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On 10 September 2020, the Singapore Competition and Consumer Commission (CCCS) issued its final Market Study on E-commerce Platforms. This Study is particularly significant as it not only looks at issues from a competition perspective, but also from a consumer protection perspective, reflecting the CCCS’ clear position as a regulator of both areas. Concurrently, the CCCS has made a number of proposed changes to its various Guidelines, some of these directly flowing from making explicit that the digital platform will essentially be regulated in the same manner as brick and mortar. 

1.    CCCS concludes that there are no competition concerns on e-commerce platforms in Singapore

After months of reviewing what the CCCS described as being “across multiple market segments offering distinct products and/or services”, ranging from food delivery to ride hailing, the CCCS has concluded that it did not identify any current major competition concerns involving e-commerce platforms in Singapore. In arriving at this conclusion, the CCCS identified four key elements, namely that:

  • Consumers check multiple platforms and consider both price and non-price factors as they decide on the platform to use
  • E-payment services by e-commerce platforms are for now not a pre-requisite for a platform’s success
  • The lack of data is not currently a critical barrier to entry into the e-commerce world
  • Data protection is not viewed as a key parameter of competition amongst e-commerce platforms

Some may observe that this is a different approach to that taken by several other major competition regulators; However, in context, the CCCS has expressly highlighted that it was looking at platforms in this region rather than at a global level, noting in particular that this area had not been looked at in other market studies. This targeted approach thus appears most relevant to businesses operating in the region. However, further analysis may be needed as e-commerce participants range considerably in size.

What is particularly instructive is the fact that the CCCS has recognised that in defining the market for multi-sided platforms, as e-commerce typically comprises, the entire product ecosystem must be reviewed. Alongside this, the CCCS has recognised that as market power is assessed, new potential theories of harm such as self-preferencing, will need to be reviewed. Such changes are proposed in the Guidelines.

2.    In-depth review by the CCCS of six of its Guidelines: 

Guidelines are a useful tool which assist businesses in assessing whether their behaviour complies with competition law or otherwise. Though non-binding, they do provide the framework of the analysis the regulator will apply and the processes it will follow when reviewing a matter; and any business who has had to go through the halls of the CCCS will know that the Guidelines are applied as if they are binding.
The changes made by the CCCS to its Guidelines can broadly be divided into two categories: proposed changes to the analytic framework and proposed changes to the procedural framework. The sections below highlight some of those.

2.1    Analytic Framework

As a direct result from the Study, the CCCS proposes to amend several of its Guidelines, including that on Market Definition, on the Section 47 Prohibition (i.e. abuse of dominance) and on the Substantive Assessment of Mergers. The proposed amendments seek to provide detailed explanations on how the CCCS will assess and review multi-sided markets, the importance of taking into account innovation and rapid changes in competition dynamics when assessing market power but also when assessing the effect resulting from a merger between firms that are “innovators”. Such a proposed approach appears helpful but must be reviewed carefully, especially as the control of “key inputs”, which could include “physical assets, proprietary rights and data” will be a factor that the CCCS will consider in its assessment. One immediate question is whether more guidance should be provided in that regard, for instance on when such inputs will be considered and regarding their relevance.

Separately, the CCCS has, for the first time since they were issued, amended its guidelines on the Treatment of Intellectual Property Rights (IPRs).  There are a number of important changes to these guidelines, starting with the lowering of the market share thresholds of the parties to a licensing agreement which will be taken into account to determine whether the adverse effect on competition of the agreement is appreciable or otherwise. Other important changes include the introduction of proposed treatment of Intellectual Property (IP) settlement agreements or refusal of access to data (that could be protected under copyright law) by a dominant entity. It is worth highlighting here that the exclusion of vertical agreements from the prohibition of anti-competitive agreements, which is unique to Singapore, does not apply to vertical agreements the primary object of which relates to IPRs.

2.2    Procedural Framework

The CCCS has also proposed a number of changes to the CCCS guidelines on Merger Procedures and on Remedies, Directions and Penalties.  These primarily relate to enforcement and hence, the CCCS sees merit in combining the guidelines.
Most of the changes appear business-friendly in streamlining processes, for example by allowing information to be provided electronically by the merger parties, with no need for a hard copy unless expressly requested for, or by providing clearer milestones in the merger review process. Some proposed amendments or additions may require more in-depth review – such as the proposed changes to the steps and timelines in relation to moving from a Phase 1 to a Phase 2 in a merger notification, which would probably require considerable thinking alongside the business and Merger & Acquisition (M&A) experts.
Other changes include the CCCS providing for a template waiver to be agreed to, which will allow the CCCS to liaise with other competition authorities. This change is to the benefit of the regulator and removes flexibility for businesses.  Typically, when waivers are provided, businesses spend time assessing and considering the scope of the waiver, including the nature of the information that can be exchanged with other competition authorities.
Another proposed change is the broadening of the extent of information to be gathered by the CCCS in merger notifications. For example, the CCCS has proposed identifying the top ten customers instead of the current five for example.  This means that the CCCS will see an increased amount of data as it assesses the merger.

3.    Concluding Words

On the proposed amendments to the Guidelines, the CCCS has opened consultation until 8 October 2020. It is important for businesses to spend time understanding the proposed changes, the potential impact that this could have on business, and assess whether tweaks ought to be proposed to the CCCS.  If so, it is best that this be done at this stage rather than after the Guidelines have been amended.

On the Study, businesses involved in online e-commerce must gain a thorough understanding of any impact that it might have to their businesses.  Whilst the CCCS has for now concluded that there are no major concerns, this is not to say it will not arise in the future. The modified Guidelines in this regard may pose substantial issues for e-commerce players. It is also necessary to look at the issues from a consumer protection angle.

Region: Singapore, Asia
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