Worldwide: Competition Law Quarterly Update - January 2016

Last Updated: 7 March 2016
Article by Cavinder Bull, Lim Chong Kin and Scott Clements

WELCOME MESSAGE

In this issue, we round up some of the major developments in the competition law world from the second half of 2015.

Looking ahead into 2016, the year promises to be a busy one as nine of the ten ASEAN countries have competition laws in place and are working towards implementing these laws. In April this year, Singapore will also play host to the International Competition Network's annual meeting, which should shine a spotlight on the important role competition law plays in this region.

On 3 and 4 March this year, the Global Competition Law, Law Leaders Forum, will be held in Singapore. Promising to be a successful event, our practice head Chong Kin will be co-chairing the event this year with a confirmed list of prominent competition law panel specialists. In particular, this event will feature an ASEAN roundtable to discuss new competition law regimes in the region. The list of panel specialists will include high-level officials from the competition authorities of Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, the Philippines, and Thailand.

Through co-chairing this event, we extend a discounted rate to clients who are interested in attending. We have provided event details in the flyer attached to this update. We very much encourage and look forward to welcoming on the day.

SINGAPORE COMPETITION LAW WATCH

ARTICLES & COMMENTARIES: UPDATES FROM AROUND THE WORLD

REGULATORY UPDATES

UK Competition and Markets Authority issues guidelines on voluntary redress schemes

In August 2015, the UK Competition and Markets Authority ("CMA") issued a guidance document ("Guidance Document") on how voluntary redress schemes for infringements of competition law can be approved by the CMA and other relevant regulators (collectively, "Regulator").

The Guidance Document follows amendments to the Competition Act 1998, which now allows a person who has infringed competition laws to submit a voluntary redress scheme for the Regulator's approval. In certain circumstances, infringers can receive a discount of up to a maximum of 20% on the penalty imposed by the Regulator. Those affected by the infringement can also claim compensation through the scheme without having to go to court. However, the availability of the scheme does not prevent persons who have been harmed by a competition law infringement from seeking recourse in other forms e.g. by bringing follow-on private action against the infringers. The redress schemes can only be approved if they are related to decisions issued by the Regulator or the European Commission (e.g. in relation to a breach of the prohibition against anti-competitive agreements or abuse of a dominant position).

The Guidance Document provides that an application for approval of a voluntary redress scheme can be submitted to the Regulator either during the course of an on-going investigation or after the Regulator or European Commission has issued an infringement decision. However, the voluntary redress scheme can only be approved at the time, or after, the relevant infringement decision is issued.

The Guidance Document further notes that the voluntary redress scheme must be devised in accordance with the process, information and terms required in the Competition Act 1998 (Redress Scheme) ("Redress Regulations") in order for it to be approved by the Regulator.

Conditional approval by the Regulator of an outline of the voluntary redress scheme is possible even if the Redress Regulations has not been fully complied with. To qualify for this conditional approval, the applicant must furnish the Regulator with information about when and how the voluntary redress scheme will fully comply with the Redress Regulations. The Regulator may impose conditions as part of such conditional approval, for example, by requiring the applicant to comply with the Redress Regulations or to provide further information about the voluntary redress scheme by a particular date. The conditional approval can be revoked if the conditions are not met.

The Guidance Document may be accessed here.

In Singapore:

The Singapore competition law framework does not currently provide for a process where infringers may propose voluntary redress schemes as a way of minimising their liabilities relating to an infringement of competition law. Section 86 of the Competition Act (Cap. 50B) allows individuals who have suffered loss directly as a result of an infringement of the Competition Act to bring follow-on private actions.

US Federal Trade Commission issues guidance on section 5 of the Federal Trade Commission Act

In August 2015, the US Federal Trade Commission ("FTC") released a guidance statement ("Guidance Statement") on its enforcement principles regarding unfair methods of competition under section 5 of the Federal Trade Commission Act ("FTC Act").

Section 5 of the FCT Act prohibits "unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce". The section, and the correct enforcement approach under it, has always remained somewhat unclear and vague. The prohibition on "unfair methods of competition" was intentionally worded broadly by Congress, to give the FTC the authority to apply the provision flexibly, on a case-by-case basis. Since the enactment of the FTC Act more than 100 years ago, the FTC has not issued any guidance on how it would enforce section 5 of the FTC Act. There has reportedly been pressure for the FTC to issue some guidance to provide clarity to businesses and lawyers on how the section should be used.

The Guidance Statement now explicitly sets out the principles under which the FTC will enforce section 5 of the FTC Act. Specifically, it clarifies that the ban on "unfair methods of competition" encompasses not only acts and practices that violate the Sherman or Clayton Act, but also those acts and practices that contravene the spirit of the antitrust laws as well as those that, if allowed to mature or complete, could violate the Sherman or Clayton Act.

The FTC also sets out three principles that it would adopt when deciding whether to challenge a specific conduct to be an unfair method of competition in violation of section 5 of the FTC Act:

  1. the FTC will be guided by the public policy underlying the antitrust laws (i.e. the promotion of consumer welfare);
  2. the conduct will be evaluated under a framework similar to the rule of reason (i.e. the conduct in question must cause, or be likely to cause, harm to competition or the competitive process, taking into account any associated cognisable efficiencies and business justifications); and
  3. the FTC is less likely to challenge a conduct as an unfair method of competition on a standalone basis (i.e. only under section 5 of the FTC Act), if enforcement of the Sherman or Clayton Act is sufficient to address the competitive harm arising from the conduct.

FTC Chairwoman Edith Ramirez noted that the Guidance Statement makes explicit the approach that the FTC had previously adopted in enforcing section 5 of the FTC Act, and that the Guidance Statement does not indicate any change of course in its enforcement practices and priorities.

The Guidance Statement may be accessed here.

In Singapore:

The Competition Act (Cap. 50B) does not expressly prohibit "unfair methods of competition". Instead, it is concerned with conduct that would, for example, prevent, restrict or distort competition in Singapore (section 34 of the Competition Act). However, other laws may provide some form of protection against unfair methods and practices. For example, the Consumer Protection (Fair Trading) Act (Cap. 52A) ("CPFTA") protects consumers against "unfair practices", which includes practices that deceive or mislead consumers, or that involve making false claims.

MOFCOM streamlines merger review procedures

China's Ministry of Commerce ("MOFCOM") has introduced internal changes to streamline its merger review procedures. These changes will take effect from 15 September 2015.

Prior to these changes, merger notifications were sent to the Consultation division of the Anti-Monopoly Bureau ("AMB"), which was in charge of pre-filing consultation and pre-review (also known as formality review), before case initiation. After the case was accepted for review by the consultation division, it was passed to either the legal or economics case-handling divisions for substantial review.

According to the director general of the AMB, there were complaints received that the previous pre-review consultation period, a period lasting 40 to 50 days before a case is accepted for review, was too long. Additionally, he noted that, as lawyers became increasingly familiar with the merger filing system, MOFCOM had been receiving fewer consultation requests, while at the same time facing more pressure to clear substantial reviews.

The new rules abolish the pre-review system and restructure the consultation division, which has since assumed a new function as the third case-handling devision. All three divisions are now responsible for both pre-review and substantive merger review. To encourage sector-specific experience and expertise, each division is responsible for specific industries and is tasked to examine all merger filings within the particular sector.

Accordingly, the new regime allows MOFCOM to dedicate more resources to case reviews, by having consultation officials to handle cases as well.

The new regime now allows companies to consult after a case is initiated, although companies may still submit requests, through a different procedure, for consultation prior to merger notifications.

In addition, MOFCOM has also streamlined its merger filing content requirements and revised its case notification forms and software.

The amendments are yet another demonstration of MOFCOM's commitment to expediting the merger review process. In 2014, MOFCOM introduced a "fast-track" review procedure for "simple cases" that do not raise competition concerns in China. According to the director general of the AMB, 65-70% of cases are now handled under the simplified procedure, which has significantly improved the efficiency of MOFCOM's merger review process.

Indonesian Economic Ministry directs Competition Regulator to assess industry structures

The Indonesian competition regulator, the Commission for the Supervision of Business Competition ("KPPU"), has been tasked by the Ministry of Economic Coordination ("MEC") to analyse industry structures, and in particular, industries which directly impact the general public. This is a step towards enabling and facilitating the government to devise effective and appropriate policies to overcome inefficiencies in various industries.

With the intention to reap the benefits of competition law, Indonesia's president, Joko Widodo has issued a presidential decree on the Medium-term National Development Plan 2015 – 2019. This decree, which s sets out competition law as a fundamental concern, not only aims to strengthen the powers of the KPPU, it also implies that businesses should ensure their business plans and operations are properly aligned with pro-competition values.

Notably, pursuant to directions from the MEC and a mandate given by Widodo to supervise the food industry, on 19 August 2015, the KPPU announced that it is working with three other government bodies (i.e. the Ministry of Agriculture, the Ministry of Trade and the national police) to prosecute 32 companies in an alleged collusion in the beef industry. On 13 November 2015, Widodo tasked the KPPU to eradicate cartel practices in seven commodities.

In Singapore:

The CCS has powers under the Competition Act (Cap. 50B) to undertake market inquiries where it considers that a feature, or features, of that market may give rise to competition concerns. The CCS has previously undertaken such studies in respect of (inter alia) the retail petrol industry and the airline industry.

To read this Quarterly Update in full, please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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