Singapore: Asia Pacific Competition Highlights, Q3 2020

CCCS publishes study on e-commerce platforms and updates guidelines

On 10 September 2020, the CCCS published the e-commerce platforms market study report (the Study), after consulting with various industry stakeholders and conducting an online survey of platform consumers and platform suppliers. While the CCCS did not identify any current major competition concerns involving e-commerce platforms in Singapore, it proposed to update its guidelines relating to market definition, section 47 prohibition (abuse of dominant position) and substantive assessment of mergers, to provide more clarity and guidance to businesses in the digital sector. Further, the study also urged operators of e-commerce platforms to raise sellers’ awareness and understanding of the Consumer Protection (Fair Trading) Act and encouraged sellers to adopt its recommended “good trade practices”.

This was followed by the CCCS’ public consultation on the proposed changes to its guidelines in respect of the treatment of intellectual property rights, market definition, section 47 prohibition (abuse of dominant position), enforcement, substantive assessment of mergers and merger procedures (the Public Consultation), which is ongoing until 8 October 2020. This Public Consultation represents the CCCS’ major overhaul of its competition guidelines, to keep pace with the fast-moving digital markets and the legal developments within Singapore.

With technology permeating almost every industry and sector in the world, all businesses should consider reviewing their existing operations, competition compliance programs and consumer welfare policies, bearing in mind the upcoming changes to the guidelines and the Study.

CCCS issues Guidelines on Price Transparency

The CCCS issued the Guidelines on Price Transparency (“Guidelines”), which sets out how it would interpret the Consumer Protection Fair Trading Act (“CPFTA”) in relation to the display/advertisement of prices and pricing practices. In particular, the Guidelines cover four main areas, which are:

• drip pricing
• false or misleading price comparison
• advertising false discounts
• misusing the word “Free” in advertisements

Importantly, the CCCS highlighted that the CPFTA and the Guidelines apply to both local and overseas-based businesses that supply goods/services to consumers in Singapore, whether operating online or in physical stores.

Since taking on the function of administering the CPFTA in 2018, the CCCS has completed three CPFTA-related investigations relating to price transparency (see Charcoal Thai 1 case, Wishing Well Beauty Centre and Ruby Beauty Pte Ltd case and SG Vehicles group of companies case). As such, the issuance of the Guidelines and these investigations underline the CCCS’ focus on price transparency. This is further illustrated by the CCCS’ current review of the CPFTA, in which it seeks to broaden its enforcement powers, beyond its existing limited powers of investigating errant businesses and filing injunction applications with the State Courts against them.

The Guidelines will come into effect on 1 November 2020. Businesses should review their pricing practices to ensure that they do not fall foul of the CPFTA. For more information, please refer to the Guidelines (see here), Guidelines Infographic (see here) and the corresponding media release (see here).

CCCS issues COVID-19 guidance on collaborations for the supply of essentials

The COVID-19 pandemic disrupted the supply of essential goods and services, and such disruptions have required competitors to collaborate temporarily to sustain/improve the supply of essentials. In response, the CCCS issued the “CCCS Guidance Note on Collaborations between Competitors in Response to the COVID-19 Pandemic” (“Guidance Note”), to provide clarity on whether such collaborations put in place from 1 February 2020, and which would have to expire by 31 July 2021, fall afoul of the Competition Act (the “Act”).

The Guidance Note sets out that the CCCS would exceptionally assume that collaboration was likely to generate net economic benefits and accordingly, was unlikely to infringe the prohibition against anti-competitive agreements under section 34 of the Act, provided that the collaboration:

1. sustained or improved the supply of goods or services designated as “essential” by the Ministry of Trade and Industry, in Singapore (Essentials)
2. was limited in scope and time
3. did not involve price-fixing, bid-rigging, market-sharing or output limitation

The list of Essentials was set out in the Annex to the Guidance Note (see here). That said, collaborations that involve price-fixing, bid-rigging, market-sharing or output limitation continue to be prohibited unless they satisfy the net economic benefit criteria under the Act.

While the Guidance Note provides businesses with clarity on collaboration with competitors in relation to the supply of Essentials, it also sends a clear message that the CCCS expects all businesses to continue complying with existing competition laws in spite of the ongoing COVID-19 pandemic.

CCCS ends probe into online food delivery and virtual kitchen sectors

The CCCS has concluded its investigations into the online food delivery and virtual kitchen sectors, which commenced in September 2019, after receiving feedback from the public. By way of background, virtual kitchens are commercial kitchen spaces provided to F&B operators that mainly cater to customers of online food delivery services.

As part of the probe, online food delivery services in Singapore were investigated for the alleged refusal to supply online food delivery services to F&B operators of a certain competing virtual kitchen operator. However, given that the alleged refusal to supply had since ceased, and that the CCCS found that competition in the virtual kitchen sector remains dynamic, the CCCS decided to end its probe, but will continue to monitor the online food delivery and virtual kitchen sectors.

This investigation further illustrates the CCCS’ increasing focus on the digital sector. Businesses in the digital sector must remain vigilant and informed of competition-related developments, in order to ensure that they do not inadvertently end up on the wrong side of the law.

For more information, please refer to the media release (see here).