Better Business
with
Competition
Compliance
Programme
How competition compliance
can help your business
Singapore has consistently been ranked among the world’s most
competitive economies. A key factor underpinning this achievement
is its sound competition policies. By having in place a Competition
Law regime which ensures a landscape in which businesses can
compete free of distortions and impediments created by anti-competitive
conduct, businesses are able to compete on their own merits on a
level playing field.
In the course of competing, in order to thrive and grow, you need to
be aware of the risks of infringing competition rules and learn how to
protect your business by developing a compliance strategy that best
suits your objectives.
CCS encourages all companies to adopt and maintain an effective
Competition Compliance Programme.
CUT ALONG THE DOTTED LINE
Better
Business
Smarter
Business
SAfer
Business
Rivalry with competitors is part and parcel of doing business. Managing
A successful Competition Compliance Programme makes your business smarter when
Your business may be exposed to many competition risks. Unknown to you, staff may engage
your risks with an effective Competition Compliance Programme means
it comes to knowing your rights and responsibilities. When effectively implemented on
in anti-competitive practices such as bid rigging or price-fixing. As the financial penalty for
putting in place a better business process for your company, which will
a company-wide basis, it helps your business identify any possible infringements
breaching competition law is ultimately borne by the company, staff may be tempted to engage
enhance your competitive edge. A Competition Compliance Programme
early, and nips it in the bud by allowing the company to take appropriate remedial
in anti-competitive practices, especially if doing so leads to personal gains. In addition,
is a formalised internal framework to ensure that your firm (both
action swiftly. Good knowledge of competition law will also help your staff in spotting
a company may suffer serious reputational damage if it is found to have breached competition law.
management and employees) complies with competition law. It can be
potential anti-competitive conduct early and raise this to the Competition Commission
A compliance programme does not completely indemnify a business from wrongdoing if it is
part of an overall corporate compliance framework.
of Singapore, thus minimising the risk of your business being a victim.
found to have infringed the law. However, a company that has an effective Competition
Compliance Programme in place may have its financial penalty reduced.
What is a Competition
Compliance Programme (CCP)?
Simply put, a CCP is the commitment of a company to comply with the provisions
of the Competition Act by putting in place a formal internal framework to ensure
that management and employees comply with competition law. The elements of a
CCP may include simple “dos and don’ts” checklist for staff, continual review of
staff conduct by management, and regular staff training to raise awareness of
competition law.
A CCP can be either standalone or a part of a broader regulatory compliance
framework, and can be organised at the levels of local offices or global
headquarters. It is also useful as a part of good corporate governance.
Why a CCP is important
for your business?
When competing in the marketplace, your company can be exposed to
anti-competitive practices in many ways. Sometimes, you can be a victim of such
illegal practices by your competitors or suppliers. At other times, your junior staff
or sales staff may breach the law, unknown to senior management. Under the
Singapore Competition Act, it is the company that is liable to financial penalties for
its employee’s actions.
A successful CCP not only minimises the risk of your business infringing
competition law, but also helps in detecting any possible infringements at an
early stage, thereby allowing timely remedial action. Good knowledge of
competition law would also help you identify anti-competitive practices in the
marketplace and lodge a complaint to CCS if your business is adversely affected.
Having an effective CCP in place may also reduce the amount of financial
penalties should there be a finding of an infringement by CCS. First, a CCP that is
effectively implemented can be a mitigating factor. Second, timely termination of
anti-competitive practices would shorten the duration of infringement, which is a
key factor for calculating the penalty amount. Third, in relation to cartels, early
detection is particularly crucial as up to 100% immunity from financial penalties
may be granted to the first cartelist to come forward to CCS1 under the CCS
Leniency Programme.
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Other conditions apply, and the actual quantum in the reduction of penalties depends on several factors.
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Implementing an Effective CCP
Guidelines to a CCP
For a CCP to be effective, it must be tailored to the particular circumstances of
your business. There is no standard programme that will apply universally. Your
company may consider seeking professional advice from a legal adviser or a
compliance specialist.
The features of a CCP should ultimately be a management decision based on your
business circumstances. However, the following are common features in many CCPs:
Putting a CCP in place should be seen as the start of a continual process, rather
than an end in itself. The programme must be ongoing and sufficiently flexible to
adapt to the changing requirements of the business. The CCP framework should
be regularly reviewed to ensure that it stays relevant to your business.
• Appropriate policy and procedures
• Active implementation
• Training
• Regular evaluation
1. Appropriate policy and procedures
An effective policy would contain at least the following elements:
• an overarching commitment to comply with competition law;
Successful compliance
starts from the top
Senior management support for the CCP is vital as an indicator of your business’
commitment to complying with competition law. It signals the importance your company
accords to competition compliance to external stakeholders and deters other businesses
from engaging your company in anti-competitive practices. Strong management support
will also encourage more junior employees to adhere to the programme and actively follow
its principles. Senior management support must be visible, active and persistent. This can
be achieved in a number of ways, such as:
• placing a duty on all employees and directors to conduct their business dealings
within this overarching policy, for example by including adherence to the CCP in the
employee handbook;
• disciplinary action to be taken against employees/directors who intentionally or
negligently involve the firm in anti-competitive practices – this is essential if the
programme is to be taken seriously; and
• adherence to CCP as a consideration in performance appraisals.
A framework should be provided to enable employees to:
• seek advice on whether or not a particular transaction complies with
competition law; and
• report activities that they suspect infringe competition law.
It is essential that employees are informed of the business’ policy and procedures on
compliance in an appropriate way.
• a personal message to staff from the most senior individual in the organisation stating
his or her commitment to the CCP;
• making reference to the CCP in your business’ mission statement or code of behaviour
and ethics;
• making adherence to the CCP one of the overall objectives of the organisation; and/or
• designating a member of the Board of Directors or the senior management team to
take on overall responsibility to ensure that the CCP is functioning correctly and to
report to the Board at regular intervals on it.
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2. Active Implementation
4. Regular evaluation
A CCP goes further than a verbal or written commitment to comply with competition
law. It must be actively implemented and promoted through the operation of appropriate
policies and procedures. Active implementation of a CCP could include, for example, a
complete review by an independent party, of all existing contracts/agreements the
company has signed, from a competition angle (e.g. exclusive clauses, sales rebate
terms and conditions, etc), as well as an internal or external audit of existing standard
operating procedures for staff, such as sales and marketing staff or staff involved in bid
preparation. A well-designed and effective CCP could include putting in place
procedural safeguards such as ensuring that all contracts/agreements be cleared
through the legal department, which would include competition law as a consideration
in their review.
Even if the above three elements are present, a CCP is unlikely to be successful unless its
effectiveness is regularly evaluated. Evaluation is essential not only as a means of ensuring
that the CCP is working properly but also to enable areas of risk to be identified and
addressed. The evaluation element should include some or all of the following:
• ensure that the CCP is kept up to date in relation to developments in competition law;
• formal audits of sales and procurement processes, by appointment or unannounced, to
check for actual or potential infringements; and
• review mechanisms for reporting actual or potential infringements to senior management,
and for taking steps to put right the problem and limiting the risk of recurrence.
The evaluation process should be carried out as openly as possible as an indicator to
employees that their conduct is constantly subject to review against the terms of the CCP.
3. Training
Training forms a crucial part of an effective CCP and is essential for all employees.
Training should be provided on competition law and the business’ CCP. Such training
can be offered as part of the induction programme for new staff and also on a continuing
basis in order to reinforce the compliance message and keep staff updated with changes
in the law. You can deliver the training in a variety of ways – such as informal seminars,
video presentations and role-play. Ideally the training should be related in some way to
the business activities so that employees are better able to identify competition issues
in their everyday work. In addition, it might be useful to identify employees or business
units that are likely to be more exposed to competition law risks. These might include
the following:
• senior management;
• sales and marketing staff;
• staff in charge of purchasing and procurement;
• strategic planning staff who plan potential mergers or acquisitions;
• staff involved in negotiating of contracts with customers or distributors;
• staff involved in pricing policy or loyalty programes/rebates;
What about Small and
Medium-Sized Enterprises (SMEs)?
Compliance is important for all businesses regardless of their size. While some
businesses might cite high costs of developing and implementing such compliance
programmes, individual businesses, including SMEs, must keep in mind the potential
costs of non-compliance and note that having an effective competition compliance
programme in place goes towards good corporate governance as well.
It is therefore important that SMEs take compliance seriously. However, CCS recognises
that businesses may adopt different methods of ensuring compliance, depending on their
size. For example, smaller businesses may choose not to implement a formal compliance
programme, but it is necessary to ensure that your employees are aware of and kept up to
date with the implications of and the need to comply with competition law.
• staff who hold concurrent positions in trade associations; and
• staff who have contact with competitors.
Additional customised training might be made available for these categories of staff.
Training records should be kept and management should ensure that the training
content is up to date.
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A quick overview
of Competition Law
2. Abuse of a dominant position
A business that enjoys substantial market power over a period of time might be in a dominant
position. The assessment of a dominant position is not based solely on the size of the business and/
or its market share. Other factors such as entry barriers and bargaining power of customers may also
be considered.
There are three key things you should watch out for in
your business and your competitors’ businesses:
Dominant businesses are prohibited from certain abusive practices which block or inhibit other
players from competing in the market. Examples of such abusive practices are:
• Anti-competitive agreements
• slashing prices below cost in order to drive competitors away from the market (Predatory Pricing);
• Abuse of a dominant position
• giving discounts to customers on condition that they do not purchase from other competitors
(Exclusive Dealings, Loyalty Discount);
• Mergers that substantially lessen competition
• selling a product on condition that the customer also purchases another product (Tying); and
1. Anti-competitive agreements
• refusing to supply an essential input material to a downstream competitor (Refusal to Supply).
1000
1000
1000
1000
1000
1000
$15
$20
$25
$50
$50
$50
UNITS
UNITS
UNITS
MARKETS
Before
UNITS
UNITS
Sorry, no business for
you because I was told
to order only from that
dominant supplier.
UNITS
I will be closing down. I don’t
stand a chance when the
market leader sets prices
below cost to drive me out!
MARKETS
AFTER
Cartels are the most serious types of anti-competitive agreements, where two or more
businesses agree (whether in writing or otherwise) not to compete with each other.
RETAILER
Supplier
How am I to continue my business
when you tie down all the customers
with your discount schemes?
Cartels include agreements to:
Businessman
Customer
This is unreasonable! How can
you just decide not to supply
me with material needed for
production without any reason?
• fix prices;
• engage in bid rigging (for example, cover pricing);
• limit production/supply; and
• share customers or markets.
Other agreements that could be anti-competitive include, amongst others, the
exchange of price information and the joint selling or purchasing of products with
competitors. In addition, companies are reminded that price recommendations by
industry associations may be incompatible with competition law.
COMPETITOR
DOMINANT
PLAYER
DOMINANT
PLAYER
COMPETITOR
For all the conduct listed above, it is important to consider the effect of the conduct on customers and
on the process of competition when determining whether it would amount to an abuse. Of course, the
firm engaging in such conduct would have to be dominant in the first instance.
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3. Mergers that substantially lessen competition
When dealing with mergers, two questions that you should ask yourself is:
• Does the merger result in a substantial lessening of competition in Singapore?
• Are economic efficiencies from this merger sufficient to offset the lessening of
competition?
Not all mergers give rise to competition issues. Many mergers are either pro-competitive
(because they positively enhance levels of rivalry), or are competitively neutral. In order to
determine whether a merger is anti-competitive, CCS will assess whether the merger
leads to a substantial lessening of competition (resulting in an increase in prices above
the prevailing level, lower quality, and/or less choices of products and services for
consumers), and if so, whether there are economic efficiencies that are sufficient to
offset this anti-competitive effect.
Generally, competition concerns are unlikely to arise in a merger situation unless:
• the merged entity has/will have a market share of 40% or more; or
• the merged entity has/will have a market share of between 20% to 40% and the
post-merger combined market share of the three largest firms is 70% or more.
Further, CCS is unlikely to intervene in a merger situation that only involves small
companies, namely where the turnover in Singapore in the financial year preceding the
transaction of each of the parties is below S$5 million and the combined worldwide turnover
in the financial year preceding the transaction of all of the parties is below S$50 million.
You may also consider whether the merging entity will affect the competitive landscape in
the market, such as giving rise to coordinated anti-competitive behaviour among firms
(because the number of players in the market are reduced), for example, coordination on
prices or output or lead to increased market power such that the merging entity is able to
raise prices and/or reduce output or quality after the merger.
Competition Compliance
Programmes in Action
Competition compliance programmes are a key component in many business
organisations, from SMEs to MNCs that span the globe. We spoke with Edmund Chan,
General Counsel at ExxonMobil Asia Pacific Pte Ltd and Anne Riley, Associate
General Counsel and Head of Legal Antitrust Team at Shell as they shared their views
about their organisation’s experience with competition compliance programmes.
Edmund Chan
General Counsel
ExxonMobil Asia Pacific Pte Ltd
ExxonMobil is committed to achieving outstanding performance in all aspects of our business.
To achieve that, the company needs to remain competitive. In pursuing business opportunities,
ExxonMobil maintains its commitment to comply with the antitrust and competition laws of all
countries, which are applicable to its businesses. ExxonMobil’s Antitrust Policy places this
responsibility on every director, officer and employee.
ExxonMobil has had a compliance programme for competition law in place for many years and there is
a culture of compliance to the law within ExxonMobil and all of its affiliates. We maintain the same high
expectations and standards for compliance programs in all ExxonMobil affiliates.
We believe an effective CCP will foster competition and the benefits of competition.
Anne Riley
Shell Group Antitrust Counsel
Associate General Counsel
Head of Shell’s global Legal Antitrust Team
We consider that having an antitrust compliance programme is a key part of good corporate
governance. While the threat of high corporate fines may undoubtedly be a reason for firms to
maintain effective internal compliance efforts, we have many other reasons for maintaining our
antitrust compliance programme, including: avoiding or reducing the risk of infringements which
cause reputational damage, loss of shareholder value and loss of customer respect; protecting our
customers by promoting ethical behaviour; avoiding costly investigations and follow-on litigation,
and trying to ensure that Shell is viewed as an ethically and socially responsible organisation.
We absolutely believe that a CCP is important to every business, regardless of size. Of course the
programme does not need to be of the sophistication and complexity of the programmes operated
by larger corporations, and the programme must be tailored to the size, financial resources and
risks faced by the business concerned.
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CONTACT US
If you have a concern or complaint, or would like to seek further
information on competition law, you may contact CCS at:
Address
45 Maxwell Road
#09-01
The URA Centre
Singapore 069118
Hotline: 1800-325 8282
Facsimile: (65) 6224 6929
Email: [email protected]
Website: http://www.ccs.gov.sg
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Disclaimer: CCS encourages all businesses to develop and implement a CCP. In the event of any violation of
the Competition Act, CCS will consider whether and how much weight to give to the CCP as a mitigating factor,
depending on all the circumstances of a case, and the commitment and effectiveness in implementing the CCP.