegations were made by Ubiquity, a

company that provides bulk SMS services over its

network infrastructure, which are typically

purchased by companies for sending mass alerts

or notifications to a large customer base. Ubiquity

purchases termination services from Telecom

Italia and Vodafone, which charge a fee when

consumers under another mobile network send an

SMS to subscribers of Telecom Italia and

Vodafone.

Telecom Italia and Vodafone also provide bulk

SMS services to companies directly, and compete

with Ubiquity in the downstream retail market.

Whereas termination services are a necessary

(paid) input into the supply of bulk SMS services

for third parties such as Ubiquity, Telecom Italia

and Vodafone bear no similar input cost.

Ubiquity alleged that Telecom Italia and Vodafone

had abused their dominant positions in the SMS

termination services market, by manipulating their

termination service fees and bulk SMS services

rates, leaving competitors in the downstream bulk

SMS services market being unable to cover their

costs.

Investigations into Telecom Italia and Vodafone for

the margin squeeze allegations are ongoing.

In Singapore:

Where a dominant, vertically integrated

undertaking discriminates in the supply of an input

to downstream entities, by providing preferential

terms to its own downstream affiliate, the

discrimination may be considered abusive

according to the CCS Guidelines. These actions

are called “price squeezes” or “margin squeezes”.

The CCS Guidelines state that, in testing for a

margin squeeze, the CCS will ask whether the

integrated undertaking’s downstream business

would make at least a normal profit if it paid the

same input price that it charged its competitors,

given its revenues at the time of the alleged

margin squeeze.

Google rejects Director-General of Competition’s charges On 4 and 11 November 2016 respectively, Google

filed official responses to the European

Commission’s (“EC”) statement of objections; with

the first response being in relation to its shopping

comparison services and search advertising

practices; and the second being in relation to its

contractual practices in the mobile operating

system market.

In response to the objection that Google had

abused its dominance in the online shopping

market, Google argued that the EC’s analysis of

the market definition was too narrow. In particular,

it argued that the EC had failed to take into

account the constraining influence of Amazon and

other platforms of online shopping in the market,

such as mobile apps, social media sites and

merchant platforms.

Google also rebutted the objection that Google

had favoured its shopping comparison service

over those of its competitors, noting that the

promotion of certain merchant ads was informed

by consumer demand, rather than any plan to

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undermine competition. By increasing the visibility

of rival shopping comparison services, Google

noted that this would in effect subsidise websites

that had become less useful to consumers, which

would compromise innovation and competition.

In relation to the objection against AdSense, a

technology that places Google’s search-based

adverts on other websites, Google has already

made changes to the practices that the EC takes

issue with, and communicated its hope that the

case would be resolved quickly.

Google also issued a second response defending

its practices in the mobile operating system market.

Google notes that the EC had failed to take into

account the competitive influence of Apple’s iOS

operating system on the Android model, as was

evident from EC’s consumer survey.

It also responded to the objection that Google

prevents competition between rival apps by

compelling smartphone manufacturers to pre-

install a suite of apps, such as Google Search,

Chrome and the Google Play app store. In its

response, Google noted that it did not foreclose

manufacturers from pre-installing rival apps into

the Android phone, while consumers could easily

uninstall the Google apps from their smartphones.

Meanwhile, packaging Google Search together

with other products like Google Play allows

Google to offer its entire suite for free, without

charging any licensing fees.

In relation to claims that Google prevented

substantial modifications to the open-source

Android operating platform, Google noted that a

minimum compatibility requirement allows

developers to create apps that would run

seamlessly across various devices, without the

need to configure the app for incompatible

operating platforms. Hence, Google argues that its

minimum compatibility requirement sustains

competition among rival platforms and encourages

innovation across the market.

In Singapore:

Section 47 of the Competition Act prohibits any

conduct on the part of one or more undertakings

which amounts to an abuse of a dominant position.

Under the CCS Guidelines, vertical restraints that

restrict a buyer or seller operating at different

stages of the supply chain may amount to an abuse

of a dominant position. In determining whether the

vertical restraint is abusive, the CCS will consider

the effect of the vertical restraint on competition.

South Africa’s Competition Tribunal imposes credit guarantee remedy for predatory pricing On 6 September 2016, the South African

Competition Tribunal imposed a Credit Guarantee

Remedy on Media24 for engaging in predatory

pricing.

The Tribunal previously found that Media 24 had

abused its dominance in the newspaper market in

Goldfield from 2004 to 2009, eventually driving its

competitor, Gold Net News (“GNN”) out of the

regional market.

At the time, a Media24-owned newspaper, Forum,

had adopted a predatory pricing strategy which

involved offering low advertising rates despite

making a loss. This led eventually to GNN’s exit

from the market in 2009. Ten months later, Forum

also closed down, leaving another Media24 title,

Vista, as the sole local newspaper in the area.

In deciding on the appropriate remedy, the

Tribunal considered remedies proposed by the

Competition Commission, but dismissed them as

unsuitable. Instead, the Tribunal ordered that

Media24 allow, subject to conditions, rival

publications in the Goldfield area 90 days’ credit to

use the printing and distributing services of certain

companies (Paarl Coldset and OnTheDot) owned

by Media24’s holding company, Naspers.

The Credit Guarantee Remedy aims to lower the

barriers to entry by eliminating the cash flow

squeeze problem faced by smaller publications,

which are often required to pay for printing and

distribution upfront before receiving advertising

revenue.

In Singapore:

Section 47 of the Competition Act (Cap. 50B)

prohibits any conduct on the part of one or more

undertakings which amounts to an abuse of

dominance in any market in Singapore. In order for

an infringement to be found, there is a dual

requirement that an undertaking must hold a

dominant position, and must have abused that

position. Predatory conduct can amount to the

abuse of a dominant position according to the CCS

Guidelines on the Section 47 Prohibition, albeit that

no such cases have arisen in Singapore to date.

Once a breach of section 47 has been found, the

CCS has a wide discretion to impose directions

that it considers necessary to bring the

infringement to an end.

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REGULATORY UPDATES First trial under the Competition Appeal Tribunal’s fast-track procedure The United Kingdom Competition Appeal Tribunal

(“UK CAT”), heard its first case (Socrates Training

Limited v the Law Society of England and

Wales [2016] CAT 10) under the fast-track

procedure (“FTP”), which came into effect in

October 2015. Socrates, an organisation with an

annual turnover of £750,000 (S$1.3m), alleged an

abuse of dominant position by the defendant, the

Law Society, and seeks an injunction and

damages. The part of the case that is subject to

the FTP by order of the UK CAT is limited to the

injunction claim. The hearing took place from 8 to

11 November 2016.Judgment is pending.

The FTP, which aims to assist individuals and small

and medium-sized enterprises in bringing less

complex claims with limited exposure to costs risks

to the UK CAT, was originally introduced pursuant

to an amendment to the Enterprise Act 2002 made

by the Consumer Rights Act 2015, effective 1

October 2015. The CAT may, either by its own

initiative or through the application of a party, make

an order that a claim is to be subject to the FTP.

Rule 58(3) of the CAT Rules 2015 sets out a list of

factors that the CAT shall take into account when

making a decision as to whether a case should be

allocated to the FTP. These factors include,

amongst other things, whether one or more of the

parties are an individual or a micro, small or

medium-sized enterprise; the complexity and

novelty of the issues involved; as well as the

nature of the remedy being sought and, in respect

of any claim for damages, the amount of damages

claimed.

Claims allocated to the FTP must be brought to

trial within six months and trial must generally take

no longer than three days. Claims allocated to the

FTP are also subject to a cap on recoverable

costs at a level to be determined by the CAT.

In Singapore:

Whilst no corresponding procedure exists in

Singapore, the CCS has recently established a

slightly different fast-track procedure (being the

“CCS Practice Statement on the Fast Track

Procedure for Section 34 and Section 47 Cases”)

which came into effect on 1 December 2016. The

purpose of CCS’s fast-track procedure is to

achieve procedural efficiencies and resource

savings through a streamlined administrative

procedure that results in an earlier infringement

decision than would have been possible without

the fast track procedure. The CCS may take into

account, amongst other things, the number of

parties concerned in the investigation, the number

of parties who have proactively indicated their

willingness to engage in a fast track discussion as

well as the predicted margin for argument and

extent to which facts may be contested.

FEATURE ARTICLE 2016 SINGAPORE COMPETITION

LAW YEAR-IN-REVIEW

Introduction

As 2017 begins, it is timely take a look back at the

key highlights of Singapore’s competition law

scene in 2016.

In the paragraphs that follow, we round up the

developments in Singapore competition law over

the past year, and highlight some changes within

the CCS itself.

Please reach out to our competition law team if

you require further insights on any of the following

issues.

Major developments in 2016

Amendments to the CCS guidelines

A key development in 2016 was the release of the

revised versions of CCS’s guidelines and the

introduction of a new fast-track procedure for

cartel and abuse of dominance cases. This

welcoming change comes a decade after the

passing of the Competition Act (Cap.50B) (“Act”).

The revised guidelines and practice statement

generally took effect from 1 December 2016. For

more details on the amendments, please click

here to see our previous quarterly update.

Infringement Decisions in 2016

Financial advisers penalised by the CCS for

pressurising a competitor to withdraw a

promotional offer from the life insurance market

In March 2016, the CCS released an infringement

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decision relating to an anti-competitive agreement

by ten financial advisers in Singapore to

pressurise a competitor into withdrawing a

promotional offer relating to the sale of life

insurance products. The CCS held that the

arrangement was a restriction of competition by

“object”, having regard to the parties’ aggregate

market shares, the innovative nature of the offer

and the actual withdrawal of the offer. For more

details, please click here.

The ball bearings appeal

On 1 September 2016, the Competition Appeal

Board (“CAB”) released its decision on the appeal

brought by Nachi-Fujikoshi Corporation and its

Singapore subsidiary (“Nachi”) against the CCS’s

2014 infringement decision. The appeal saw

Nachi’s financial penalty being reduced from

S$7,564,950 to S$4,773,423 on the ground that its

financial penalty was miscalculated. The key issue

at hand was what base turnover figures the CCS

ought to have used in calculating the financial

penalties. The CCS had used turnover figures

provided by Nachi prior to the release of its

preliminary infringement decision; notwithstanding

the fact that new turnover figures became

subsequently available (i.e. before the CCS had

issued its final infringement decision). Nachi’s

submission was that its fine should have been

recalculated using this new turnover information

instead. This problem arose primarily because the

CCS’s (previous) relevant guideline stated that the

turnover to be used for the calculation of financial

penalties should be that for the financial year

preceding the CCS’s decision (which created

some ambiguity). It is noteworthy that this

ambiguity has now been addressed in the revised

guidelines which clarify that the turnover to be

used in the calculation of financial penalties should

be that of the financial year preceding the date

when the infringing party’s participation in the

infringement ends. For more details, please click

here.

Joint Ventures

Joint venture between Lufthansa and

Singapore Airlines Limited

On 12 December 2016, the CCS cleared a

proposed joint venture between Singapore Airlines

Limited (“SIA”) and Deutsche Lufthansa AG

(“Lufthansa”) after accepting voluntary capacity-

related commitments from both parties on two

specific routes between Singapore and Frankfurt

and between Singapore and Zurich. The joint

venture relates to the provision of scheduled air

passenger services between Germany, Austria,

Switzerland and Belgium, on the one hand, and

Singapore, Indonesia, Malaysia and Australia, on

the other. Drew & Napier LLC acted for the parties

to the joint venture. For more details, please click

here.

Mergers

Conditional clearance of proposed acquisition

by ADB BVBA and Safegate International AB

On 3 March 2016, the CCS announced that it had

approved the proposed acquisition of Safegate

International AB by ADB BVBA from Fairford

Holdings Private AB following the CCS’s

acceptance of the parties’ voluntary behavioural

commitments to address certain competition

concerns. This decision marks the second time the

CCS has cleared a merger on the basis of

commitments (i.e. the CCS earlier cleared a

proposed acquisition of JobStreet Singapore by

SEEK Asia Investments Pte Ltd in 2014), but the

first time that the CCS has accepted purely

behavioural commitments. Drew & Napier LLC

acted for the merger parties. For more details,

please click here.

Other mergers cleared in 2016

In addition to the ADB-Safegate merger, 2016 saw

the clearance of the following mergers in the past

year:

(i) Acquisition of GAPL Pte Ltd by Heineken

International BV.

(ii) Acquisition of the sole control by Western

Digital Corporation of SanDisk Corporation.

(iii) Acquisition of ICAP plc’s global wholesale

broking business by Tullet Prebon plc.

(iv) Joint Venture between SIA Engineering

Company Ltd and Airbus Services Asia

Pacific Pte Ltd.

(v) Acquisition of Hermes Microvision, Inc by

ASML Holding N.V.

(vi) Acquisition of certain property and assets

from Ley Choon Constructions and

Engineering Pte Ltd by Samwoh Premix Pte

Ltd.

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Other Investigations

Investigation into fresh chicken distributors for

price fixing and market sharing

On 8 March 2016, the CCS announced that it had

issued a proposed infringement decision against

13 fresh chicken distributors for anti-competitive

conduct that involved coordinating the amount and

timing of price increases in fresh chicken products

as well as agreeing not to compete for each

other’s customers. To date, the CCS has not yet

issued its final infringement decision. For more

details on the preliminary infringement decision,

please click here.

Supply of lift spare parts in Housing &

Development Board estates

As part of the CCS’s ongoing investigations into

the restrictive industry practices in the supply of lift

spare parts in Housing & Development Board

(“HDB”) estates, E M Services Pte Ltd had

provided the CCS with voluntary commitments in

relation to its supply of BLT lift spare parts in

Singapore to other lift maintenance service

providers in Singapore. The CCS has accepted

these commitments to fully address their concerns

as against E M Services Pte Ltd. For more details,

please click here.

Exclusive agreements in the online food

delivery industry

The CCS investigated an online food delivery

provider’s practice of entering into exclusive

agreements with certain restaurants: a practice

which prevented these restaurants from engaging

other food delivery providers’ services. On 25

August 2016, the CCS announced that it had

ceased its investigations as it had concluded that

such agreements did not harm competition.

However, the CCS also indicated that the

exclusive agreements could turn problematic in

future and in light of this concern, it would continue

to monitor the situation. For more details, please

click here.

Within CCS

Increasing cross-jurisdictional cooperation in

competition work

In an International Financial Law Review Survey

on Merger Control 2017, the CCS shed light on

the main challenges it perceives in relation to

merger control and cartel enforcement activities.

These challenges include technological changes

that contribute to increasingly complex market

structures and business conduct, multi-sectoral

market issues, as well as a rise in cross-border

transactions with anti-competitive influences on

Singapore. E-commerce and disruptive

technologies will also be expected to present a

new set of challenges to Singapore’s existing

competition regime. In this regard, 2016 has seen

the CCS engaging in more coordinated dialogue

with other regulators in Singapore as well as

greater and closer cooperation with foreign

competition authorities. This is a trend that the

CCS expects to continue and perhaps even gain

greater importance in the months that follow.

In the same survey, the CCS recognised the

importance of behavioural commitments in the

context of merger control, especially in situations

where structural remedies may be unsuitable (e.g.

where structural remedies may result in a less

attractive merger deal). For more details, please

click here.

Board changes at CCS

With effect from 1 August 2016, three new

members were appointed to the CCS’s Board,

namely Professor Euston Quah (Head,

Department of Economics, Nanyang

Technological University), Professor Wong Poh

Kam (National University of Singapore School of

Business), and Mr Kan Yut Keong (Retired

Accountant, Pricewaterhouse Coopers). Other

members in the Board include:

(i) Chairman: Mr Aubeck Kam Tse Tsuen

(Permanent Secretary, Ministry of

Communications and Information and Ministry

of Manpower).

(ii) Dr Andrew Khoo Cheng Hoe (Deputy

Managing Director, Corporate Development,

Monetary Authority of Singapore).

(iii) Professor Phang Sock Yong (Vice Provost

(Faculty Matters) & Celia Moh Professor of

Economics, Singapore Management

University).

(iv) Professor Tan Cheng Han, S.C. (Chairman,

Centre for Law & Business (Faculty of Law),

National University of Singapore).

(v) Toh Han Li (Chief Executive, Competition

Commission of Singapore).

(vi) Ms Chia Aileen (Assistant Chief Executive &

Director-General (Telecoms & Post),

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Infocomm Media Development Authority of

Singapore).

(vii) Mr Wong Yew Meng (Retired Partner,

PricewaterhouseCoopers).

(viii) Mr Tan Kok Kiong Andrew (Chief Executive,

Maritime and Port Authority of Singapore).

(ix) Ms Chionh Sze Chyi Mavis, S.C. (Chief

Prosecutor (Criminal Justice Division) and 3rd

Solicitor-General, Attorney-General’s

Chambers).

Copyright in this publication is owned by Drew & Napier LLC. This publication may not be reproduced or transmitted in any form or by any means, in whole or in part, without prior written approval. Drew & Napier LLC accepts no liability for, and does not guarantee the accuracy of information or opinion contained in this publication. This publication covers a wide range of topics and is not intended to be a comprehensive study of the subjects covered nor is it intended to provide legal advice. It should not be treated as a substitute for specific advice on specific situations.

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FOR MORE INFORMATION ON THIS QUARTERLY UPDATE, CONTACT:

Lim Chong Kin Director; Head, Competition & Regulatory

Since 1999, Chong Kin has played a key role in the development of sectoral competition regulation

in Singapore’s telecommunications and media industries, and subsequently the development of

general competition law under the Competition Act. He was the lead Singapore counsel that

undertook the drafting of the Telecom Competition Code 2000 and 2005, the Media Market

Conduct Code 2003 and the Postal Competition Code 2008. Chong Kin's diverse client portfolio

spans the CCS and the sectoral competition regulators to private sector companies. Chong Kin

also regularly advises corporations on a whole range of competition law matters including

competition compliance, advisory, transaction reviews and filing for decisions and guidance with the CCS. For example,

he has represented VISA in filing numerous notifications to the CCS in relation to its multilateral interchange fees. He

also assists clients in handling inquiries and investigations by the CCS. He is currently assisting clients in international

cartel investigations as well as advising clients on leniency applications. Chong Kin has been widely acknowledged as

the leading competition law expert in Singapore by major ranking publications. Chambers Asia Pacific 2017

recognises Chong Kin's achievements. He is described as “clever, able, bright and estimable man; he is terrific”. Who’s

Who Legal: Competition 2008 – 2016 also rank Chong Kin as a leading competition lawyer. Asialaw 2017 lists him as

a market-leading lawyer, noting, “[Chong Kin] is a very technically proficient and commercially savvy lawyer. He is also

very entrenched in the competition space, giving him unique insights into policy direction and interpretation.” Asia

Pacific Legal 500 2017 lists Chong Kin as a leading individual in Competition and Antitrust in Singapore. Chong Kin is

also an endorsed individual for Competition/ Antitrust and Regulatory Practice by Best Lawyers International 2016.

Tel: +65 6531 4110 Fax: +65 6535 4864 Email: chongkin.lim@drewnapier.com

Scott Clements Director, Competition & Regulatory

Scott is the Deputy Head of the Competition & Regulatory Practice Group. He is qualified as an

advocate and solicitor of Singapore, and a barrister and solicitor of the High Court of New Zealand.

Scott has extensive experience in relation to contentious competition law matters. He assisted in

relation to the first set of appeals made to the CAB in respect of a cartel matter (securing reductions in

financial penalties of 90% for Regent Star), and also assisted in the appeal of the first ever abuse of

dominance case relating to SISTIC.com Pte Ltd, where the financial penalty was also reduced. Scott

has assisted on multiple leniency filings before the CCS, and has also assisted clients during dawn

raids by the CCS, and in the context of CCS interviews and formal requests for information made pursuant to the CCS’s

statutory powers. Scott also assisted Visa to secure a positive decision from the CCS on its notification relating to Visa’s

interchange fee system. Scott is heavily involved in the economic analysis of competition law matters, holding a degree

economics from Victoria University in New Zealand, and a post graduate degree in economics for competition law from

Kings College. Scott joined Drew & Napier LLC in 2007, and was previously a senior investigator with the New Zealand

Commerce Commission. There, he was involved in leading investigations and analysing competition law and economic

issues, particularly in respect of mergers and acquisitions. Chambers Asia Pacific 2017 recognises Scott as a leading

competition lawyer, noting that, “‘He brings the perspective of a former competition regulator to the table, which is very

valuable.’ Another source singles him out for his detailed understanding of economics in the market.” He is described as

“able to understand the business model very clearly and provide advice that is precise and to the point”. Clients find Scott

“wonderfully mature, excellent” and "smart, and very easy to work with."

Tel: +65 6531 4183 Fax: +65 6535 4864 Email: scott.clements@drewnapier.com

Corinne Chew Director, Competition & Regulatory

Corinne is a Director at Drew & Napier LLC. Corinne’s experience extends to all areas of

competition law practice, including assisting clients in the filing of merger notifications to the CCS,

leniency applications and assisting clients with CCS investigations. Corinne has also assisted multi-

national and local companies in setting up competition law compliance and audit structures, dawn

raid and whistle-blowing programmes and conducting audit checks for companies in a wide range of

industries in Singapore and other jurisdictions such as China, Thailand, Malaysia, Indonesia, South

Korea and Vietnam. Corinne’s corporate experience includes providing contractual and regulatory

advice for listed and unlisted companies in a broad spectrum of industries. She has assisted in the

reviewing and drafting of joint venture, shareholder, distribution, as well as sale and purchase agreements. Corinne is

listed as a leading individual in Competition and Antitrust in Singapore by Asia Pacific Legal 500 2017, and is noted for

her “excellent legal knowledge and in-depth understanding of the [competition] regulator”.

Tel: +65 6531 2326 Fax: +65 6535 4864 Email: corinne.chew@drewnapier.com

For further information on the Competition Law and Regulatory Practice Group, please click here.