Canadian COMPETITION LAW

June 8, 2010

We are pleased to provide this global competition law update from our friends at the leading Singapore firm Rajah & Tann LLP.

Introduction

This client update discusses two new infringement decisions issued by the Competition Commission of Singapore (“CCS”).  The first case involves bid-rigging activities by 14 electrical services companies in the provision of electrical and building works for properties in Singapore.  Significantly, the case is the first infringement decision in Singapore in which one of the companies involved in the cartel blew the whistle on the others, thus earning it immunity.  The total penalty imposed on the other 13 companies is S$187,592.94.

In the second case, the first abuse of dominance infringement decision issued in Singapore, SISTIC.com Pte Ltd. (“SISTIC”) was fined S $989,000 for requiring key venues and event promoters to sell performance tickets through SISTIC only by way of a series of exclusive agreements.

This update discusses the competition law whistle-blowing leniency regime in Singapore and the application of competition law to all businesses – small and large – operating in Singapore. The SISTIC case will be discussed again at a later stage.

The Electrical Services Companies

It does not take giants to make waves in competition.  In the third cartel decision in Singapore, the CCS issued S$187,592.94 in fines on 13 electrical services companies for price-fixing through bid-rigging.  The electrical service company which blew the whistle on the cartel, Arisco Engineering & Maintenance Services Ptd Lt. (“Arisco”), enjoyed immunity under the CCS’ Leniency Programme and hence, did not receive a penalty.

The 14 electrical companies colluded to submit bids for 10 electrical or building works projects.  The modus operandi here was similar to that in the first-ever cartel decision issued by the CCS in January 2008 on the Pest Control companies.  Typically, when a tender project was up for bids, the company that was interested in winning the project would request for a cover bid from at least one other company.  The company making the request would inform the others of its bid price so that they could submit a higher quote.  According to the CCS, there were instances where the company making the request prepared the quotation for the companies supporting it.

Under section 34 of the Competition Act (“the Section 34 Prohibition”), “agreements between undertakings, decisions by associations of undertakings or concerted practices which have as their object or effect the prevention, restriction or distortion of competition within Singapore are prohibited.”  Although the CCS typically takes into account the size of the undertakings when considering if there will be appreciable effect on competition in the market, it has stressed, in its Guidelines and its previous cartel decisions that an agreement involving price-fixing, bid-rigging, market-sharing or output limitations will always have an appreciable adverse effect on competition.  The 13 companies were fined between S$5,000 and S$44,000.

It should be noted that the maximum penalty which can be imposed by the CCS is 10 percent of the turnover of the business of an undertaking in Singapore for each year of infringement for up to three years.

Blowing the Whistle

Under the CCS’ Leniency Programme, cartel members who whistle-blow on the cartel may receive immunity from, or a reduction on the amount of, financial penalties that will be imposed on the cartel.

The Leniency Programme provides that the cartel member may receive the following benefits, among others, under certain conditions: (a) total immunity against financial penalties for the first cartel member to provide the CCS with evidence of the cartel activity before an investigation has commenced, provided that the CCS does not already have sufficient information to establish the existence of the alleged cartel activity; or (b) reduction of up to 100 per cent in the level of the financial penalties where the cartel member is the first to come forward to provide evidence of cartel activity once an investigation has commenced but before the CCS has sufficient information to establish the existence of the alleged cartel activity; or (c) reduction of up to 50 per cent in the level of the financial penalties where the cartel member is not the first to come forward to provide evidence of cartel activity once an investigation has commenced but before the CCS has sufficient information to establish the existence of the alleged cartel activity.

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