Comments

Competition authorities take a strict stance against price-fixing agreements, which are considered the most egregious of anti-competitive agreements, and the CCCS is no exception. In the media release to this infringement decision (see here), Ms. Sia Aik Kor, Chief Executive of the CCCS, re-affirmed the CCCS's position that price coordination between competitors remains "one of the most serious types of anti-competitive conduct" and emphasized the need for businesses to determine their prices independently, in order to ensure the presence of competitive pressure. This is notwithstanding the fact that the FTZ surcharge was first introduced as a measure to manage rising costs.

As our economy recovers from the pandemic in a time of rising inflation, we can expect the CCCS to be guided by the Joint Statement on Maintaining Competition Policy in Post-Pandemic Economic Recovery issued by the ASEAN Heads of Competition Agencies ("Joint Statement") (see here and our previous client alert on the same) in ensuring that anti-competitive activities do not take place under the guise of "economic recovery" or difficult market conditions. To this end, this may involve increased vigilance by the CCCS, and more frequent collaborations with other competition authorities within and beyond the ASEAN region, in an effort to strengthen cross-border enforcement against anti-competitive conduct.

Businesses should ensure that commercial decisions are taken independently (especially pricing strategies), and should not coordinate commercial decision-making with competitors, even if such decisions are made with the intention of supporting economic recovery or managing rising inflation. Businesses operating across jurisdictions are also encouraged to review their global/regional business processes and competition compliance programmes, to prepare for increased cross-border antitrust enforcement by competition authorities. For more information and to discuss what this development might mean for you, please get in touch with your usual Baker McKenzie contact.

In more detail

Prompted by a complaint made by a member of the public, the CCCS commenced investigations on 8 August 2018. The CCCS investigated 11 warehouse operators that have warehouses at Keppel Distripark, which is appointed under the Free Trade Zones Act 1966, by inspections without notices and written requests for information. The CCCS also requested for information from customers of the 11 investigated warehouse operators (Baker McKenzie represented one such customer in responding to the CCCS Notices requiring production of information and documentation).

Following the investigation, the CCCS found that four warehouse operators — CNL, Gilmon, Penanshin and Mac-Nels — entered into an agreement and/or concerted practice to fix the prices of warehousing services at Keppel Distripark by coordinating the imposition of the "FTZ Surcharge". The Price-Fixing Conduct (since 15 June 2017) involved these four businesses exchanging information about their intentions to introduce a FTZ Surcharge of SGD 6 per w/m and the subsequent implementation of the FTZ Surcharge in a coordinated manner. The CCCS found the four warehouse operators to have infringed section 34 of the Act, as they had "ceased to operate independently and had knowingly substituted practical cooperation between themselves for the risks of competition".

While the CCCS had investigated the conduct of other warehouse operators at Keppel Distripark that had implemented the FTZ surcharge as well, the CCCS did not identify any evidence of their participation in the Price-Fixing Conduct. In arriving at this conclusion, the CCCS highlighted that warehouse operators may independently decide to implement FTZ surcharges in response to market conditions, and it is not an infringement to do so. This highlights the importance of making commercial decisions independently.

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