Singapore: Guidance on collaboration between competitors to supply essential goods and services during the COVID-19 pandemic

In brief

The COVID-19 pandemic has disrupted the supply of essential goods and services around the world, including Singapore, and such disruptions have required competitors to temporarily collaborate to sustain or improve the supply of essential goods and services. To provide clarity on whether such collaborations will fall afoul of the Singapore Competition Act (Cap. 50B) (the “Act”), the Competition and Consumer Commission of Singapore ("CCCS") has issued the "CCCS Guidance Note on Collaborations between Competitors in Response to the COVID-19 Pandemic" ("Guidance Note").


Contents

The Guidance Note sets out that CCCS will exceptionally assume that a collaboration is likely to generate net economic benefits and accordingly, is unlikely to infringe the prohibition against anti-competitive agreements under section 34 of the Act, provided that the collaboration:

  1. sustains or improves the supply of goods or services designated as "essential" by the Ministry of Trade and Industry, in Singapore ("Essentials");
  2. is limited in scope and time; and
  3. does not involve price-fixing, bid-rigging, market-sharing or output limitation.

The Guidance Note will only apply to collaborations put in place from 1 February 2020, and which will expire by 31 July 2021 ("Applicable Period"). That said, collaborations that involve price-fixing, bid-rigging, market-sharing or output limitation will continue to be prohibited unless they satisfy the net economic benefit criteria under the Third Schedule to the Act.

Businesses engaged in the supply of Essentials intending to temporarily collaborate with their competitors should ensure that their collaborations are in accordance with the Guidance Note.

Key takeaways

Under normal circumstances, collaborations between competitors will come under close scrutiny of the CCCS, as they infringe the prohibition against anti-competitive agreements under section 34 of the Act. However, recognising that businesses may be required to make prompt supply chain decisions, the CCCS has opted to assume that all collaborations between competitors relating to the supply chain for Essentials will generate NEB and accordingly, are unlikely to infringe prohibitions under the Act (instead of investigating such collaborations), as long as the above 3 requirements are satisfied. The CCCS will generally not investigate such collaborations.

The CCCS provided the following examples in its Guidance Note:

  1. joint production of Essentials where the collaboration allows businesses to produce the Essentials that they otherwise would not have been able to produce effectively alone;
  2. joint distribution and marketing of Essentials where the collaboration allows businesses to distribute and market the Essentials that they otherwise would not be able to distribute to/reach effectively alone;
  3. joint purchasing where the collaboration allows businesses to collectively bargain for lower prices for Essentials; and
  4. sharing of aggregate non-individualised information (or individualized information in certain cases) to facilitate the meeting of demand for Essentials, with adequate competition compliance safeguards in place.

However, the Guidance Note will not apply to:

  1. collaborations that fall outside of the Applicable Period i.e. 1 February 2020 to 31 July 2021; and
  2. agreements entered into with the Singapore Government or any statutory body, or conduct carried out on their behalf.

Importantly, the Guidance Note does not provide an absolute safe harbour for businesses to engage in anti-competitive behaviour with competitors. The CCCS remains empowered to commence investigations against businesses using the COVID-19 pandemic and the Guidance Notice as a guise for their anti-competitive activities.

The CCCS encourages businesses to:

  1. self-assess to determine if their collaboration falls within the framework of the Guidance Note;
  2. contact the CCCS for clarification at cccs_feedback@cccs.gov.sg; or
  3. notify the CCCS for guidance or a decision on the application of the Act to a collaboration.

The list of Essentials include products and services from the following categories: Health and Social Services; Food; Energy, Water, Waste and Environment; Information and Communications; Defence and Security, Construction, Facilities Management and Critical Public Infrastructure; Manufacturing and Distribution; Legal Services; and Others. A detailed list of products and services listed as Essentials can be found in the Annex to the Guidance Note.

While the Guidance Note provides businesses with clarity on collaboration with competitors in relation to the supply of essential goods and services in Singapore, it also sends a clear message that the CCCS expects all businesses to continue complying with existing competition laws in spite of the ongoing COVID-19 pandemic. This is in line with the joint statement made by the ASEAN Experts Group on Competition (of which Singapore is a member of) in response to the COVID-19 pandemic (see here), which calls on all businesses in the ASEAN region to continue to comply with competition law despite the economic downturn.

Please do not hesitate to get in touch with us if you wish to discuss how this development may impact your business operations in Singapore.

For more information, please refer to the Guidance Note (see here) and the corresponding media release (see here).

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