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Form vs Effect: A Singapore Perspective

A question common to all unilateral conduct-related competition cases is where to draw the line to distinguish legitimate conduct that ought to be encouraged, from exclusionary conduct of a nature that should be condemned as anti-competitive. Both forms (good and bad) can bear the same outward appearance of an undertaking desiring to win customers at the expense of its rivals, and the distinction poses one of the most interesting challenges in the application of competition law. This, in-turn, has led to much tension and debate in Europe over several decades as to whether such assessments should be form-based, or effects-based, with lawyers and economists (and indeed courts) often having different perspectives on matter – particularly as to which standard currently prevails.

Such questions of form or effect have also been particularly relevant to the development of abuse of dominance laws in Singapore, albeit less conspicuously. This may not be wholly surprising when it is remembered that Singapore’s regime was originally modelled on the UK and European systems, and in fact Singapore’s Competition Appeal Board (“CAB”) has explicitly acknowledged that UK and European cases are “highly persuasive” in the interpretation of Singapore competition law. However, the issue has experienced its own unique evolution within the city-state.

The seminal case abuse of dominance case in Singapore remains the Competition and Consumer Commission of Singapore’s (“CCCS”) (formerly the Competition Commission of Singapore) decision in CCS600/008/07 Abuse of a Dominant Position by SISTIC.com Pte Ltd, 4 June 2010. At the risk of oversimplifying the case, the conduct in question essentially related to exclusivity arrangements entered into by SISTIC.com Pte Ltd (“SISTIC.com”) (the largest open ticketing services provider in Singapore) with venue operators and event promoters (with the venue operators in question accounting for a significant proportion of all open ticketed events in Singapore). The central theory of harm was that these arrangements led to the foreclosure of SISTIC.com’s competitors, and ultimately CCCS found SISTIC.com’s conduct to be abusive.

On appeal, all parties agreed that the assessment of abuse of dominance in Singapore should be one that is effects-based, and that the economic standard used for the purposes of Singapore competition policy is the total welfare standard, but little more was agreed. In upholding the CCCS’s finding of infringement, the CAB held that “an abuse will be established where [the CCCS] demonstrates that a practice has, or [likely has], an adverse effect on the process of competition” and that “it is sufficient for the [CCCS] to show a likely effect, and it is not necessary to demonstrate an actual effect on the process of competition”.

Debate can rage as to whether the test above is form-based or effects-based, but the fact that the test centres around the assessment of effects on the process of competition, rather than effects on total welfare (and related parameters such as price, output and innovation etc), invites a conclusion that the test is the former. The test also sets a threshold for establishing an abuse that, at least on its surface, may quite easily be met.

At first this may seem academic, but the practical implication is that difficulties arise for businesses in assessing their potential risk exposure using this test, particularly when it comes to exclusive contracts. The fact that exclusive contracts foreclose by definition, and the fact that the test for abuse is one that focuses on the likely effect on the process of competition, may result in such businesses shying away from conduct that may in fact be competitively neutral, or worse still, shying away from conduct that is pro-competitive.

It is interesting to observe that since this test was laid out, there have been five subsequent (public) cases involving abuse of dominance related investigations, all of which were closed upon receipt by the CCCS of voluntary commitments from the investigated undertakings – such commitments commonly involving, inter alia, an undertaking to remove (or not enforce) exclusivity provisions. This case history demonstrates a pragmatic approach to the application of competition law in Singapore, but at the same time raises the question as to whether this trend could lead to an undertaking being inclined to abandon innocuous arrangements too quickly, in fear of the prospect of fighting an appeal on the battleground of an, arguably, form-based test.

Then again, these subsequent cases have led to the closure of active competition law investigations without any financial penalties – so perhaps little sleep is being lost on missed opportunities for exclusive arrangements.

Scott Clements, Allen & Gledhill, Competition Law Blog, Dominance, Singapore
Scott is a competition law specialist, and his experience spans nearly 11 years in Singapore.

He has extensive experience in relation to contentious and non-contentious competition law matters and was involved in the first set of appeals made to the Competition Appeal Board in respect of a cartel matter and in the appeal of the first ever abuse of dominance case. Scott has also assisted on multiple leniency filings made to the Competition Commission of Singapore (CCS), now known as the Competition and Consumer Commission of Singapore (CCCS) and assisted clients during dawn raids by the CCCS. Scott is recognised as a leading competition lawyer by Chambers Asia-Pacific, and Who’s Who Legal. He was also named as one of Singapore’s 40 most influential lawyers aged 40 and under in 2015, by the Singapore Business Review.

Scott graduated with degrees in law and economics from Victoria University of New Zealand and holds a postgraduate degree in economics for competition law from Kings College London. He is qualified as an advocate and solicitor of Singapore, and a barrister and solicitor of the High Court of New Zealand.

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