ASEAN COMPETITION LAW RESOURCE DATABASE COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

SINGAPORE CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Q2/2012

CCS Clears Proposed Acquisition of Synthes by J&J On 5 January 2012, the proposed acquisition of Synthes, Inc. (“Synthes”) by medical devices and diagnostics giant, Johnson and Johnson (“J&J”), was cleared by the Competition Commission of Singapore ("CCS") in a Phase 1 review. The parties submitted a notification of their proposed transaction to CCS on 11 November 2011, detailing the acquisition by J&J of all the voting securities in Synthes. J&J and Synthes are both key players in the business of manufacturing and supplying orthopaedic medical devices and orthopaedic biomaterials. Section 54 of the Competition Act prohibits mergers that have resulted or may be expected to result in a substantial lessening of competition. In assessing whether the proposed merger between J&J and Synthes would infringe section 54, CCS had to establish whether or not the merger would indeed substantially lessen competition through an assessment of the impact of the merger on the structure and competitive dynamics of the market, among other factors. The proposed acquisition would place the merged entity’s market share at approximately 40-50 percent of the market for the supply of spine devices; approximately 80-90 percent of the market for the supply of trauma devices; and approximately 15-25 percent of the market for supply of bone graft substitutes. Private and restructured hospitals, as well as surgeons in private practice primarily form the market for orthopaedic medical devices and orthopaedic biomaterials in Singapore (specifically, in relation to spine and trauma devices and bone graft substitutes). CCS found these customers to have significant buyer power as they have the ability to switch between competing suppliers of orthopaedic medical devices and orthopaedic biomaterial products. Further, CCS established that there were only moderate barriers to entry in the market, as existing global manufacturers which did not presently have a presence in Singapore were not constrained from entering the Singapore market to supply orthopaedic medical devices and orthopaedic biomaterial

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SINGAPORE COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

CASE SUMMARY

Q2/2012

(as published in the D&N Competition Law Quarterly Update) products (subject to the necessary regulatory approvals from the Health Sciences Authority). In this regard, CCS sought the views of four competitors and four suppliers in the market for supply of spine devices, trauma devices and bone graft substitutes. CCS also noted that the regulatory requirements were not prohibitive, nor were the costs of entry prohibitively high. CCS considered that these global manufacturers, should they enter the Singapore market, could act as a competitive constraint on any attempt by the merged entity to exploit any reduction in rivalry flowing from the acquisition. CCS dismissed concerns that the proposed acquisition may bring about coordinated effects which may substantially lessen competition in the market. This was because the product markets are already sufficiently differentiated and the relevant product markets being marked by intense competition between the suppliers due to the structure of supply where suppliers enter into fixed contracts for a minimum of two years and the method of procurement via competitive tenders. CCS further noted that in the relevant product markets, competition was not usually based on price but on other factors such as customer service and the clinical track record of the products. Accordingly, given the intense nature of competition in this market, strong countervailing buyer power of the customers, moderate barriers to entry as well as other competitive characteristics of in the relevant market, CCS found that the proposed acquisition by J&J would not result in a substantial lessening of competition or infringe section 54 of the Competition Act. The proposed acquisition was cleared by the European Commission on 18 April 2012, but is still pending regulatory approval by the US Federal Trade Commission and other national competition authorities.

CCS Clears Proposed Nippon/Sumitomo Merger

.

On 10 February 2012, CCS cleared the proposed merger between Japan’s two largest steelmakers Nippon Steel Corporation (“Nippon”) and Sumitomo Metal Industries, Ltd (“Sumitomo”) in a Phase 1 review. CCS was notified of the proposed transaction on 21 December 2011. The proposed transaction involves a worldwide acquisition of Sumitomo’s entire business by Nippon, with Sumitomo ceasing to exist as a legal entity after the transaction takes effect. The parties have also filed notifications of the proposed transaction to competition authorities in ten other jurisdictions. CCS’s review of the proposed merger involved an examination of regional (Asian) markets for the supply of (i) seamless steel pipes; (ii) seamed steel pipes; (iii) H-beams; (iv) plates; (v) hot-rolled steel sheets; (vi) cold-rolled steel sheets; (vii) galvanised steel sheets; and (viii) retaining structures. This approach was taken as almost all of Nippon and Sumitomo’s

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CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Q2/2012

customers procured steel products in each of the relevant product markets on a regional or global basis. CCS also noted that other large global players in the finished steel product markets would act as competitive constraints on the merged entity. Within Singapore, while the parties estimated that the market share of the merged entity would be increased marginally (between 0-10 percent) in each of the eight product markets, CCS considered that this was not a significant increase, and did not give rise to a presumption that the proposed transaction would substantially lessen competition. As part of its review, CCS also contacted the Building and Construction Authority to discuss the regulatory regime in Singapore with regards the import of steel products in the construction industry. While CCS considered that there were no regulatory barriers for new market entrants, it nonetheless took the view that the high capital investment costs suggested that competitive constraint from new entrants or existing steel manufacturers switching production facilities may be relatively low in the short term. Notwithstanding this, CCS observed that owing to a general trend of overcapacity of finished steel products globally, the merged entity would be unlikely to exercise any market power in these market conditions. Based on feedback from customers in the industry, CCS found that these customers (which included trading companies and downstream manufacturers) hold some degree of countervailing buyer power as they have the ability to switch among third-party suppliers. Further, CCS observed that post-merger coordination would be unlikely, given that Nippon and Sumitomo’s total combined output of finished steel products in 2010 contributed to less than 10 percent to the top 20 steel manufacturers globally. In addition, customers’ procurement decisions were not based only on pricing, but on other factors such as long-term business relationships, quality and delivery time. In considering these factors, CCS found that the proposed transaction would be unlikely to increase the potential for coordinated effects. The parties expect to effect the merger on 1 October 2012, pending clearance from the competition authorities in China.

CCS Issues Proposed Infringement Decision Against Ferry Operators On 9 March 2012, CCS issued a Proposed Infringement Decision (“PID”) against two ferry operators, Batam Fast Ferry Pte Ltd and Penguin Ferry Services Pte Ltd, for alleged concerted practices which had as their object, the prevention, restriction or distortion of competition, in contravention of section 34 of the Competition Act. As the PID has not been made publicly available, details of the precise

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CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Q2/2012

nature of the parties’ conduct in question are still unknown to the public. However, CCS has indicated that instead of determining their ferry ticket pricing independently, the parties exchanged sensitive and confidential price information in respect of the routes operated by them between Harbourfront and Sekupang, Batam, and Harbourfront and Batam Centre. Before CCS finalises its decision on whether there has been an infringement, the ferry operators were given an opportunity to submit their arguments, as well as any other information by 23 April 2012. Should CCS proceed to issue a final infringement decision, the parties may lodge a Notice of Appeal to the Competition Appeal Board within eight weeks of CCS’s decision. The merits of any possible appeal remain to be seen, and whilst section 34 cases are largely factual in nature, some parties have had success in reducing the financial penalties imposed by CCS in such cases.

PROPOSED REVISIONS TO THE SINGAPORE MERGER CONTROL PROCEDURES CCS conducted a month-long public consultation between 20 February 2012 and 20 March 2012 on its proposed changes to CCS’s Guidelines on Merger Procedures (“Proposed Amended Guidelines”). The Proposed Amended Guidelines seek to increase transparency of CCS’s merger review procedures, streamline the process of merger notification in order to minimise the burdens on businesses as well as to encourage merger parties to file problematic mergers despite Singapore’s voluntary merger notification system. Notwithstanding that merger notifications are voluntary in Singapore, CCS does engage in active market surveillance on mergers and may take enforcement measures in cases where a merger which has not been notified may nonetheless infringe section 54 of the Competition Act relating to mergers that result in a substantial lessening of competition (“Section 54 Prohibition”). The key proposed amendments include: (a)

self-assessments on whether notification is necessary – for example, mergers involving two small companies with relatively low turnover in Singapore are unlikely to raise competition concerns (ie turnover of each of the parties in the financial year preceding the transaction is below SGD 5 m for Singapore, and the worldwide turnover is below SGD 10 m);

(b)

a new process whereby merger parties can obtain a confidential opinion from CCS on whether a merger is likely to raise concerns,

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CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Q2/2012

with the qualification that such advice is provided without having taken into account third party views. This new process is a welcome change, especially for confidential mergers involving listed companies; (c)

clarification on the treatment of confidential information. CCS cautions that where it considers that the confidentiality claims made in respect of the notification or any other submission are excessive or unreasonable, it may “stop the clock” on the assessment process until such time as the applicants file a nonconfidential version that meets CCS’s requirements;

(d)

streamlining information requirements to reduce information requests to the parties, and help reduce the likelihood of delays in the assessment process;

(e)

emphasising the benefits of pre-notification discussions – in particular, the Proposed Amended Guidelines make clear that where the merger parties consider that some of the requested information contained in the form which is used for the Phase 1 review (i.e. Form M1) is not relevant to the assessment of their merger, they can discuss this with CCS in pre-notification discussions;

(f)

a process whereby CCS and the merger parties can resolve competition concerns in Phase 1 by way of commitments; and

(g)

clarifying the role of third parties and complainants.

The existing Guidelines on Merger Procedures were issued by CCS to afford greater clarity to the industry on the Section 54 Prohibition. The Section 54 Prohibition came into force on 1 July 2007. For more details, please refer to our legal update here.

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SINGAPORE COUNTRY

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Singapore Indonesia Malaysia Philippines Thailand Vietnam

Q1/2012

Seagate/Samsung Merger Cleared In Singapore, following an in-depth Phase 2 assessment of the Seagate/Samsung deal, CCS cleared the proposed transaction on 29 November 2011 on the grounds that “the transaction, if carried into effect, would not infringe Section 54 of the [Competition] Act”. Section 54 is the provision prohibiting mergers which lead to a substantial lessening of competition in any market in investigations into the matter. From CCS’s investigations into the Seagate/Samsung deal, CCS found that the countervailing bargaining power of customers in Singapore would not change significantly as a result of the merger, if carried into effect. Additionally, given that other hard disk drives suppliers have spare capacity which would allow them to expand their supply of hard disk drives to customers in the event that the merged entity reduced output or increased prices, the transaction would not raise any competition concerns as a result of non-coordinated horizontal effects. Finally, CCS agreed with Seagate and Samsung’s arguments that the proposed acquisition would not raise concerns in terms of coordinated effects on competition despite the reduction in the number of market participants in the relevant market for the following reasons: (a) the hard disk drives market is of a highly innovative nature, the time between innovation cycles are short and there are great benefits of being “first to market”. As such, any attempts by market players to coordinate market behaviour would be undermined; (b) the asymmetry of market shares removes the incentive for the smallest player to participate in any coordination; (c) there is significant countervailing buyer power which could disrupt any attempt at coordination; and (d) given the differences in margins between the various hard disk types, ease of supply-side switching and ability to add capacity rapidly, any attempt at coordination between market players would require granular communication and, thus, would not be feasible. Drew & Napier acted for Seagate/Samsung in the Singapore notification of CCS.

CCS Fines Ten Modelling Agencies for Price Fixing On 23 November 2011, the Competition Commission of Singapore (“CCS”) released an infringement decision against 11 modelling agencies in Singapore for breaching Section 34 of the Competition Act (Cap. 50B) (“Act”). Section 34 of the Act prohibits, amongst other things, price fixing activities. The 11 agencies were: (1) (2) (3) (4)

Please click here to access further information on CCS’s investigation and the basis of calculation of the financial penalties.

Ave Management Pte Ltd. Bees Work Casting Pte Ltd. Catworkz International Pte Ltd. Diva Models (S) Pte Ltd.

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SINGAPORE COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update) (5) (6) (7) (8) (9) (10) (11)

Q1/2012

Electra Management Impact Models Studio Linsan Models Looque Models Singapore Pte Ltd. Mannequin Studio Pte Ltd. Phantom Management Pte Ltd. Quest Model Management

The agencies were members of the Association of Modelling Industry Professionals (“AMIP”), which was the subject of a complaint received by CCS in 2009 for fixing fees for modelling services. Out of the 11 agencies, ten were fined a total of SGD 361,596. Individual fines ranged from SGD 3,000 to SGD 132,315. One agency, Mannequin Studio Pte Ltd., qualified for immunity from financial penalty under the Competition (Transitional Provisions for Section 34 Prohibition) Regulations as it terminated its conduct within 6 months after the Act came into force by leaving AMIP. AMIP was established in 2005, and CCS’s investigations showed that AMIP and its members were engaged in a single overall agreement to fix prices for modelling services from 2005 to 2009. The price fixing activities extended to a wide variety of modelling services, for editorials, advertorials, fashion shows, print advertisements and television commercials. The anticompetitive activity affected customers such as publishers, photographers, fashion show choreographers, and fashion labels. The price fixing only stopped in July 2009, when CCS conducted inspections on several of the modelling agencies’ premises. The release of the infringement decision and fines follows the Proposed Infringement Decision (“PID”), a non-public version of the infringement decision, which CCS issued to the agencies on 18 May 2011. The agencies were given the opportunity to make written and oral representations to CCS based on the PID.

Alliance Between Singapore Airlines and Virgin Australia Approved by CCS On 19 October 2011, CCS gave its approval of a proposed strategic alliance agreement (“alliance”) between Singapore Airlines Limited (“SIA”) and Virgin Australia Pty Ltd (“Virgin Australia”). CCS’s approval came just a few days after its Australia counterpart, the Australian Competition and Consumer Commission (“ACCC”), gave in-principle approval of the deal. ACCC has since given its authorisation to the alliance on 1 December 2011. SIA currently operates flights to more than 100 destinations in 40 countries, including five destinations in Australia – Adelaide, Brisbane, Melbourne, Perth and Sydney. Virgin Australia flies to 32 Australian and 16 international destinations including the USA, UAE, New Zealand, Indonesia, Thailand, Papua New Guinea, Fiji, Samoa, Tonga, Vanuatu and the Cook Islands. However, Virgin Australia does not operate flights to Singapore.

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SINGAPORE COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Q1/2012

The alliance, which was announced in June 2011, includes, inter alia, a code sharing arrangement in which the airlines will sell each other’s seats on both international and domestic flights; offer reciprocal frequent-flyer programme benefits and lounge access; co-ordinate schedules between the airlines for routes between Singapore and Australia; and undertake joint sales, marketing and distribution activities. While CCS has not released details of its decision, the alliance is expected to result in increased competition for air passenger services between Singapore and various Australian, Pacific and trans-Tasman destinations. It is envisaged that the alliance would lead to a number of consumer benefits such as greater convenience through seamless connecting flights and more destination choices. Consumers can also expect more competitive fares, an expansion of services and products available to them and more opportunities to earn and use frequent-flyer points. Drew & Napier represented the airlines in the notification to CCS.

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SINGAPORE COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Q4/2011

The 6th East Asia Conference on Competition Law and Policy in Singapore The 6th East Asia Conference on Competition Law and Policy, jointly organised by the Competition Commission of Singapore (CCS) and the Asian Development Bank (ADB) was held on 16 September 2011. The conference was attended by government officials, business leaders, competition professionals and academics from various East-Asian jurisdictions, including China, Japan, South Korea, Vietnam, Taiwan, Malaysia, the Philippines, Mongolia and host, Singapore. Topics discussed ranged from the growth and direction of competition laws and policies in the mature competition law jurisdictions in East-Asia, e.g., South Korea’s experience in enforcing competition laws and the Japanese authority’s view on competition law policies in Japan, to the experiences of younger jurisdictions such as Vietnam, Singapore and China, which have implemented generic competition laws in the last decade (in 2005, 2006 and 2008 respectively), to, finally, the jurisdictions in which competition laws will come into force/be enforced in the near future (e.g. Malaysia and the Philippines). The conference helped shed light on key topics such as: (a)

the cooperation and allocation of cases between China’s three competition/ antitrust enforcement agencies: the State Administration for Industry and Commerce (SAIC) which is responsible for overseeing non-price-related infringements, the National Development and Reform Commission (NRDC) which is tasked with regulating price-related infringements and the Ministry of Commerce (MofCom) which oversees merger regulation, under China’s AntiMonopoly Law;

(b)

the Philippines’ steps towards establishing a new generic competition law regime, including the recent designation of a new competition authority in the Philippines and discussions on establishing a system to address the endemic exploitative practices of monopolies; and

(c)

Malaysia’s new competition law framework. Interestingly, the Chief Executive Officer of Malaysia’s newly established Malaysian Competition Commission (MyCC) indicated that the MyCC has already started receiving complaints, even before Malaysia’s Competition Act comes into force on 1 January 2012.

Drew and Napier’s Competition Law Practice Group co-head, Mr Lim Chong Kin, was invited to give a presentation on “Competition Law in New Jurisdictions, Trends and Challenges from a Business Perspective” at the conference. In his presentation, Mr Lim spoke on challenges faced by businesses when seeking to comply in jurisdictions with newly introduced competition law. He also spoke in favour of greater harmonisation across regional trading blocs such as ASEAN and East Asia, as a way to ensure that businesses can continue to operate with some measure of certainty on a regional basis.

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SINGAPORE COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

CCS Issues Infringement Employment Agencies

Decision

Q4/2011

against

On 30 September 2011, the CCS released an infringement decision against 16 employment agencies in Singapore for breaching section 34 of the Competition Act (Act). Section 34 of the Act prohibits, among other things, price fixing activities. The 16 agencies were fined a total of S$152,563, with fines for individual agencies ranging from S$5,000 to over S$42,000. The agencies were found to have participated in a meeting to restrict competition by fixing the monthly salaries of new Indonesian foreign domestic workers (FDW’s) in Singapore. The CCS commenced investigations on 20 January 2011, a day after reports came out in the Today newspaper and Channel NewsAsia (CNA) that 17 major employment agencies in Singapore were going to increase the monthly salaries for new Indonesian FDWs to S$450. On 21 January 2011, the CCS conducted simultaneous inspections at the premises of some of the agencies, and over the next week, conducted interviews with key personnel from the 16 agencies. In its media report, the CCS stated that it “does not take a view on what should be the appropriate level of monthly salaries for new Indonesian FDWs in Singapore. What is prohibited under the Act is the attempt by competitors to collectively fix the monthly salaries...”. The infringement decision was preceded by a proposed infringement decision (PID) released by the CCS on 13 May 2011. However, neither the PID nor the level of fines, were made public at that time.

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SINGAPORE COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

CCS Issues Proposed Infringement Decisions against Modelling and Employment Agencies On 13 May 2011 and 18 May 2011, the CCS issued two PIDs relating to suspected contraventions of Section 34 of the Singapore Competition Act (Cap. 50B) (the Act). The PIDs, issued to 16 employment agencies and 11 modelling agencies, foreshadow likely infringement decisions which, if issued, will bring the total number of enforcement actions taken by the CCS to six in its five year history.

Q3/2011 For the full article, please see Drew & Napier’s Legal Update http://www.drewnapier .com/pdf/200511_Leg alUpdate.pdf

The two PIDs relate to price-fixing of the monthly salaries for Indonesia foreign domestic workers in Singapore, and various modelling services provided in Singapore. Section 34 of the Act prohibits agreements that have as their object or effect the prevention, restriction or distortion of competition within Singapore. Section 34 of the Act specifically cites pricefixing as an example of prohibited agreements. Few details relating to the cases have been publicly released at this stage. Whilst the CCS has publicly announced that it has issued the PIDs, the facts upon which it intends to rely on in these decisions are only provided to the parties under investigation. According to local media reports, the employment agencies are alleged to have met to discuss collectively raising the monthly salary of new Indonesian foreign domestic workers in Singapore to S$450 to ease a supply crunch that had arisen because of competing demand from other countries. As for the modelling agencies, they are alleged to have coordinated and collectively raised prices for a wide range of modelling services in Singapore. Copies of the CCS’ PIDs are only provided to those parties subject to the potential infringement finding. Under the Competition Regulations 2007 (the Regulations), the PID must contain the facts upon which the CCS relies on in its assessment, and its reasons for arriving at the proposed decision. Parties subject to a CCS infringement finding must also be given a reasonable opportunity to make representations to the CCS with regard to the PID, which is a right that is statutorily provided for under Section 68(1)(b)(ii) of the Act. The Regulations also provide that parties have the ability to make oral representations to the CCS, if they so wish, and will be given a reasonable opportunity to inspect the documents in the CCS’ file. Following the receipt and consideration of any representations, the CCS can proceed to issue an infringement decision with any amendments it considers necessary. Representations made to the CCS at the PID stage may be of importance during any subsequent appeal to the Competition Appeal Board of a resulting infringement finding. In particular, the access provided to the CCS file is an important step in considering and assessing the weight of any evidence the CCS has in its possession to substantiate its claims. Besides playing an important role in any representations made to the CCS at the PID stage, legal counsel also have a critical role to play in the preliminary stages of the investigation (i.e. before the issuance of the PID). It is in the earlier stages where the investigation and the CCS’ thinking regarding the potential issues involved are at their formative stages, that persuasive advocacy may be most beneficial to a company in the spotlight.

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SINGAPORE COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

CCS Releases Report on Retail Petrol Market Inquiry On 19 May 2011, the CCS published a staff report summarising its findings following a recent market inquiry into the competitiveness of the Singapore retail petrol market. The market inquiry had been undertaken pursuant to the CCS’ statutory powers of investigation under section 61A of the Singapore Competition Act (Cap. 50B) (Act). The CCS’ powers of investigation under the Act include the power to conduct investigations where the CCS has reasonable grounds for suspecting that any agreement or conduct has infringed an operative prohibition in the Act, and also (as was the case here) to undertake pro-active market investigations where it has reasonable grounds for suspecting that a feature or combination of features in a market may prevent, restrict or distort competition.

Q3/2011 For more details on CCS’s market inquiry into the retail petrol market, please see Drew & Napier’s Legal Update http://www.drewnapier .com/pdf/300511_Leg alUpdate.pdf

These grounds of suspicion were founded upon common public perception that the retail petrol market in Singapore is uncompetitive or even collusive. In particular, many consumers are under the impression that retail petrol prices are similar among competitors, move in tandem across companies (known as price parallelism) and rise more and faster than they fall (known as the rocket-and-feather phenomenon). In this instance, the CCS’ market inquiry concluded that, although the market structure and conditions of retail petrol in Singapore suggest a material risk of collusive or coordinated practices among the market players, the current facts and data do not present any evidence that the petrol companies are engaging in collusive behaviour. Ultimately, the CCS’ findings in this market inquiry mean that no enforcement action will be taken at the present time. Notwithstanding this, it was clearly indicated in the report that the views contained within the report would not in any way restrict or confine the CCS’ ability to enforce the Act if any anti-competitive activity comes to the CCS’ attention. In particular, the CCS highlighted that it reserves the right to carry out competition assessment which may deviate or differ from the views or findings expressed in the study. The CCS has further indicated that it will continue to monitor developments in the sector.

Joint Venture (JV) Agreement between All Nippon Airways (ANA), Continental Airlines (Continental) and United Airlines Cleared by CCS The CCS issued a clearance decision on 4 July 2011 in relation to the notification for decision filed by ANA, Continental and United Airlines (collectively, the Applicants) on their JV Agreement. The JV Agreement is intended to bring together specific routes of ANA, Continental and United. After the formation of the JV, the Applicants will jointly set capacity, schedules and fares for certain transpacific routes. All revenues from the routes brought together will be pooled and then redistributed to the individual carriers according to a formula to be established by the Applicants. The aim of the JV Agreement is to establish "metalneutrality" between the Applicants, in that each will become indifferent as

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CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Q3/2011

to which airline operates the underlying metal (i.e. the aircraft) on each route. Drew and Napier represented the Applicants in the notification for decision to the CCS.

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SINGAPORE COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

CASE SUMMARY

Q2/2011

(as published in the D&N Competition Law Quarterly Update)

Singapore Competition Appeal Board Reduces Penalties in Its First Decision On 24 March 2011, the Singapore Competition Appeal Board (CAB) issued its first decisions on the appeals against the CCS infringement decisions relating to price fixing amongst express bus operators and their trade association for bus services between Singapore to Malaysia and Southern Thailand. The CCS had imposed a collective fine of S$1.69 million on the 17 parties that were found guilty of anticompetitive behaviour. Six parties had appealed to the Competition Appeal Board through three separate appeals and all had their penalties reduced by varying degrees. However, the appeals by four parties challenging the CCS' liability finding were rejected. Senior Counsel Cavinder Bull and Scott Clements from Drew & Napier LLC, represented Regent Star Travel Pte Ltd (Regent Star) and Transtar Travel Pte Ltd (Transtar), in the appeal on the amount of financial penalty imposed. Regent star secured the largest financial penalty reduction of 90% amongst all the appellants while Transtar obtained a 40% reduction. The penalties were reduced on the basis that the CCS had overstated the relevant turnover and incorrectly defined the relevant market used for the purposes of calculating relevant turnover. Senior Counsel Cavinder Bull noted that “while this is a significant result for our clients, the impact of the decision will extend beyond the present case.” He added that the case will influence the way the CCS calculates financial penalties in future. Please refer to Drew & Napier's Legal Update at http://www.drewnapier.com/pdf/250311_LegalUpdate.pdf for more.

CCS Clears Acquisition

Samwoh

Corporation

Pte

Ltd

On 27 January 2011, the CCS cleared the completed acquisition of control by Samwoh Corporation Pte Ltd (Samwoh) of Highway International Private Limited (Highway). The relevant product markets involved are asphalt premix and the provision of asphalt premix laying services in Singapore. Earlier on 7 June 2010, the CCS notified Samwoh that it would proceed to a Phase 2 review of the notified acquisition as the Phase 1 review had highlighted possible competition concerns. In response, Samwoh offered a commitment to divest or otherwise dismantle one of its asphalt manufacturing plants to address the competition concerns by the CCS and therefore avoid a lengthy Phase 2 review. CCS however continued with its assessment, considering views of third parties, including competitors, customers and relevant authorities as well as the proposed commitment. Almost eight months later, the CCS concluded that the acquisition would not infringe section 54 of the Singapore Competition Act. Additionally, based on evidence that it received, the CCS also did not necessitate the acceptance of Samwoh's proposed commitment.

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SINGAPORE COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Q2/2011

CCS Clears F&N Foods Proposed Acquisition of King’s Creameries On 17 December 2010, the CCS cleared the proposed acquisition by F&N Foods Pte Ltd, a wholly owned subsidiary of Fraser and Neave Limited, of the issued share capital in King’s Creameries (S) Pte Ltd (proposed acquisition). For the purposes of the merger assessment, the CCS had rejected the submitted product market and instead defined it as: (a)

the sale and distribution of industrial ice cream for impulse and takehome consumption; and

(b)

the sale and distribution of industrial ice cream to catering customers,

in respect of the sale and distribution of ice cream; and (c)

the manufacturing of ice cream for impulse and take-home distribution; and

(d)

the manufacturing of ice cream for catering distribution,

in respect of the manufacturing of ice cream. The CCS was also of the view that the relevant geographic markets for the manufacturing as well as the sale and distribution of industrial ice cream are likely to be those manufactured globally and sold in Singapore. Based on the above defined relevant market, the presence of factors such as the intense nature of competition in the market, the presence of strong countervailing power and low barriers to entry, amongst other factors, led the CCS to conclude that the proposed acquisition, if carried into effect, will not infringe the section 54 prohibition.

No Action against SIA Cargo Staff

In Singapore

Singapore Airlines (SIA) Cargo, which agreed in November 2010 to pay a US$48 million (S$60 million) fine imposed by the US Department of Justice (DoJ) for its role in a price-fixing conspiracy, announced that it will not take action against any staff in connection with the case. SIA believes its executives ‘have acted in good faith and without any personal gain’. It is understood that the US DoJ will also not press charges against any SIA Cargo employee.

Participation in a cartel is not a criminal offence under the Singapore Competition Act (Act). While the individual employees involved may not be personally liable under the Act, they may be subject to disciplinary actions by their companies. Companies may find it useful to stipulate their no-tolerance policy in their staff compliance manual to highlight to staff the seriousness of such actions.

SIA Cargo also confirmed that it would fight similar charges in Europe and three other countries and reiterated that its US plea was for ‘limited conduct and limited liability’. Presently, SIA Cargo has appealed against the decisions in Europe and South Korea where it was fined €74.8 million (S$130 million) and 2.35 billion won (S$2.7 million) respectively. Notwithstanding this, SIA indicated that it has set aside S$199 million to pay these fines. Investigations are still pending in Australia and New Zealand. To date, 21 airlines and 19 executives have been charged in the US for engaging in anticompetitive behaviour by fixing fuel and security surcharges and more than US$1.7 billion (S$2.1 billion) have been levied in fines.

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CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Q1/2011

Block Exemption for Liner Shipping Agreements Extended to 31 December 2015 On 16 December 2010, the Minister for Trade and Industry (Minister) extended the Competition (Block Exemption for Liner Shipping Agreements) Order 2006 (BEO) for five years to 31 December 2015, without substantial changes to its scope. The CCS has earlier recommended the extension of the BEO to the Minister on the basis that the BEO remains relevant and brings about substantial benefits for local shippers and the Singapore economy. The revised Competition (Block Exemption for Liner Shipping Agreements) (Amendment) Order 2010 can be found at http://app.ccs.gov.sg/cms/user_documents/main/pdf/Competition%20Act% 20(BEO%202010).pdf. On the same day, the CCS published its response to the earlier public consultation of 14 September 2010 on its proposed recommendations to the Minister to extend the BEO. After reviewing the responses to this public consultation, the CCS maintained its view that liner shipping agreements that fulfil the requirements set out in the BEO continue to satisfy the criteria set out under section 41 of the Competition Act (Cap 50B) (Act), and qualify for exemption from the section 34 prohibition against anticompetitive agreements. The recommendation by the CCS came despite the concerns by trading firms that the proposed five-year extension of the BEO will keep freight rates high or result in further increases that would ultimately benefit shippers at the expense of local businesses. It was also highlighted that Asia is home to the most liner conferences and discussion agreements that are typically used to fix freight rates, tariffs and surcharges. However, these oppositions were countered by the Singapore Shipping Association who claimed that “the days of shipping cartel’s price-fixing are long past” and “[t]oday’s liner shipping agreements are non-binding. Member lines in these co-operative agreements have the full freedom to determine individual freight rates and charges for the carriage of goods in international shipping.” Shipping lines also expressed support for the BEO citing efficiencies and innovations that help improve services, control costs and temper market volatility. Overall the CCS was of the view that the rationale for the BEO in 2006 remains relevant and continues to fulfil the criteria under section 41 of the Act for the following reasons: •

As a small and open economy, the presence of an extensive network of liner shipping companies has contributed significantly to Singapore’s status as a premier international maritime centre for liner shipping operations;

•

The presence of a large number of major shipping companies contributes to Singapore’s success as a transhipment hub that brings important flow through benefits for local shippers, businesses and the Singapore economy; and

•

Antitrust exemption for liner shipping continues to be the regulatory norm globally and a block exemption brings regulatory certainty to the shipping industry.

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CASE SUMMARY

Q1/2011

(as published in the D&N Competition Law Quarterly Update)

For more information on the CCS’ response to the feedback from the public consultation, please refer to Drew & Napier’s Legal Update at http://www.drewnapier.com/pdf/201210_LegalUpdate.pdf

F&N Foods Creameries

Proposes

to

Acquire

King’s

The CCS is conducting a Phase 1 review of the proposed acquisition by F&N Foods Pte Ltd (F&N Foods), a wholly owned subsidiary of Fraser and Neave Limited (F&N), of the issued share capital in King’s Creameries (S) Pte Ltd (King’s) (collectively, the “Parties”). The Parties notified the CCS of the proposed acquisition on 22 October 2010. The Parties submit that given the intense nature of competition in the market for the sales and distribution of ice cream, strong countervailing buyer power of customers, low barriers to entry, and other competitive characteristics of the relevant market, the notified acquisition will not result in a substantial lessening of competition. The CCS’ invitation for views on the notification has closed on 9 November 2010. Phase 1 review typically takes no more than 30 working days to complete.

JAL and American Airlines Seek Decision from CCS On 6 December 2010, Japan Airlines International Co. Ltd. (JAL) and American Airlines Inc. (American Airlines) applied to the CCS for decision as to whether their Alliance Agreement and Joint Business Agreement infringe section 34 of the Competition Act which prohibits anticompetitive agreements. The Alliance Agreement and Joint Business Agreement seek to integrate the transpacific businesses of JAL and American Airlines beyond mere code-sharing. The airlines claim that the two agreements will generate significant efficiencies and provide considerable consumer benefits through an enhanced and more competitive range of services to air transportation passengers, including those travelling to and from Singapore. JAL and American Airlines are members of the oneworld alliance, which is presently the smallest out of the three global airline alliances. JAL and American Airlines’ proposal to cooperate commercially on flights between North America and Asia while continuing to operate as separate legal entities has received antitrust immunity in Japan and preliminary antitrust immunity in the US.

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CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

CCS Decides Against Medical Fee Guidelines On 18 August 2010, the CCS published its final Statement of Decision in respect of the Singapore Medical Association’s (SMA) Guidelines on Fees 1 2 (GOF). Based on inputs from the SMA and an in-depth market study led by Drew & Napier LLC, the CCS concluded that the GOF infringed section 34 of the Competition Act, and did not benefit from the Net Economic Benefit (NEB) exclusion. However, the CCS decided that no enforcement action was necessary as the GOF was removed voluntarily by the SMA since April 2007.

Q4/2010 Please refer to Drew & Napier Legal Update on the CCS’ decision on SMA’s GOF http://www.drewnapier .com/pdf/240810_Leg alUpdate.pdf

In reaching its decision that the GOF infringed section 34 of the Competition Act, the CCS concluded that the GOF had the object of restricting competition. In particular, the CCS took into account the following: • • • • •

the purpose of the GOF was to influence prices in the private medical services sector to be within an “acceptable range”; despite the voluntary nature of the GOF, the SMA had an objective mechanism in place to foster compliance among medical practitioners; the GOF consisted of fees that might have been fashioned with a degree of self-interest and not actual price data; inherent conflict of interest for SMA, a body of doctors, to set prices given their financial interest in the level of the GOF; and the GOF did not promote better quality of medical services.

The CCS further noted that on the facts, the GOF had been effective in influencing prices. The CCS also concluded that the GOF did not benefit from the NEB exclusion and stated that it preferred independent, objective and unbiased initiatives to address any information asymmetry problems. This is the first time that the CCS has issued a negative decision in relation to a notified agreement. It followed the Ministry of Trade and Industry’s (MTI) decision on 7 June 2010 to reject an appeal from the SMA to exclude its GOF from the Competition Act.

CCS Proposes to Extend Block Exemption for Liner Shipping Agreements for Five Years The CCS has issued a consultation paper on 14 September 2010 on its intention to recommend to the Minister an extension to the existing block exemption for liner shipping agreements for another five years till 31 December 2015. Liner shipping agreements are agreements where vesseloperating carriers agree to co-operate in providing liner shipping services. In July 2006, pursuant to section 36 of the Competition Act (Cap. 50B), the

1

2

Decision available at: http://app.ccs.gov.sg/cms/user_documents/main/pdf/SMASD%20(18%20Aug%202010).pdf, accessed 27 September 2010. The market study took into account the inputs of various stakeholders in the medical services sector, such as the Ministry of Health, the Singapore Medical Council, hospitals (both restructured and private), various private specialist and GP clinics, various insurance companies as well as the Consumer Association of Singapore.

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SINGAPORE COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Q4/2010

Minister for Trade and Industry issued a block exemption for liner shipping agreements. This block exemption exempts a category of liner shipping agreements from the section 34 prohibition against anticompetitive agreements. Under the block exemption, parties to liner shipping agreements will be able to discuss and agree on the rationalisation and management of capacity and prices, subject to certain conditions and obligations. The current block exemption will expire on 31 December 2010. Besides proposing to recommend an extension to the duration of the block exemption and minor changes to fine-tune the filing arrangements required under the block exemption, the CCS has left the scope of the block exemption largely unchanged. In coming to this proposal, the CCS stated that antitrust exemptions remain the regulatory norm for the liner industry globally, and for Singapore’s trade partners. However, the CCS recognised that there have been changes in the international regulatory environment in respect of conference-type activities, in particular, in the European Union. Notwithstanding this, the CCS stated that in view of the global economic downturn that has impacted the liner industry significantly, it requires more time to assess the impact of regulatory changes in the European Union. The CCS therefore considers that the rationale for the block exemption in 2006 remains relevant, as the presence of an extensive network of liner shipping companies has contributed greatly to Singapore’s status as a premier international maritime centre for liner shipping operations. The CCS also highlighted the flow-through benefits for the Singapore economy, stating that a block exemption will provide certainty to the shipping industry. The CCS took the view that this would contribute to economic progress, as required under section 41 of the Competition Act. The consultation closed on 4 October 2010 and is pending the CCS’ review of the comments received through the consultation.

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SINGAPORE COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Q3/2010

CCS Issues Infringement Decision to Electrical and Building Works Companies On 4 June 2010, the CCS issued an infringement decision against 14 electrical and building works companies for collusive tendering in respect of 10 electrical and building works projects for commercial and residential properties during the period of July 2007 to April 2009. Collusive tendering or bid-rigging is considered to always have an adverse appreciable effect on competition. While this is the second infringement decision against collusive tendering, this is the first case in which the CCS has granted total immunity in respect of financial penalties to a whistle blower under its leniency programme. The CCS began its investigations after Arisco Engineering & Maintenance Services (Arisco), one of the companies involved in the cartel informed the CCS that its previous management had entered into bid-rigging arrangements with other companies to coordinate the price of quotations. The CCS acted on this lead and carried out surprise inspections at the premises of the companies, conducted interviews with the relevant personnel and issued notices seeking information and documents. As a result, 13 other companies were found guilty of participating in the bid-rigging scheme and were fined a total of $187,592.94. Arisco was spared of all financial penalties as it met all the conditions of the CCS’ leniency program.

CCS Issues Infringement Decision to SISTIC On 4 June 2010, the CCS issued an infringement decision against SISTIC for allegedly abusing its dominant position in the market for open ticketing services via various exclusive agreements. SISTIC was fined S$989,000, and was directed to modify the exclusive agreements in question by 4 August 2010, by removing any clause(s) that may require these parties to use SISTIC exclusively. SISTIC has announced that it has instructed Cavinder Bull S.C. of Drew & Napier LLC, to lead the appeal to the Competition Appeal Board.

MTI Rejects Appeal to Exclude Medical Fee Guidelines On 7 June 2010, Singapore’s Ministry of Trade and Industry (MTI) rejected an appeal from the Singapore Medical Association (SMA) to exclude its Guidelines on Fees (GOF) from the Competition Act. The SMA voluntarily withdrew those pricing guidelines in 2007 after its legal advisers cautioned that the GOF could potentially breach the Competition Act. The SMA had submitted that the GOF, which applied only to the private sector, served as a reference for patients on reasonable prices, and kept costs low by preventing overcharging. This was rejected by the MTI which noted that “the government has put in place various measures that are more effective and direct than the GOF in addressing the key problem of information asymmetry in

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CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Q3/2010

the healthcare market, without the potential risk of anticompetitive behaviour.” Some of the measures put in place by the Ministry of Health (MOH) to improve the level of information on fees include, publishing actual medical fees on its website, requiring hospitals to provide financial counselling to patients and for medical bills to be itemised. The MTI was of the view that “these measures provide more information as they are based on actual prices. On the other hand, the guideline on fees is a system of recommended fees set by a group of doctors, which creates risks of anticompetitive behaviour.” In addition, the MTI felt that the GOF was also unlikely to play a significant role in keeping healthcare costs down as it only applied to the private sector whereas the public sector provides 80% of hospital services. The MOH had also assessed the primary care segment (provided largely by general practitioners in private clinics) to be competitive as recurring visits for common ailments allow patients to be familiar with what constitutes a “reasonable” price. Finally, any complaints about over-charging that bring disrepute to the medical profession will be investigated by the Singapore Medical Council. The outcome of SMA’s concurrent notification to the CCS for a decision that the GOF does not contravene the section 34 prohibition is still pending.

CCS Clears Fresenius Med Care Acquisition of Asia Renal Care On 14 July 2010, the CCS approved the notified acquisition by Fresenius Med Care Beteiligungsgesellschaft mbH of 100% of the shares of Asia Renal Care, Ltd. It was submitted that the relevant goods or services are (i) dialysis services to end-stage renal disease patients in Singapore and (ii) haemodialysis products and peritoneal dialysis products. The CCS concluded that the acquisition would not infringe the section 54 prohibition against anticompetitive mergers.

CCS Clears Novartis Acquisition of Alcon On 20 May 2010, the Drew & Napier competition team helped Novartis AG (Novartis) achieve competition clearance for its proposed acquisition of 52.15% of the issued and outstanding shares of Alcon Inc from Nestle S.A.. While the CCS noted that the post merger market shares of Novartis will exceed the thresholds set out in the Guidelines on the Substantive Assessment of Mergers, it considered that the presence of factors such as low barriers to entry, countervailing buyer power and others are likely to constrain any exercise of post-merger market power. Accordingly, the CCS assessed that the merger, if carried into effect, will not infringe the section 54 prohibition of the Act against anticompetitive mergers.

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SINGAPORE COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Q2/2010

Cases Investigated: 2006 - 2009 The CCS has reported that it has received 104 cases from members of the public since the enactment of the Competition Act in 2006. It has closed 76 cases as at 20 December 2009 and is following up on the remaining 28 cases.

CCS Clears Chemoil’s Acquisition of Glencore International On 25 February 2010, the CCS cleared the notified acquisition by Glencore International AG (Glencore) of 50.81% of all the issued ordinary shares in Chemoil Energy Limited (Chemoil), through its subsidiary, Singfuel Investment Pte. Ltd from the Chandran Family Trust as well as the mandatory conditional cash offer for all the shares other than those owned, controlled or agreed to be owned by Glencore. The CCS concluded that the acquisition would not infringe the section 54 prohibition against anticompetitive mergers. Glencore and Chemoil submitted that the relevant markets include the worldwide supply of fuel oil, or on a narrower basis, marine fuel and the provision of bunkering services in Singapore and Malaysia.

Phase 2 Review for Proposed Joint Venture

In Singapore

The CCS has completed its Phase 1 review of the notification of the creation of a joint venture between Samwoh Resources Pte Ltd, Mount Kawi Pte Ltd, Poly Resources Pte Ltd and Zhan Chang Holdings Pte Ltd (the Parties) without reaching a decision.

The CCS has indicated that it would endeavour to complete a Phase 1 review within 30 working days and a Phase 2 review within 120 working days. The time period would start upon the receipt of the completed Form M1/M2 and the relevant filing fee by the CCS.

The joint venture was proposed for the initial purposes of trading and procuring 20mm granite aggregates (construction materials) and subsequently for the marketing and distribution of these construction materials. The Parties submitted that the proposed joint venture would not result in a substantial lessening of competition due to the presence of various factors including the number of competitors with strong competitive advantages, intense price competition, strong countervailing buyer power and others. As the CCS is unable to reach a decision that the notified joint venture does not substantially lessen competition during the Phase 1 review, it would inform the notifying parties of its intention to enter into a more substantive Phase 2 review and for the parties to submit a Form M2 within a specified timeframe.

CCS Seeks Views on Proposed Acquisition On 8 April 2010, the CCS invited interested parties to submit their views on Novartis AG’s (Novartis) proposed US$28.1 billion acquisition of a 52.15% stake in Alcon Inc (Alcon). Novartis is a global healthcare products company, while Alcon is a global leader in eye-care products. The merger parties submitted that the proposed acquisition will bring about benefits as their activities are to a large extent complementary. In particular, Novartis is active in contact lenses while Alcon is not, while Alcon is active in intra-

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SINGAPORE COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Q2/2010

ocular lenses whereas Novartis is not. Through the acquisition, Novartis aims to enhance its global eye-care business activities, which is a dynamic and fast-growing sector globally. The CCS’ invitation for written comments closed on 14 April 2010 and the outcome of the notification is pending. Drew & Napier’s Competition Law Practice Group has been appointed as the joint representative for the merger parties for the purpose of the merger notification to the CCS.

CCS Seeks Views on Proposed Acquisition in the Asphalt Market On 9 April 2010, the CCS invited interested parties to submit their views on the acquisition of control by Samwoh Corporation Pte Ltd (Samwoh) over Highway International Private Limited (Highway). The merger parties submit that the relevant markets include the supply of asphalt premix in Singapore and the market for the provision of asphalt laying services in Singapore. The merger parties further consider that the acquisition would not result in a substantial lessening of competition as there is intense competition in the market, strong countervailing buyer power of customers, low barriers to entry and expansion, and the presence of other competitive characteristics.

No Intervention for 2010 World Cup Rights in Singapore Singapore’s Acting Minister for Information, Communications and the Arts had rejected calls for the government to intervene and break the impasse between the local telcos and FIFA (soccer’s world governing body) in their on-going negotiations for the World Cup 2010 live telecast rights. The Minister regarded the bid as a commercial decision that should be left to market forces. SingTel and Starhub had earlier put in a joint bid for the World Cup rights but had baulked at FIFA’s reported asking price of S$40 million for all matches, which would be more than double of what Starhub paid for the 2006 World Cup telecast rights. This follows an intense fight between the two pay-TV operators for the telecast rights to the English Premier League which reportedly resulted in a significant increase in the fees paid. The Media Development Authority (MDA) indicated that government funding for public service broadcast programmes would not be utilised to bring the World Cup to Singapore as it did not meet funding criteria of “promoting social objectives and national harmony”.

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SINGAPORE COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Q2/2010

CCS Reviews Block Exemption in the Maritime Industry Singapore’s first and only block exemption order that exempts a category of liner shipping agreements (BEO) from the section 34 prohibition against anti-competitive agreements is due to expire at the end of this year. The BEO was first issued by the Minister for Trade and Industry in July 2006, following the recommendation of the CCS that the BEO would help bring Singapore’s regulatory environment in line with other major jurisdictions. Importantly it would help to preserve Singapore’s status as a premier international maritime centre, and ensuring that businesses in Singapore would enjoy reliable and competitively priced liner shipping services of satisfactory frequency. The CCS is commissioning a study to understand the impact of the BEO on Singapore’s economy and make recommendations on whether the BEO should be revised. Concurrently, the CCS is gathering information from key stakeholders. A public consultation may be conducted to allow stakeholders to comment on any proposed changes. It is significant that the review of the BEO comes at a time when there have been major changes to review and/or remove existing maritime antitrust exemption provisions. It remains to be seen how these changes would shape the application of competition law to the maritime industry in Singapore.

Bid Rigging by Electrical and Building Works Companies Uncovered On 11 March 2010, the CCS issued a PID against 14 electrical and building works companies for infringing section 34 of the Competition Act, which prohibits anticompetitive agreements. In this case, the companies were found to be involved in bid rigging or collusive tendering. This is the second PID issued within the span of three months by the CCS. The CCS’ investigation revealed that typically, one of the parties (requester) would request one or more other cartel members (supporter) to assist in providing a cover bid to increase the requester’s chances of winning the bid for providing electrical or building works for a project. The requester would even prepare the quotation for the supporter. There were also instances where the requester would inform the supporter of his quotation price so that the supporter would quote higher. CCS has uncovered such bids placed by these parties for numerous projects and it appears that the practice of requesting and providing cover bids is prevalent in the electrical and building works market. It was reported in local newspapers that the CCS investigation was the result of a leniency application by Arisco Engineering & Maintenance Services, which was one of the companies involved in the bid rigging arrangements. Under the leniency programme offered by the CCS, Arisco has been granted total immunity from financial penalties. The PID is a written notice setting out the factual information gathered by

In Singapore Under the CCS’ leniency programme, the 1st undertaking to provide CCS with evidence of the cartel activity before an investigation has commenced may receive total immunity from financial penalty. After an investigation has commenced, the 1st undertaking to provide CCS with evidence may still qualify for total immunity while subsequent leniency applicants may receive up to 50% reduction in the financial penalty. Please refer to Drew & Napier’s legal update on the CCS Leniency Programme

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SINGAPORE COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update) the CCS during the course of its investigations, and the reasoning as to why a breach of the Competition Act is suspected to have occurred. Whilst the PID does not represent a formal decision of the CCS, it is highly indicative of the CCS’ views at this point in time. It is issued to give the parties involved an opportunity to put forth their arguments to CCS and submit information that they wish CCS to consider. The parties have six weeks from the receipt of the PID to make representations or argue the case set out by CCS.

Q2/2010 http://www.drewnapier. com/pdf/130109_Comp Law_LegalUpdate.pdf for more details. It is however important to note that leniency does not protect the whistle blower from third parties that consider themselves harmed by the anticompetitive activities from bringing a claim under a private right of action.

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SINGAPORE COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Q1/2010

CCS Imposes S$1.69 Million Fine for Fixing Prices of Coach Tickets In Singapore, on 3 November 2009, the CCS imposed fines totalling S$1.69 million on 16 coach operators and their trade association, the Express Bus Agencies Association (EBAA), for engaging in price-fixing of coach tickets. Following publication in the Lianhe Zaobao on 6 June 2008 of an article regarding the EBAA’s announced increase in the charges for fuel and insurance, the CCS commenced investigations against the 17 parties. This included concurrent unannounced dawn raids at the premises of several of these parties, which uncovered information indicative of price-fixing arrangements The CCS found that the coach operators, facilitated by the EBAA, had agreed to fix the prices of coach tickets for travelling between Singapore and various destinations in Malaysia from 2006 to 2008 through regular EBAA meetings. (For details, please see our competition law update at http://www.drewnapier.com/pdf/031109_CCSFinesLegalUpdate.pdf)

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SINGAPORE COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Q4/2009

Express Bus Operators and Bus Association Submit Representations On 31 July 2009, six weeks after the CCS issued 16 express bus operators and the Express Bus Agencies Association (the parties) with a PID, the parties submitted written representations to the CCS. The PID relates to suspected price fixing of express bus ticket prices between Singapore and a number of destinations in Malaysia. The objective of the PID is to provide the parties involved with an opportunity to make representations to the CCS and submit information that they wish the CCS to consider. The case is pending CCS’ final decision.

Singapore Law Society Abolishes Fee Guidelines for Conveyancing On 23 September 2009, the Council of the Law Society announced that the fee guidelines for conveyancing transactions would be removed from 1 October 2009. These fee guidelines were introduced six-and-a-half years ago after fixed scale fees were removed. The fee guidelines were intended as a transitional measure for lawyers to have a gauge of the fair and reasonable fee to charge for conveyancing transactions. The guidelines had placed legal fees for conveyancing to approximately 30% below the market rate and led to undercutting by some lawyers. The Law Society explained that its decision stemmed from the belief that “all fees should be freely negotiated between solicitors and their clients without guidelines from the Council (other than statutory guidelines); there is no reason to treat fees for conveyancing transactions differently”. It further added that home buyers need not worry about charges for conveyancing as even without the guidelines, lawyers have an ethical obligation to charge fairly. After the Singapore Competition Act came into force in 2006, other associations such as the Singapore Medical Association and the Singapore Institute of Estate Agents had also removed their fee guidelines amidst concerns that fee guidelines were anti-competitive.

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SINGAPORE COUNTRY

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Singapore Indonesia Malaysia Philippines Thailand Vietnam

Q3/2009

Singapore issues PID to Express Bus Operators and Bus Association The CCS, on 16 June 2009, issued 16 companies (mostly comprising of express bus service operators between Singapore and Malaysia) and a bus association, with a PID. The PID relates to suspected price fixing of express bus ticket prices between Singapore and a number of destinations in Malaysia. Price fixing is a breach of section 34 of the Competition Act, which, amongst other things, prohibits agreements between competitors which prevent, restrict or distort competition within a relevant market in Singapore. The PID contains factual information gathered by the CCS during the course of its investigations, and the reasoning as to why a breach of the Competition Act is suspected to have occurred. Whilst the PID does not represent a formal decision of the CCS, it is highly indicative of the CCS’ views at this point in time. The final decision will be subject to the CCS’ consideration of any representations by the parties involved. In this case, the parties involved have been afforded six weeks to make such representations. Price fixing is considered a ‘hard core’ offence in Singapore and the CCS states in its Guidelines to the Enforcement of Section 34, that such arrangements will, by their very nature, be regarded as restricting competition appreciably.

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SINGAPORE COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Notification for Decision by Singapore Medical Association On 5 February 09, the Singapore Medical Association (SMA) submitted a Notification for Decision regarding a set of Guidelines for Fees for Doctors in Private Practice in Singapore (GOF) it had previously issued. The GOF was retracted in 2007 by SMA on its own accord as it believed that the GOF was likely to contravene the Competition Act. The GOF recommended a range of fees (e.g. consultation fees, prescription fees, medical report fees, surgical fees, and doctor’s court appearance fees) for medical services and procedures in Singapore. According to SMA, the purpose of the GOF was to safeguard the interests of patients through greater transparency of medical fees to reduce the information asymmetry between patients and medical practitioners. The SMA has presently argued that the GOF would not breach the Competition Act as there are net economic benefits and public interest considerations arising from the GOF. The CCS has since appointed a set of consultants to review the competitive landscape in the medical services sector, in particular, the implications of fee guidelines for medical services in Singapore.

Q2/2009 In Singapore Section 44 of the Competition Act allows parties to an agreement to seek a decision from CCS whether the agreement infringes Section 34 of the Competition Act agreements preventing, restricting or distorting competition. The prescribed fees for filing for a decision is SGD 5,000. Should the CCS consider that more information is required to assess the application, it may require the notification parties to submit a further filing with the additional information it requires. The filing fees for this additional filing is SGD 40,000.

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SINGAPORE COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Q1/2009

Public Consultation on Enhanced Leniency Programme The CCS plans to introduce a Marker system and a Leniency Plus system to the existing leniency programme to enhance the effectiveness of CCS’ enforcement action against cartels. The Marker system allows a potential leniency applicant to keep its place in the leniency queue for a given period of time, while it gathers the necessary information and evidence for the leniency application. The Leniency Plus system encourages cartel members under investigation for a cartel activity to report on involvement in another cartel activity. In so doing, a cartel member can obtain a discount on the financial penalty that may be imposed by CCS for its involvement in the first cartel activity, in addition to full immunity from financial penalty for the second reported cartel.

Market Study on Retail Mall Rental Space in Singapore The CCS found that there are unlikely to be competition concerns in the retail mall rental space market in Singapore at this juncture after completing a market study on this issue in the third quarter of 2008. The study considered the key retail mall players, business practices and impact of REITS and Property Funds on retail mall rental and competition within each of the following segments: (a) regional malls, (b) city malls, (c) suburban malls, (d) neighbourhood, (e) specialty malls, (f) entertainment, (g) warehouse retail scheme/standalone and (h) others.

Please refer to Drew and Napier LLC’s Legal Update http://www.drewnapier .com/pdf/181208_Leg alUpdate.pdf for further details.

The study found that no single entity held more than 25% of each market segment. It also found that while currently, tenants typically do not have much bargaining power in terms of leasing terms and conditions given limited supply and rising demand, the market was undergoing rapid evolution with approximately 19% more retail space becoming available over the next few years. Uncertain global economic outlook could change market conditions in the near future too. It further found that the emergence of REITs and property funds since 2002 has generally raised the level of professionalism in the industry. Based on these findings, the CCS was of the view that there are unlikely to be competition concerns in the retail mall rental space market at this juncture.

No CCS Ruling on Medical Fee Guidelines In response to the Singapore Medical Association’s (SMA) withdrawal of its Guidelines on Fees (GOF) due to competition concerns, the CCS has once again clarified on 3 November 2008 that it has not made any ruling on the GOF. On 1 April 2007, the SMA announced its decision to withdraw its guidelines on fees as its legal advisors had advised that these guidelines contravened the

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CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Q1/2009

Competition Act (Section 34(2)(a) of the Competition Act). In its letter to its members dated 2 April 2007, the SMA also cited advice from the Ministry of Health and response from the CCS as reasons for this decision. The CCS clarified that while its general stance is that price recommendations by industry bodies are regarded by competition agencies in most countries as harmful to competition, its ruling is always on a case-by-case basis. Given that SMA had not applied to CCS for any guidance with regard to its GOF, the CCS has not made any ruling on the GOF issued by the SMA. The CCS encouraged companies or associations to consider applying to the CCS for guidance if they are uncertain whether any agreement or conduct is likely to infringe the Competition Act. This will allow CCS to initiate a study of the agreement or conduct in light of the industry and market conditions before it can specifically conclude whether any practice is anti-competitive and not beneficial economically. The CCS states that the application cost for guidance is S$3,000, which will be used to cover part of the costs that the CCS will incur.

Six Pest Control Companies Give Assurances on Independent Pricing On 8 September 2008, six pest control companies issued a media statement assuring the CCS that the prices for their services will be decided independently by the companies.

Please refer to Drew and Napier LLC’s Legal Update http://www.drewnapier .com/pdf/10Jan2008_ Legal_Update.pdf for further details.

Pursuant to the first infringement decision issued by the CCS in January 2008, these companies were fined a total of S$262,759.66 by the CCS for bid rigging and collusive tendering arrangements. The CCS subsequently investigated these companies’ practice of charging a minimum price of S$12 per square metre and S$70 per linear metre respectively for pre-construction and post-construction termite services using “Agenda”, a type of termiticide. In light of the assurances provided by the companies, the CCS has decided not to pursue its investigations but has informed the companies that it will take appropriate action if there is a breach of the assurances.

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CASE SUMMARY

Q3/2008

(as published in the D&N Competition Law Quarterly Update)

CCS Objects to School Bus Surcharge) Recommendation

Fare

(Fuel

The CCS took issue with the recommendations of the Singapore School Transport Association (Association) that its members increase the price of scheduled school bus services by S$10 to S$15 per month, in the light of escalating diesel prices.

Please refer to Drew and Napier LLC’s Legal Update http://www.drewnapier .com/pdf/040808_CC SLegalUpdate.pdf for further details.

In its press release dated 1 August 2008, the CCS stated that “price recommendations or guidelines tend to restrict independent pricing decisions. The circulation of such recommended prices by a trade association, even if it is nonbinding, is likely to prompt industry players to cluster their prices around, if not exactly matching, the recommended prices. This is not helpful to free competition”. In particular, the CCS rejected the argument that price recommendations prevent over-charging by informing customers what the “market rate” should be. The CCS believed that it is better for customers to select the most suitable deal for themselves based on their own research rather than depending on pricing guidelines issued by associations which, in reality, do not prevent errant sellers from over-charging. The CCS has since met with the Association on this issue. The Association has been advised to take appropriate remedial action.

Singapore Institute of Estate Agents Advised by the CCS to Abolish Fee Guidelines The CCS, in a press release issued on 5 August 2008, has advised the Singapore Institute of Estate Agents (IEA) to abolish its recommendations relating to professional fees/commissions for real estate agents/agencies. The IEA has also been advised “not to encourage or facilitate any discussion, agreements or arrangements on fees and other anticompetitive restrictions amongst its members or industry players”. The IEA’s established practice was to recommend the level of fees and fee structure in relation to the sale, rental, assignment and management of properties. The IEA had applied to the CCS for guidance as to whether this practice of recommending fees and fee structures could potentially raise questions of compatibility with section 34 of the Competition Act (Cap. 50B) which prohibits agreements between companies, decisions by associations or concerted practices which have, as their object or effect, the prevention, restriction or distortion of competition within Singapore. The CCS, in advising that the recommendations be abolished, took the view that the IEA guidelines “provide a focal point for prices to converge”, irrespective of whether the recommendations were binding or not. In particular, the minimum fee scales prescribed in the IEA guidelines discourage price competition below the recommended level. The CCS was therefore of the view that the guidelines would have the “object of restricting competition in the real estate agency market” and would likely contravene the Act.

Please refer to Drew and Napier LLC’s Legal Update http://www.drewnapier .com/pdf/06August20 08_Update.pdf for further details.

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INDONESIA COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Fines Imposed on 10 Energy-related Companies for Bid-rigging On 18 May 2011, the Commission for the Supervision of Business Competition (KPPU) imposed fines on 10 parties for the infringement of Article 22 Law No. 5/1999 by engaging in bid-rigging. According to the KPPU press release, the infringement concerned a “tender conspiracy on the Procurement of Infrastructure Energy Conversion in the Directorate General of Oil and Gas, Ministry of Energy and Mineral Resources”. The facts of the bid-rigging case are unclear, although the KPPU indicated that it had found suspicious similarities in the bid price, as well as in the technical proposal/work implementation methodology documents of the tender participants, which led it to believe that the tender participants had engaged in bid-rigging. The 10 parties were fined a total of IDR 4,454,941,000 (S$640,500). According to the KPPU, the Procurement Committee of Infrastructure Energy Conversion in the Directorate General of Oil and Gas was involved in the bidrigging along with the tender participants, although the exact nature of the Procurement Committee’s involvement was unclear. The KPPU “gave recommendations to the Director General of Oil and Natural Gas, Ministry of Energy and Mineral Resources to enforce fair competition in the tender process” and requested the imposition of administrative sanction on the Procurement Committee for facilitating the tender conspiracy.

Q3/2011 In Singapore Bid-rigging is considered a “blacklisted activity” which will be viewed by the CCS as always appreciably restricting competition in the relevant market(s). Competition authorities frequently depend on “whistleblowers” responding to leniency programme to secure the necessary evidence to break down and prosecute cartels.

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INDONESIA CASE SUMMARY

COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

(as published in the D&N Competition Law Quarterly Update)

Temasek Pays Cartel Fine in Indonesia Temasek Holdings has agreed to pay the 15 billion rupiah fine (S$2.2 million) imposed by Indonesia's Commission for the Supervision of Business Competition (KPPU) for price fixing in the mobile telecoms industry. In 2008, the KPPU found that Temasek had amongst other things fixed prices and foreclosed competition in the mobile market through its indirect stakes in Indonesia's largest mobile telecoms operators. Temasek subsequently appealed unsuccessfully to Indonesia's Central Jakarta District Court and Supreme Court. While Temasek maintains that it has not contravened Indonesia's competition law, it will continue "to comply with the laws and regulations of Indonesia in its activities in Indonesia" as an international investor, "and will duly follow up to pay the KPPU fine without prejudice to its legal position".

Q2/2011 Competition Trends:

Law

LIM Chong Kin, Head of Competition Transaction, Advisory & Compliance at Drew & Napier LLC commented that "the case underscores the difficulties faced by foreign investors in Asia’s emerging competition laws, particularly in countries where competition jurisprudence is still developing. This is probably made worse by the suspicion that the objectives driving the application of competition laws in every case may not be entirely grounded on competition policies that are familiar to foreign investors based on their own home standards, but shrouded by extraneous local considerations."

Asia Pulp & Paper Fined for Price Fixing

In Singapore

Singapore-based company Asia Pulp & Paper (APP Singapore) has been fined A$3.4 million (S$4.4 million) by an Australian federal court (Court) for engaging in a “systematic, sophisticated and long-running” collusion to fix paper prices in Australia. In addition to its fine, APP Singapore, together with Indonesia-based pulp and paper firm PT Indah Kiat, had to pledge not to enter into similar arrangements for a 5-year period.

The Singapore Competition Act will similarly apply to any anticompetitive activity that is concluded outside Singapore so long as it has an adverse effect on any market in Singapore.

APP Singapore had admitted to participating in 16 meetings with competitors, between December 2000 and January 2004 that were held outside of Australia. The participants of these meetings were commonly referred to as the AAA Club and collectively agreed to fix the average price per metric tonne of folio and photocopy paper in Australia. The Court noted that the prices set at these meetings were intended to prevent “competitive discounting” between the participants. While the Court noted that the damage caused by the price fixing arrangements could not be quantified, it believed that the penalties imposed were stiff enough to act as a deterrent. The fine imposed on APP Singapore was comparable to those levied on other firms for similar offences. For example, in January 2010, the Court fined APRIL Fine Paper Trading (Singapore) A$3.25 million (S$4.2 million) for its

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INDONESIA CASE SUMMARY

COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

(as published in the D&N Competition Law Quarterly Update)

Q2/2011

involvement with the AAA Club, even though it had a considerably lower market share than the 15% held by APP Group, the parent entity of APP Singapore.

KPPU Fines Oil and Gas Companies for Bid Rigging

Competition Trends:

The KPPU has fined four oil and gas companies a total of 31 billion rupiahs (S$4.7 million) for bid rigging. The KPPU found that Japan's Mitsubishi had colluded with its consortium partners Pertamina, Medco Energy International and Medco D&P Tomori Sulawesi to win a bid for a liquefied natural gas project in Central Sulawesi. The KPPU also inquired into an agreement by the companies to obtain confidential information about LNG International, an Australian based competitor.

LIM Chong Kin, Head of Competition Transaction, Advisory & Compliance at Drew & Napier LLC observes that "based on the limited information available, it appears that the KPPU has taken issue with the fact that a group of potentially competing companies have formed a consortium to bid for the gas block development project. It is an interesting decision in that submitting tender bids on a consortium basis is a very common business practice around the world, especially for large scale projects. As such, it remains to be seen whether KPPU's objection arises from specific circumstances surrounding the structure of the industry, the manner in which the consortium was formed and its subsequent behaviour.

Accordingly, KPPU fined Mitsubishi 15 billion rupiahs (S$2.2 million), Pertamina 10 billion rupiahs (S$1.6 million), Medco Energy International 5 billion rupiahs and Medco D&P Tomori Sulawesi 1 billion rupiahs (S$154 000). The case was brought to the KPPU's attention when LNG International complained to the KPPU after losing its bid for the Central Sulawesi natural gas project.

Law

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INDONESIA CASE SUMMARY

COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

Q1/2011

(as published in the D&N Competition Law Quarterly Update)

Indonesian High Court Rules in Favour of Carrefour In November 2010, the KPPU appeal to uphold its ruling against Carrefour Indonesia (Carrefour). Earlier in November 2009, the KPPU had found Carrefour guilty of abusing its dominant position, obtained through the acquisition of local retailer PT Alfa Retailindo Tbk (Alfa Retailindo), by imposing unfair trading terms on its suppliers. As a result, the KPPU ordered Carrefour to sell its 75% stake in Alfa Retailindo and pay a fine of Rp 25 billion (S$3.5 million). Carrefour subsequently appealed this decision to the South Jakarta District Court, which voided KPPU’s sanctions on the basis that there was insufficient evidence that Carrefour was dominant. The KPPU responded to this by appealing to Supreme Court with new evidence to support its earlier finding that Carrefour was dominant. Please refer to our previous Quarterly http://www.drewnapier.com/pdf/270410_LegalUpdate.pdf for information on KPPU’s claims against Carrefour.

Update more

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INDONESIA CASE SUMMARY

COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

(as published in the D&N Competition Law Quarterly Update)

Q4/2010

Indonesia: Start of the Merger Control Regime

In Singapore

On 20 July 2010, the Indonesian Government adopted a set of merger control regulations, Regulation No.57/2010, that formally operationalised the country’s merger control regime.

The merger regime in Singapore provides for notification to the CCS on a voluntary basis any time prior, during or after the merger transaction. For merger parties who intend to notify, they may seek for a Pre-Notification Decision (PND) with the CCS to identify the information needed for a complete submission, as well as any additional useful information that the CCS may require in assessing the notification. As in Indonesia, the assessment provided by the CCS during the PND is not binding on the CCS and does not preclude it from conducting further inquiries and/or taking action against the merger parties subsequently.

Under Article 28 of Law No. 5/1999, businesses are prohibited from conducting mergers, consolidations or acquisitions of shares in other business entities that may result in monopolistic practices or unfair competition. Regulation No.57/2010 provides for a mandatory post-merger review, by the KPPU, Indonesia’s competition authority for transactions above certain thresholds. Merger parties must notify the KPPU of the transaction within 30 days of the transaction being completed. Failure to do so may result in penalties of 1 billion rupiahs (S$151,000) per day, up to a maximum of 25 billion rupiahs (S$3.78 million). The thresholds for notification are: • • •

combined assets of 2.5 trillion rupiahs (S$377 million); combined turnover of up to 5 trillion rupiahs (S$755 million); or combined assets of 20 trillion rupiahs (S$3 billion) for the banking sector.

A formal investigation may follow the notification should the KPPU find that the merger may result in anticompetitive effects in any market in Indonesia. The KPPU must provide its assessment within 90 business days from the date of receipt of a complete merger application. Regulation No.57/2010 also provides for voluntary pre-merger notification where merger parties may seek a non-binding opinion from the KPPU as to whether the transaction, if carried into effect, is likely to be anticompetitive. Going through the pre-notification process however does not preclude the KPPU from issuing an infringement decision after the merger has been implemented. In addition, merger parties who opt for a pre-merger notification are still obliged to go through the post-merger review.

KPPU Issues Guidelines on Cartels

In Singapore

The KPPU has issued Regulation No. 4/2010 that sets out further guidance on how it will interpret and enforce the prohibition against cartels as contained in Article 11 of Law No. 5/1999, where business actors are not allowed to enter into agreements with their competitors with the intention of influencing prices or marketing goods in a way that would result in monopolistic practices or unfair business competition.

There is currently no criminal liability in Singapore for cartel activity. However the CCS has the power to impose substantial penalties on businesses and direct them to undertake actions to address any competition concerns. Agreements that are anticompetitive will also become void.

Regulation No.4/2010 outlines a number of factors which may indicate the presence of cartel activities: • • •

the inter-relation of ownership between competing companies; significant barriers to entry for new businesses in respect of a particular market; and/or uniformity of prices for goods or services which in certain

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INDONESIA CASE SUMMARY

COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

(as published in the D&N Competition Law Quarterly Update)

Q4/2010

circumstances may be an indication that there is a consensus in relation to price fixing among competing companies. Should cartel activity be established by the KPPU, Regulation No.4/2010 provides for sanctions including fines, imprisonment, agreements being voided and a temporary prohibition on specific persons from being a director of a company. Regulation No.4/2010 came into force on 9 April 2010.

Indonesia Cement Industry Cleared of Price Fixing Charges The KPPU had determined that there was no evidence of eight cement manufacturers operating a price-fixing cartel in Indonesia. The KPPU started investigations when it was alerted to sudden rises in cement prices by the country’s Real Estate Association. Following this lead, the KPPU found that similar prices for cement were being charged in 14 provinces throughout Indonesia. Notwithstanding this, the KPPU did not find any evidence of collusion, be it through output limitation or market allocation. The KPPU also did not find cement prices to be excessive. While the KPPU acquitted the cement companies of any wrongdoing, it recommended that the Indonesia Cement Association to be dissolved as it may facilitate price-fixing, production and marketing coordination. The KPPU was of the view that the task to stabilise cement prices, if necessary, should be carried out by the Government instead.

Pfizer fined for Price Fixing and Abuse of Dominance in Indonesia The KPPU decided that Pfizer (particularly PT Pfizer Indonesia, Pfizer Inc, Pfizer Overseas LLC, Pfizer Global Trading and Pfizer Corporation Panama) and PT Dexa Medica had violated the Law of the Republic of Indonesia Number 5 Year 1999 Concerning Prohibition of Monopolistic Practices and Unfair Business Competition (Law No. 5/1999) for

In Singapore The CCS has similarly taken the position that an observation of parallel pricing alone will not, in and of itself, amount to evidence of collusion. In response to the common perception that price parallelism in the retail petrol industry in Singapore is an indication of the presence of anticompetitive activity, the CCS has previously noted that it is normal market behaviour for oligopolistic firms to observe its competitors' conduct closely and factor that into its own pricing strategy. Accordingly, matching a competitor’s price is permissible under competition laws so long as prices are determined independently.

In Singapore Without evidence of anti-competitive agreement(s) or conduct amounting to abuse of dominant position, high pricing alone will not amount

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INDONESIA CASE SUMMARY

COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

(as published in the D&N Competition Law Quarterly Update) participating in a price fixing scheme involving a hypertension drug (amlodipine tablets). KPPU found that the price of Norvask, produced by Pfizer, was 14.6 times more expensive than the average international price (calculated based on the World Health Organization bulk purchase price), while the price of Tensivak, produced by PT Dexa Media, was 13.6 times higher. It was reported that KPPU considered that the appropriate difference between local and international price levels should only be 2.5 times. It was decided that Pfizer violated Article 5 (which prohibits price fixing), Article 11 (which prohibits cartels), Article 16 (which prohibits agreements with foreign parties that contain elements that are likely to result in monopolistic practices and/or unfair business competition), and Article 25 clause 1 (which prohibits the abuse of a dominant position), while PT Dexa Medica violated Articles 5, 11, and 16 of Law No. 5/1999. As a result, the five Pfizer entities were fined IDR 25 billion (S$3.61 million) each and PT Dexa Medica was fined IDR 20 billion (S$2.89 million). In addition, Pfizer was ordered to lower the price of Norvask by 65%, while PT Dexa Medica was ordered to lower the price of Tensivak by 60%.

Q4/2010 to a breach competition law Singapore.

of in

Further, CCS has always maintained that its role is not to act as a price regulator in the Singapore market. As such, it is highly unlikely that CCS will impose an order similar to that imposed by KPPU in this case which determines the level at which a market player should price its product.

Representatives of PT Pfizer Indonesia and PT Dexa Medica have indicated that they will appeal against the decision.

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INDONESIA CASE SUMMARY

COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

Q3/2010

(as published in the D&N Competition Law Quarterly Update)

KPPU Adopts New Enforcement Procedures

Investigation

and

On 5 April 2010, the KPPU began applying a new process in enforcing the country’s competition law. Previously, many criticisms were leveled against the KPPU in the way it balanced its multiple roles of investigator, prosecutor and judge. Some of the criticisms include an inherent bias in favour of the prosecution by allowing the prosecuting panel and the investigating staff to come from the same team, and the deciding panel to be largely made out of the prosecuting panel. Other complaints include a weak examination process that amongst other things was closed to the public. In addition, certain pieces of evidence used to make a finding of infringement were withheld on grounds of confidentiality. Accordingly, the new processes involve a detailed and systematic preexamination process and separate teams for the investigation, the prosecution and the judgment. In addition, the defendant would be provided with the opportunity to cross-examine witnesses and more chances to submit evidence.

In Singapore The CCS is similarly vested with the powers to be investigator, adjudicator and enforcer under the Competition Act. Based on our experience, typically a team of CCS officers would undertake the investigation before presenting their findings and recommendations to the Commission members for their decision. Appeals against the decision of the CCS may then be made to the Competition Appeal Board, an independent body headed by a retired Supreme Court judge.

KPPU Fines Airlines for Fixing Fuel Surcharge

In Singapore

The KPPU found nine local airlines guilty of violating the country’s competition laws by concluding a written agreement to jointly impose a fuel surcharge of 20,000 rupiah (S$2.8) per passenger on all flights.

Price fixing is considered to be a hardcore offence under section 34 of the Singapore Competition Act (“Act”) and would always result in an appreciable adverse effect on competition. Parties entering into such anticompetitive agreements after 1 January 2006 are deemed to have infringed the Act and are liable to financial penalties even if the agreement been terminated or has not been implemented successfully.

While the KPPU noted that the agreement was officially cancelled shortly after it was implemented, it provided the airlines with the opportunity to impose convergent prices. Furthermore, the KPPU found that the airlines had continued to implement the agreement even though it was cancelled. In particular nine airlines had fixed the surcharge by flight distance hour (i.e. zero to one hour, one to two hours and two to three hours). The KPPU estimated that this price fixing arrangement had resulted in losses to passengers of up to 13.5 trillion rupiahs (S$1.9 billion). Accordingly, the KPPU imposed fines and damages totalling to 585 billion rupiahs (S$90 million) on the nine local airlines.

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INDONESIA CASE SUMMARY

COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

(as published in the D&N Competition Law Quarterly Update)

Q3/2010

Temasek’s Final Appeal Rejected On 26 May 2010, the Supreme Court of Indonesia upheld the price-fixing decision against Temasek Holdings by the country’s competition watchdog, the KPPU. This decision is consistent with the Supreme Court’s earlier dismissal of Temasek’s first appeal in 2008. In May 2008, the KPPU found that Temasek had violated Indonesian competition laws through its stakes in two of Indonesia’s largest mobile phone companies Telkomsel and PT Indosat. The KPPU ruled that Telkomsel and PT Indosat had set anti-competitive prices that resulted in market foreclosure. Details on the Supreme Court’s final ruling have yet to be released.

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INDONESIA CASE SUMMARY

COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

(as published in the D&N Competition Law Quarterly Update)

Indonesia

consults

on

cartel

guidelines

On 22 March 2009, the KPPU released new guidelines that are aimed at discouraging the formation of business cartels. The guidelines set out 11 points that are designed to help businesses ascertain the types of cooperation between competitors that would infringe the competition provisions in Law Number 5 concerning Prohibition of Monopolistic Practices and Unfair Business Competition. These 11 points include guidance on the level of buyer power by sector, the composition of trade associations, barriers to entry for new entrants, production capacity in the market, information exchange between competitors and others. This new set of guidelines is open for consultation and is expected to come into force sometime in April this year.

Q2/2010 In Singapore The CCS had issued the Guidelines on the Section 34 Prohibition to provide guidance on types of agreements that are likely to have an appreciable adverse effect on competition. Notwithstanding, the CCS is not bound by the guidelines and will make its decision based on the specific facts of each case.

Carrefour wins appeal against KPPU

In Singapore

In February 2010, Carrefour Indonesia successful appealed against the KPPU’s decision that it had violated Article 17 (1) and Article 25 (1a) of the country’s law against monopolies.

A single buyer has "monopsony power" where he holds market power in the relevant purchasing market such that he is able to decrease the price of a relevant product below competitive levels with a corresponding reduction in the overall quantity of the input produced or supplied in a relevant market, or a corresponding diminishment in any other dimension of competition. An exercise of monopsony power that leads to anticompetitive outcome may be considered as an abuse of dominance, and therefore caught by section 47 of the Competition Act.

The KPPU claimed that Carrefour’s 2008 acquisition of 75% of a local retailer, PT Alfa Retailindo (Alfa), had led to monopolistic practices at the upstream supplier level and an abuse of dominance at the downstream level of the retail business. KPPU claimed that product suppliers were put in a disadvantageous bargaining position vis-à-vis Carrefour as its share of the upstream supplier market grew from 45% to 57.99% after the acquisition. Carrefour was alleged to have forced unfair trading terms on the suppliers. The KPPU also found evidence of suppliers to Alfa being forced to supply Carrefour after the acquisition. Carrefour was ordered to pay a fine of Rp 25 billion (US$2.7 million) and sell its stake in Alfa within a year. This ruling was overturned by the South Jakarta District Court that found the KPPU’s accusations to be unsubstantiated. The KPPU has appealed the District Court’s decision to the Supreme Court and the result of the appeal is still pending.

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INDONESIA CASE SUMMARY

COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

(as published in the D&N Competition Law Quarterly Update)

Q3/2009

Indonesia Investigates Cement Companies

In Singapore

In response to concerns about systematic increases in cement prices in Indonesia since 2007, the KPPU announced in April that it is investigating cement companies for suspected cartel activity. The investigation is thought to have originated after a complaint from the Indonesian Real Estate Association and the Indonesian Chamber of Commerce.

Price fixing and cartel arrangements are prohibited under section 34 of the Singapore Competition Act. Cartel activity is considered to be a hard-core offence by the Competition Commission of Singapore, and as such is always considered to have an appreciable effect on competition.

It is alleged that three manufacturers: Semen Gresik, Holcim, and Indocement Tunggal Perkasa control around 90 per cent of the market, and if found guilty of cartel behaviour, the companies could face financial penalties. In Indonesia, price fixing activities are prohibited under Chapter III of Law No. 5/1999, which also prohibits a number of other anticompetitive arrangements.

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MALAYSIA COUNTRY

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Singapore Indonesia Malaysia Philippines Thailand Vietnam

Q2/2012

Airlines First to be Scrutinised in Malaysia

In Singapore:

A share swap between AirAsia and Malaysia Airlines, resulting in AirAsia’s major shareholder taking a 20.5 percent share in Malaysia Airlines, and Malaysia Airlines' major shareholder taking 10 percent of AirAsia, continues to be scrutinised by the Malaysian Competition Commission (“MyCC”), in one of its first ever investigations since competition law took effect in Malaysia on 1 January 2012. The airlines have also agreed to cooperate in the provision of many services, including ground-handling and engineering. It was understood that Malaysia Airlines would reduce investment in its budget airline which competes head-on with AirAsia.

Share swap may either be analysed as mergers or as agreements depending on the nature of the arrangement and the extent to which control may be passed/ created. Whether any particular share swap would give rise to competition law concerns would depend on a full analysis of all the facts, and the impact on the market.

The Federation of Malaysian Consumers Association has leaned on the issue by suggesting that the deal may have led to higher fares for consumers, and is urging MyCC to take action. From a competition perspective, the concern is that the share swap would soften competition between the parties, which might in-turn have an effect on fare or service competition between them. MyCC has announced that the investigation remains on-going, and that it would not be appropriate to comment on it at this juncture.

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MALAYSIA CASE SUMMARY

COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

(as published in the D&N Competition Law Quarterly Update)

Developments in Competition Law in Malaysia The Malaysian Competition Act (“Act”) came into force on 1 January 2012. With this, Malaysia became the fifth country in ASEAN to have a national competition law (after Indonesia, Thailand, Vietnam, and Singapore). The Act prohibits anti-competitive agreements or arrangements, such as price-fixing and market-sharing, and abuses of a dominant position. Malaysia’s competition legislation is broadly consistent with international antitrust laws, except that it does not provide for a merger control regime. The Act was passed in May 2010, but businesses operating in Malaysia were given some 18 months to make the necessary preparations to ensure compliance with the new competition laws when they came into force on 1 January 2012, this year.

Q1/2012 Please click here for Drew and Napier LLC’s Legal Update dated 16 December 2011 for more details on the content of MyCC’s draft guidelines. The consultation on the guidelines closed on 30 December 2011.

For details of the Malaysian competition law regime, please click here for Drew & Napier LLC’s Guide to Malaysian Competition Law. Already the Malaysian Competition Commission (“MyCC”) has commenced a preliminary investigation into the share swap deal between airlines AirAsia Bhd and Malaysia Airlines. MyCC's investigation arose as a result of consumer complaints that the share swap deal and collaboration between the airlines could lead to higher airfares for consumers. MyCC's commencement of investigation sends a clear signal to businesses in Malaysia that it intends to actively enforce Malaysia's new competition laws. To provide businesses with a better understanding of how it intends to implement and enforce competition law in Malaysia, MyCC commenced consultation on a set of three guidelines in November 2011, namely the: (1) Guidelines on Chapter 1 (Anti-competitive Agreements); (2) Guidelines on Market Definition; and (3) Guidelines on Complaints Procedures.

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MALAYSIA COUNTRY

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Singapore Indonesia Malaysia Philippines Thailand Vietnam

Q2/2011

Malaysia’s Competition Watchdog Established

In Singapore

After much anticipation, the MyCC was established on 1 April 2011 to enforce the Malaysian Competition Act (which will come into effect on 1 January 2012). Under the Malaysian Competition Commission Act, the MyCC will comprise a chairman and between seven and nine members, four of whom would come from the government and between three and five from the private sector.

The Malaysian Competition Act has provided for higher financial penalties than in the case of Singapore where the amount of financial penalty is limited to no more than 10 percent of the turnover of the enterprise in Singapore for each year of infringement subject to a cap of three years.

Former Chief Judge of Malaya and University Malaya Pro-Chancellor Tan Sri Siti Norma Yaakob has been appointed Chairman of the newly set up commission. The five individuals from the private sector who have been appointed to serve as commissioners are: • • • • •

Bar Council immediate past president, Ragunath Kesavan; former Asian Strategy Leadership Institute chief executive officer, Datuk Dr Micheal Yeoh Oon Kheng; Nilai International College Academic Affairs vice-president, Datuk Dr Sothi Rachagan; Universiti Sains Malaysia Graduate School of Business Dean Prof Datin Dr Hasnah Haron; and lawyer-turned businessman Abd Malek Ahmad.

Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob, whose ministry is in charge of putting the Malaysian Competition Act and Competition Commission Act in place, was quoted as saying that the government's representation in the MyCC would be made up of representatives from his ministry, the Ministry of International Trade and Industry, the Attorney-General's Office and the Economic Planning Unit. The Minister was also quoted by the New Straits Times newspaper (Wed, 2 April 2011) as saying that the MyCC would function like "a court" in dealing with cases involving anticompetitive practices and control unfair competition and restrictive business practices. Other responsibilities of the MyCC include advising the minister and authorities, implementing and enforcing the competition law, drawing up related guidelines and educating the public. The MyCC has wide powers of investigation, including the same search and seizure powers granted to police officers, and the power to compel companies and individuals to produce documents or information in investigations. Any search of an enterprise would require a warrant approved by a magistrate. However, the MyCC may conduct a search without a warrant if it feels that delay would adversely affect a case or allow evidence to be destroyed. The MyCC has the power to impose, on an enterprise found to have infringed the competition provisions, a financial penalty not exceeding 10 percent of the worldwide turnover of the enterprise over the entire period during which an infringement occurred. For other offences such as failing to comply with the MyCC’s request for documents or information, the MyCC may impose a fine not exceeding five million ringgit (or ten million ringgit for a second or subsequent offence) on

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MALAYSIA CASE SUMMARY

COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

(as published in the D&N Competition Law Quarterly Update)

Q2/2011

a body corporate; and a fine not exceeding one million ringgit or imprisonment for up to five years or both (or two million and five years for a second or subsequent offence) on an individual. [NB: SGD1 = MYR2.4] A Competition Appeals Tribunal will soon be set up to hear appeals of the MyCC decisions. The Tribunal would include between seven and 20 members appointed by the prime minister.

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MALAYSIA CASE SUMMARY

COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

(as published in the D&N Competition Law Quarterly Update)

Q2/2010

MALAYSIA: Competition Bill and Competition Commission Bill Tabled On 7 April 2010, the Malaysian government tabled the Competition Bill 2010 and Competition Commission Bill 2010 for first reading in Dewan Rakyat (Malaysia’s House of Representatives). Under the Malaysian Competition Bill, activities outside of Malaysia will be caught so long as they have an effect on competition in any market in Malaysia. The Bill prohibits anticompetitive agreements and an abuse of dominance but does not cover anticompetitive mergers. Horizontal or vertical agreements between enterprises will be prohibited if they have the object or effect of significantly preventing, restricting or distorting competition in the relevant market. However, the Malaysian Competition Bill provides for relief of liability for agreements that bring about efficiencies or social benefits (similar to the Net Economic Benefit exclusion in Singapore). An enterprise can seek individual relief of liability (i.e., individual exemption) from the Competition Commission. A leniency programme has been included into the Competition Bill to encourage whistle blowing. Large enterprises are also prohibited from abusing their dominant position either independently or collectively. An interesting difference between the Malaysian Competition Bill and Singapore’s Competition Act (Cap. 50B) is the prohibition on a dominant enterprise from directly or indirectly imposing unfair purchase or selling price or other unfair trading condition on any supplier or customer. The Malaysian Competition Bill provides the Competition Commission with significant power of investigation, including the ability to enter and search a premise or persons, to seal off documents/cupboards and to require the provision of information. An enterprise found to have infringed the competition provisions may receive a financial penalty not exceeding 10 percent of the worldwide turnover of an enterprise over the entire period during which an infringement occurred. The Malaysian Competition Bill has provided for higher financial penalties than in the case of Singapore where the amount of financial penalty is limited to no more than 10 percent of the turnover of the enterprise in Singapore for each year of infringement subject to a cap of three years. The Competition Commission Bill provides for the establishment of the Competition Commission and provide for its powers and functions. The Competition Commission will have powers to investigate and enforce the Competition Act. Its functions will include advising the minister or any public body on competition matters.

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PHILIPPINES COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Q2/2012

Philippines Competition Law in the Pipeline The Philippines has moved closer to becoming the sixth ASEAN (Association of Southeast Asian Nations) country to introduce general competition law, with its senate granting provisional approval for the Competition Policy Act of 2011 in February 2012. The move comes off the back of the approval from the Philippines House of Representatives to introduce a comprehensive competition law regime in August 2011. The Office of Competition within the Department of Justice was also created last year. Whilst certain sectors in the Philippines are subject to some quasi competition law, through various pieces of legislation, the Philippines lacks a centralised and comprehensive general competition law. The introduction of a general competition law seems to have now attained the critical and high level political support needed to drive it through the country’s legislative mechanics. It appears that the key universal prohibitions against anti-competitive agreements, abuse of dominance, and mergers that substantially lessen competition, as well as a notification mechanism, are set to form part of the law. It is unclear when precisely competition law will be introduced or take effect, but it seems to have now become a top legislative priority for the Philippines. Regional watch The introduction of competition law in the Philippines will be a milestone not only for the Philippines, but for the ASEAN region itself as it moves towards achieving the targets set out in its economic blueprint in 2015. Successful implementation of competition law in the Philippines would leave only four ASEAN countries (Brunei, Cambodia, Lao PDR and Myanmar) without general competition law in place.

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PHILIPPINES COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Q3/2011

An Update of the Status of Competition Law Development in the Philippines: The Senate Bill on competition law in the Philippines was approved on 19 June 2009 while the House Bill on competition was approved on 18 May 2011. The House Bill was largely styled after the Senate Bill, but included key provisions on mergers, the creation of a Fair Trade Commission and enforcement. A bicameral conference committee will work to reconcile the differences between the two bills. Thereafter, the reconciled version of the competition bill will be presented to the Senate and the House of Representatives for approval. Finally, the President must approve the bill before it can be passed (after the required publication) as law. There has however been no indication thus far as to when the formation of the bicameral conference committee will take place, and how long the reconciliation work will take. However, this has been the furthest Philippines has progressed towards putting in place a set of competition legislation.

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THAILAND COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Q2/2010

Honda may Face Charges in Thailand

In Singapore

Thailand’s Commerce Permanent Secretary was quoted in The Nation on 1 April 2010 that the Trade Competition Commission (TCC) had found motorcycle distributor AP Honda to have infringed Article 25 of the Trade Competition Act by abusing its dominant position. The investigation was triggered by complaints in 2001 by rival manufacturers, Kawasaki, Suzuki and Yamaha, who alleged that Honda had used its dominant position to force motorcycle dealers to sell Honda motorcycles exclusively. At the time of investigation, Honda held 70% of the relevant market.

Exclusionary behaviour which forecloses markets or weakens competition by preventing or limiting competition from existing/potential competitors is prohibited under section 47 of the Singapore Competition Act which prohibits an abuse of a dominant position.

In 2003, the TCC tried unsuccessful to persuade the prosecutors to bring Honda to trial, who instead asked for further investigation of the matter. It remains to be seen whether the prosecutors would proceed with the case. A successful prosecution could result in a fine of up to THB 6 million (≈S$250,000) and jail terms of up to three years for AP Honda. This would also be the first case in which the Thai government has brought action under the Trade Competition Act since it came into force in 1999.

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VIETNAM COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

CASE SUMMARY (as published in the D&N Competition Law Quarterly Update)

Vietnam Halts Pricing Fixing in Motor Insurance Industry Vietnam issued its first price-fixing decision against 19 insurance companies which accounted for 99.79% of the country’s motor vehicle insurance market and imposed a collective fine of VND1.7 billion (approximately S$120,000). In addition, the 19 companies were ordered to pay administrative fees amounting to VND 100million (S$7,000) to cover the cost of the investigation. The companies fined include Vietnam’s largest insurer Bao Viet, Petro Vietnam Insurance, Bao Minh and the Agriculture Bank Insurance. The Vietnam Competition Authority (VCA) began investigations into the insurance sector in 2008 and found that 19 insurance companies had signed a “cooperation memorandum among insurance companies in vehicle insurance field” and a set of “terms on the premium of car insurance” to coordinate on the level of vehicle insurance premium. It was reported that the some of the infringing companies had participated in the price-fixing scheme to reduce the severe price competition in the industry.

Q4/2010 In Singapore Unlike Singapore where price-fixing is always deemed to have an appreciate adverse effect on competition, the Vietnamese competition law only prohibits direct or indirect price fixing agreements where the parties to the agreements have a combined market share of 30% or more.

The VCA noted that the relatively low fine amounting to 0.025% of the total turnover of the infringing parties in 2007 (where the maximum fine is 10% of annual turnover) was meant to be of a “warning nature” as awareness of competition law in Vietnam is low. Notwithstanding this, the VCA signalled its intention to step up enforcement action by warning that it would deal with all future cases “strictly pursuant to the provisions of the law”.

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VIETNAM CASE SUMMARY

COUNTRY Singapore Indonesia Malaysia Philippines Thailand Vietnam

(as published in the D&N Competition Law Quarterly Update)

Vietnam Steel Association Investigated For Price-Fixing Vietnam News Agency reported on 17 December 2008 that the Vietnam Competition Administration Department (CAD) is investigating members of the Vietnam Steel Association (VSA) for allegedly fixing steel prices. In an attempt to prevent steel prices from sliding, VSA’s members agreed at a meeting on 7 October 2008 to keep the steel price stable at VND 13.5 to VND 14 million per tonne. Explaining the agreement, VSA said that its members are striving to rescue themselves from bankruptcy as steel prices have been falling below production costs. Four steel mills halted production at the beginning of September, while others have been operating perfunctorily as supplies have been in excess and products left unsold. If the VSA is found to have violated the Vietnamese Competition Laws, the CAD would take necessary measures to ensure that VSA members will not further manipulate the steel market and consumer interest will be protected.

Q1/2009 In Singapore The section 34 prohibition against anti-competitive agreements also covers decisions by trade associations. The CCS has stated that any recommendation as to prices and charges, including discounts and allowances is likely to have an appreciable effect on competition and hence breach the prohibition. Where there has been an infringement of the section 34 prohibition, the individual members (undertakings) of the association may be fined if membership coincides with participation in the agreement. Further, where there has been a decision by the association, the association may be fined independently.

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