3. Parliamentary replies
Second reading speech by SMS Koh for the Competition (Amendment) Bill 2018
20 March 2018
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SECOND READING SPEECH FOR THE COMPETITION (AMENDMENT) BILL 2018
1.Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."Background on Competition in Singapore
Competition is a key principle of Singapore's economic strategy. Competition spurs businesses to differentiate and innovate, so that they can become more efficient and productive. Consumers enjoy lower prices, wider choices, and better products and services. The economy also benefits as a result of greater productivity gains and a more efficient allocation of resources.
The Competition Act was enacted in 2004 to promote efficient market conduct and to strengthen Singapore’s competitiveness, for the benefit of both businesses and consumers. The Act is administered by the Competition Commission of Singapore (CCS), who adopts a balanced approach in ensuring a robust competition regime that supports a level playing field for businesses in Singapore, without imposing excessive compliance costs or overly restrictive conditions on businesses.Current Gaps in CCS's administration of the Competition Act
With the aim of strengthening the current competition regime, CCS has reviewed the Competition Act to identify and address existing administrative gaps, and to provide greater clarity on CCS's enforcement of the Act.
As part of their review, CCS has studied the best practices and experiences of other foreign jurisdictions, and engaged the relevant economic agencies and sector regulatory agencies.
CCS has also carried out a public consultation and most of the respondents have expressed support for the proposed amendments. Some of their feedback have been incorporated into the finalisation of this Bill.Key Amendments
Mr Speaker, Sir, let me now outline the three key amendments in this Bill.Accept binding and enforceable commitments for cases involving sections 34 and 47
To start, I must explain that there are three main prohibitions under the Competition Act. Firstly, the Act prohibits anti- competitive agreements that prevent, restrict or distort competition. This is a provision under section 34 of the Act, and so let us refer to this as the "section 34 prohibition". Secondly, the Act prohibits the abuse of dominant position under section 47 of the Act, and we will similarly refer to this as the "section 47 prohibition". Lastly, this Act prohibits mergers or acquisitions that substantially lessen market competition, and this is the "section 54 prohibition".
The first key amendment of this Bill is to allow CCS to accept binding and enforceable commitments for cases involving sections 34 and 47 prohibitions.
During CCS's investigations into potential infringements under the Competition Act, an entity under investigation may come forward to voluntarily offer "commitments", or a pledge to undertake specific measures to remedy, mitigate or prevent the competition concerns which are currently being investigated. In accepting any commitments, CCS must be assured that the commitments are sufficient to address the competition concerns being investigated, can be promptly implemented and do not give rise to new competition concerns. Should CCS accept the offered commitments, CCS will cease their investigations.
Currently, only commitments offered for the section 54 prohibition are binding and enforceable. In other words, if the merger parties breach any of the voluntary commitments previously offered to CCS, CCS will be able to take action against parties for the breach, without the need to re-open fresh investigations into the anti-competitive conduct.
Clauses 7 and 8 of the Bill amend sections 60A and 60B of the Competition Act, to allow CCS to similarly accept binding and enforceable commitments offered by entities for cases involving the sections 34 and 47 prohibitions. Clauses 5 and 6 amend sections 57 and 58, and are a consequence of the insertion of new sections 60A(1) and 60B(1).
Entities may also approach CCS for a decision as to whether an agreement or conduct has infringed the prohibitions in section 34 or section 47. Clauses 2 and 3 are consequential amendments to sections 44 and 51, which allow CCS to make a decision that there has been no infringement if a commitment has been accepted by CCS. This includes a commitment varied or substituted under section 60A(3).
These amendments will align CCS's approach to commitments for all the three main prohibitions under the Act, and also brings CCS’s practices in line with other foreign jurisdictions such as the United States and the European Union.
Mr Speaker, Sir, let me move on to the second key amendment. Conduct general interviews during inspections and searches
CCS’s current enforcement powers include the authority to require the production of specified documents or information, and the authority to enter and search any premise. This is provided for under sections 63 to 65 of the Competition Act. The second key amendment is to empower CCS to conduct general interviews during such inspections or searches of premises.
Occupants of the premise being inspected or searched by CCS, are currently required to only provide an explanation of the documents produced or seized on the premises, or information uncovered during the inspection. CCS is not empowered to ask general questions in relation to the same investigation, without first serving a written notice, as provided for under section 63 of the Act, on the occupier of the premises or the individuals it wishes to interview. This limits the efficiency and effectiveness of CCS’s investigations. In addition, it results in confusion for the individuals being interviewed, as they may have to give their statement more than once, and on the same issue as well. The occupier may also be puzzled as to why CCS has to serve two separate notices for the same investigation.
Clause 9 amends section 63 to empower CCS enforcement officers entering any premises for the purposes of an investigation, to orally examine any individual on the premise. The amendment does not increase CCS's enforcement powers, but addresses an administrative gap in the investigation process. CCS's scope of questioning is still limited to the subject matter and purpose of the investigation. The proposed amendment also brings CCS's practices in line with that of the European Union.
In addition, Clauses 10 to 11 make technical amendments to sections 64 and 65, to provide further clarity on CCS's investigation powers, such as the power to require the production of a document at such a time and place, and in such form and manner, as may be required. Allow CCS to provide confidential advice on anticipated mergers as a statutory process
The final key amendment of this Bill is to allow CCS to provide confidential advice on anticipated mergers as a statutory process.
As earlier mentioned, section 54 of the Competition Act prohibits mergers or acquisitions that substantially lessen market competition. However, not all mergers give rise to competition issues. Many mergers can preserve, or even enhance, the existing level of competition within the market.
Singapore adopts a voluntary merger notification system, similar to Australia and the UK. This means that there is no obligation, or mandatory requirement, for entities considering mergers to notify their merger situations to CCS.
Entities who are interested to enter into a merger, but are concerned about whether the anticipated merger, if carried into effect, will infringe the Competition Act, may file a notification for CCS's formal decision; or in a situation where information about the merger is not yet in the public domain, they can approach CCS for confidential advice. In the former instance, CCS will make their assessment and publicly release their decision on the anticipated merger. In the latter case, CCS's advice will only be released to the requesting parties.
Clause 4 introduces a new section 55A to formalise CCS’s provision of confidential advice on anticipated mergers. This does not change the process by which CCS will provide their advice, but seeks to provide greater clarity and assurance to businesses who wish to consider approaching CCS for advice. This approach is also consistent with practices in Australia and the United Kingdom, which operate voluntary notification regimes similar to Singapore. Conclusion
Mr Speaker, Sir, our approach to competition is a balanced one. The Bill aims to enhance the efficiency and efficacy of the competition regime in Singapore, and to ensure a level playing field for all businesses. Competition law is an important tool in ensuring that our markets work well, to encourage businesses to innovate and become more productive. This also brings about benefits for consumers as they gain faster access to a wider range of newer and better products and services.
Mr Speaker, Sir, I beg to move.