|
|
|
| |
| Home > News & Events > Speeches > 2005 > Speech delivered by Mr Ng Wai Choong Chief Executive CCS |
|
|
| |
Speech delivered by Mr Ng Wai Choong, Chief Executive CCS
SPEECH BY MR NG WAI CHOONG, CHIEF EXECUTIVE, COMPETITION COMMISSION OF SINGAPORE, AT THE OFFICIAL LAUNCH OF THE COMPETITION COMMISSION OF SINGAPORE AND COMPETITION LAW CONFERENCE 2005 ON TUESDAY, 2 AUGUST 2005, 9.35AM AT SUNTEC CONVENTION CENTRE
PREPARING FOR COMPETITION LAW IN SINGAPORE: THE CCS's PERSPECTIVE
1. Good afternoon.
2. The earlier speakers have, from their respective vantage points as regulators, economist and lawyers, given their perspectives on competition law. As a new competition authority, how will the CCS carry out its regulatory function?
3. While the regulation of competition has been in existence for certain sectors such as energy and telecommunications, we never had a generic competition law applicable to businesses in general. The enactment of such a new law marks a bold step forward for our economy. Much care and attention will be needed for its implementation. The CCS has been carrying out public outreach and consultation programmes to raise awareness of the law and to obtain feedback. Today, I would like to touch on some issues that market players have expressed concerns about, and how the CCS plans to deal with them.
I. CROSS-SECTORAL CONCERNS
4. A major concern raised was how the CCS would handle cross-sectoral issues. For example, undertakings may be regulated by one agency on a certain aspect and by the CCS on competition aspects. Naturally, businesses are afraid that in such instances, there may be conflicting directions from different regulators. There are also fears that the need to comply with double regulation will result in increased business costs.
5. These are very real concerns. The CCS will thus come up with a framework for co-ordination with other sectoral regulators. We have established an Interagency Competition Forum for CCS and the sectoral regulators to meet regularly and resolve any cross-sectoral issues. Where possible, we will establish clear boundaries in our respective functions, so that there is clarity on what falls under the regulatory jurisdiction of each agency. Where there is overlap, there will be mechanisms to decide which agency will take the lead, so that businesses do not have to deal with multiple regulators. The Interagency Competition Forum will also promote alignment and consistency in the regulatory and analytical approach to competition issues.
II. TRANSITIONAL PROVISIONS
6. Another concern which businesses have raised relates to the impact of the Act on pre-existing agreements. We have provided for a transitional period of one year from the commencement of the Act in January 2005. In addition, parties to agreements in existence for more than 5 years before that - in other words, before January 2000 -- can apply to the CCS for a longer transitional period if needed. However, there has been feedback that businesses need more time to bring their agreements into compliance with the Act. The CCS has thus reviewed the transitional provisions, and will make the following changes.
7. First, taking into account that our guideline on the section 34 prohibition was just released, for all agreements made on or before 31 July this year, the CCS will now allow a grace period of an additional 6 months up to 30 June 2006 to comply with Act. Parties will thus have a longer time to renegotiate or amend those portions of their agreements which run foul of the Act. During the period from 1 January to 30 June 2006, the CCS will not impose a financial penalty.
8. Second, for complex agreements that require a longer time to comply with the Act, the parties can apply to the CCS a longer transition period, even if the agreement is in existence less than 5 years before the Act's commencement. The application must be made before 1 July 2006. Where the application so merits, the CCS will generally grant a transitional period of up to one year.
9. The CCS will be issuing its guideline on the transitional period later this month.
III. BLOCK EXEMPTIONS
10. During the course of public consultations, we also received enquiries on whether there will be block exemptions. Businesses have highlighted that certain activities which have traditionally been given block exemptions in competition regimes in other parts of the world should receive like treatment in Singapore. The CCS is studying this. Block exemptions are highly technical, and require expert inputs and intimate knowledge of the sector. Where the industry concerned is governed by a sectoral regulator, close coordination between the CCS and that regulator is also needed. In seeking to define Singapore's block exemptions, the CCS will draw on the experience of more mature competition jurisdictions, but take into account the local circumstances. Currently, we are studying the issue of block exemption orders in certain sectors, notably the airline and shipping industry.
IV. THE SINGLE ECONOMIC ENTITY DOCTRINE
11. Apart from operational issues, many have also sought clarification as to the conceptual bounds of the new law. One of the concerns most commonly raised related to the single economic entity doctrine. Under this doctrine, a parent and its subsidiary, or two subsidiaries of the same parent, form a single economic unit if the subsidiary has no real freedom to determine its course of action in the market, and enjoys no economic independence despite its separate legal personality.
12. Several consequences flow from this doctrine. For example, if a parent and its subsidiary form a single economic unit, any agreement between them will not be caught by the section 34 prohibition as it will not be an agreement between independent undertakings. However, where the parent and subsidiary do form a single economic unit, the parent may be held responsible for anti-competitive actions of the subsidiary, e.g. when the subsidiary enters into a price-fixing agreement with some other party.
13. Whether two companies form a single economic unit is very much a matter of fact. Nevertheless, there will be certain key factors that will play an important role in the determination. These include things such as the parent's shareholding in the subsidiary, whether or not the parent has control of the subsidiary's board of directors and whether the parent plays a role in the subsidiary's decision making process.
CONCLUSION
14. In striving towards the goal of creating and maintaining efficient markets in Singapore, the CCS will apply sound economic principles in its interpretation of the legal framework. This does not mean that our approach will be theoretical or academic. The CCS will bear in mind the practical realities of the market. For example, we recognise that Singapore is a small open economy, where some degree of market concentration is inevitable. Rather than looking at things statically, we also intend to take a dynamic approach. For example, the fact that an undertaking's market share crosses a certain threshold may have to be qualified if market shares in the market concerned tend to fluctuate more widely than in other markets. Ultimately, the CCS seeks to operationalise the competition regime in a pragmatic manner that will achieve tangible results in bringing about greater efficiency, innovation and enterprise in Singapore.
15. Thank you. |
| |
|
|
|
|
|
|
|