The Five Don’ts of Competition Act

1. Don’t Price Fix 

“Psst! Shall we agree to charge the same price? This way, we won’t have to compete among ourselves on prices?”

“Let’s come up with the same discount schemes” 

Never agree with your competitors to increase or maintain prices. Even if you indirectly fix prices by, for example, agreeing to offer the same discounts or credit terms, it would be considered a breach of the Competition Act. 

2. Don’t Share Information Related to Pricing 

“What’s your pricing plan for this product?”

You should also never share or exchange information on decisions and tactics related to pricing, profits or marketing with your competitors. This includes sharing on present or future pricing, promotions, discounts, pricing policies, and the terms and conditions of sale. By doing these, businesses effectively agree to price fix by offering the same price, discounts, promotions or pricing policies. 

3. Don’t Bid-Rig

“Hey, what if we all decide who should win this tender and at what price? This way, we can make sure that the tender is awarded at a high price.”

The most common form of tender manipulating (or bid-rigging) is when competitors agree on who should win a tender. To support the designated winner, the other bidders may agree to refrain from bidding, withdraw their bid, or submit bids with higher prices or on unacceptable terms. Other bid-rigging agreements involve subcontracting part of the main contract to the losing bidders, or forming an undisclosed joint venture to submit a single bid. An essential feature of the tender system is that tenderers prepare and submit bids independently.”

4. Don’t Share Markets

“Shall we just share out the market by deciding who gets which customer? Then we won’t have to work so hard to win customers.”

Don’t get embroiled in a market sharing arrangement. In a market sharing agreement, competitors agree to divide up customers either by geographical area or customer type and sell only to their allotted customers. As a result, they do not compete for each other’s customers. What this means is that customers and companies have fewer suppliers and have been prevented from shopping around for the best deals, and will be forced to pay more for goods and services.

5. Don’t control production with your competitors 

“Instead of producing so much and letting consumers decide how much they want to pay, how about we keep the supply low, and jack up the price?”

Never agree to control production. Production control involves competitors agreeing to limit the quantity of goods or services available in the market. By controlling the supply or production of goods and services, competitors are able to indirectly increase prices to maximise their profits. As a result, consumers are forced to pay more for goods and services. In addition, because companies are also purchasers of foods and services, this will lead to companies paying for the goods and services that they buy, thereby reducing their efficiency.

The Five Do’s of the Competition Act

1.       Do avoid any communication with your competitors on any anti-competitive tactics or plans with you 

Communication with your competitors on any anti-competitive tactics or plans with you is illegal, regardless of the setting and the form it takes. You can break the law with agreements reached via email, through a phone conversation, in the form of a “wink and a nod”, during meetings or in social setting.

2.       Do make clear your objection to any anti-competitive agreement

Should a competitor attempt to discuss anti-competitive tactics or plans with you, end the discussion immediately. If the discussion continues, excuse yourself from the meeting. Under the Competition Act, your mere presence can be taken as approval on your part of what is being said, even if you are silent throughout the discussion.

3.       Do introduce a compliance programme in your company.

To help your company steer clear of trouble spots, put in place a sound compliance programme. The compliance programme must be tailored to your company’s particular requirements. Here are some features of an effective compliance programme:

• Appropriate policies and procedures should be carefully designed and implemented. These may be documented in a compliance manual.
• Senior management’s support for the compliance programme and their adherence to the programme should be visible, active and regularly reinforced to signal the company’s commitment to the programme.
• Training should be conducted regularly for employees at all levels on competition law and the company’s policies and regulations regarding anti-competitive practices.
• Regular evaluation and review should be conducted to ensure that the compliance programme is working properly as well as to identify and address areas of possible risk.

4.       Do educate yourself, your staff and business partners on Competition Law

CCS has developed a range of collaterals which are available on its website. There are also a number of CCS’ outreach sessions, which interested members of the business community can attend.

5.       Do seek guidance from CCS if you are concerned that any of your trade practices may be anti-competitive.

If you are worried that any of your trade practice may be anti-competitive, you may seek guidance or a decision from CCS. If you are currently involved in a price-fixing agreement with your competitors, you can approach us to apply for leniency. Under the CCS Leniency Programme, the first person or company that comes forward and provides evidence of such activities before CCS starts investigation is granted full waiver of the penalty.