The Study's findings make clear that the issues arising from the digital sector sit at the intersection of competition law and consumer protection law.
The CCCS has been studying the applicability of its competition assessment tools to the digital sector since 2015. The Study's proposed amendments to the CCCS's competition guidelines crystallise its research findings over the last five years. As the COVID-19 pandemic catalyses business digitalisation in Singapore and the region, we expect the CCCS to continue its focus on competition issues in the digital sector well into 2021.
On the consumer protection front, e-commerce platform operators should disseminate the CCCS's recommended "good trade practices" to their sellers and adopt the same when selling directly to consumers. While not legally binding, sellers may do well to familiarise themselves with and adhere to these recommendations. Relatedly, the CCCS's Guidelines on Price Transparency will come into effect on 1 November 2020 (read about it here).
For further information and to discuss what this development might mean for you, please get in touch with your usual Baker McKenzie contact.
In more detail
As part of the Study, the CCCS and its consultant interviewed a range of industry stakeholders, including:
- e-commerce platforms that compete or potentially compete in multiple market segments offering distinct products and/or services in Singapore or in the Southeast Asian region
- e-commerce platforms that offer their own dedicated e-payment services (e.g., e-wallets)
- e-commerce platforms that do not offer their own dedicated e-payment services
- companies that offer e-payment services
- companies supplying services relating or adjacent to e-commerce platforms
- specialist consultancy that advises platform companies on business strategy
An online survey of platform consumers and platform suppliers was also conducted.
Competition findings and recommendations. While the CCCS did not identify any current major competition concerns involving e-commerce platforms in Singapore, it will update the following competition guidelines to provide more clarity and guidance to businesses in the digital sector:
- CCCS Guidelines on Market Definition: how the CCCS will assess the features of multi-sided platforms and consider consumption synergies (e.g., convenience, savings in transaction costs and time from purchasing multiple products or services from the same supplier instead of purchasing each product or service from different suppliers) when defining markets
- CCCS Guidelines on the Section 47 Prohibition 2016: how the CCCS will consider factors (e.g., control of data) when assessing market power and potential new theories of harm, such as self-preferencing (when an e-commerce platform operator gives preferential treatment to its own products/services when it competes with sellers operating on its platform)
- CCCS Guidelines on the Substantive Assessment of Mergers 2016: how the CCCS will assess mergers involving firms that are important "innovators," even though they do not have large market share; and conglomerate mergers involving e-commerce platforms
Consumer protection findings and recommendations. Importantly, the CCCS noted that it considers "e-Commerce platform operators and sellers listed on e-Commerce platforms to be within the meaning of suppliers under the CPFTA. This is because e-Commerce platform operators receive fees from sellers, by providing a platform for these sellers to list and sell their products/services to consumers."
The CCCS urged e-commerce platform operators to raise sellers' awareness and understanding of the CPFTA and encouraged sellers to adopt the following "good trade practices":
- Be upfront. State the price of goods and services clearly and accurately.
- Ensure that discounts and the duration of any discount are true.
- Provide key information to consumers.
- Ensure that product descriptions are truthful and accurate.
- Do not post or pay for fake reviews.
- Monitor buyers' queries and feedback.
Relatedly, the CCCS's recently issued Guidelines on Price Transparency will explain how the CCCS would interpret the CPFTA in relation to the display/advertisement of price and pricing practices, such as time-limited discounts, free offers and price comparisons (read about it here).
For more information, please refer to the Study report (see here) and the corresponding media release (see here).
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