CCCS seeks feedback on proposed Business Collaboration Guidance Note: Allen & Gledhill

18 August 2021

From 30 July 2021 to 27 August 2021, the Competition and Consumer Commission of Singapore (“CCCS”) is seeking public feedback on a proposed Business Collaboration Guidance Note (“Guidance Note”) that will enable businesses and trade associations to work together with greater confidence by providing greater clarity on ways to collaborate without harming competition.

The Guidance Note sets out guidance on the assessment factors that CCCS would generally consider in determining whether a collaboration complies with section 34 of the Competition Act (“Competition Act”), when specific types of collaborations may give rise to competition concerns, and the conditions under which competition concerns are unlikely.

Six common types of business collaborations

The Guidance Note focuses on the following six common types of business collaborations:

Information sharing: Exchange of both price and non-price information among businesses;
Joint production: Collaboration to jointly produce a product or subcontract production out;
Joint commercialisation: Collaboration in the selling, distribution or promotion of a product;
Joint purchasing: Collaboration to jointly purchase from one or more suppliers;
Joint research & development (“R&D”): Collaboration on R&D, such as joint investment; and
Standardisation: Setting of industry or technical standards by standard setting organisations as well as the usage of standard contractual terms.

The Guidance Note also includes a short section each on cross-border collaborations and information for trade associations regarding their role in supporting collaborations among their members.

Minimising competition concerns

The Guidance Note provides guidance on how to minimise competition concerns for each of the six common types of business collaborations. In summary, competition concerns are less likely to arise when:

For information sharing

Information is publicly available or is not related to price or other important factors that impact how businesses compete;
Information is historical, aggregated (especially by independent third parties) and cannot be attributed to individual businesses;
The market has a large number of players with frequent entry and exits, and the relevant goods/services are highly differentiated or changes rapidly (on condition the information shared does not facilitate price-fixing, bid-rigging, market sharing or output limitation); or
In the context of a collaboration where commercially sensitive and individual information is needed, only information strictly necessary to implement the collaboration is shared and there are safeguards to ring-fence commercially sensitive information so that businesses are unable to access information affecting competition between them.

For joint production and joint commercialisation agreements

The collaboration does not facilitate price-fixing, bid-rigging, output limitation and market sharing;
Collaborating businesses do not have market power, e.g. they have aggregate market shares of less than 20% (if they are actual or potential competitors) or less than 25% each (if they are non-competitors);
The collaboration does not result in collaborating businesses having a significant proportion of common costs unless there is significant cost reduction that outweighs the potential harm arising from such common costs; and
The collaboration does not raise concerns in relation to the types of information sharing or contain safeguards to minimise concerns with information sharing.

For joint purchasing agreements

The collaboration does not facilitate price-fixing, bid-rigging, output limitation and market sharing;
Collaborating businesses (a) do not have buyer power in the purchasing market, e.g. they have aggregate market shares of less than 20% and (b) do not have market power in the selling market(s), e.g. they have aggregate market shares of less than 20% (if they are actual or potential competitors) or less than 25% each (if they are non-competitors);
The available supply in the purchasing market is not limited and other competing purchasers are not foreclosed from suppliers;
The collaboration does not result in collaborating businesses having a significant proportion of common costs unless there is significant cost reduction that outweighs the potential harm arising from such common costs; and
The collaboration does not raise concerns in relation to the types of information sharing or contain safeguards to minimise concerns with information sharing.

For joint R&D

The collaboration is between businesses that are not actual or potential competitors or does not remove a maverick competitor from the market;
Where the collaborating businesses are actual or potential competitors for existing products or technologies, they do not have market power, e.g. their aggregate market share is less than 20%; or
Where the collaboration is on new products or technologies, there are multiple viable alternative R&D projects undertaken by competitors going on.

For standardisation agreements and standard terms and conditions

The standards are established fairly through a transparent process and access to the standards are fairly given. Businesses or organisations interested in pursuing standardisation agreements should be mindful to avoid any unfair practices during the standard-setting process. Unnecessary restrictions in the terms of access to the standards should also be avoided.
The standard terms are concise and relate specifically to their objectives in mind and businesses are not compelled to adhere to them. Businesses or organisations interested in establishing standard terms in their industry should be mindful not to have overly extensive or prescriptive benchmarks, or standard price or non-price terms that facilitate price-fixing, bid-rigging, market sharing or output limitation. Businesses should not be compelled to adopt the standard terms and should retain the ability to come up with their own terms if they wish to.

According to the Guidance Note, if businesses remain in doubt as to whether a specific collaboration complies with the Competition Act, they may wish to notify the collaboration to CCCS for guidance or decision as to whether it would be likely to infringe or has infringed the section 34 prohibition respectively. There is no legal requirement for businesses to notify their collaborations to CCCS. It is for the businesses to self-assess and decide whether to make a notification for guidance or decision to CCCS.

Additional consultation questions

In addition to inviting comments on the Guidance Note, CCCS is also seeking feedback on the following:

Any other types of common collaborations that should be included in the Guidance Note.
Any other information and guidance, including specific guidance to trade associations that should be included in the Guidance Note.
Whether the examples and diagrams provided in the Guidance Note are sufficiently clear in providing guidance.
The type of post-issuance collaterals and engagements which would be useful to supplement and provide further guidance to businesses on business collaborations, and the most effective format of these collaterals and engagements.

Reference materials

CCCS’s media release is available on its website www.cccs.gov.sg. The consultation documents can be accessed and downloaded from the “Public Consultation” section, or by clicking on the following: