Competition Commission of Singapore Publishes Revised Guidelines on Merger Procedures
Stamford Law Corporation Press
COMPETITION COMMISSION OF SINGAPORE PUBLISHES REVISED GUIDELINES ON MERGER PROCEDURES
In our April issue, we highlighted the proposed revisions to the Guidelines on Merger Procedures in the public consultation paper issued by the Competition Commission of Singapore (CCS) in February this year.
· Guidance on circumstances where notification would be appropriate
Under the Singapore merger regime, notification to the CCS of a merger is voluntary. However if the merger is subsequently found to have resulted in a substantial lessening of competition (SLC), the CCS may require the merger to be dissolved and/or impose financial penalties on the merger parties. As such, merger parties have to assess if an application to CCS is appropriate for their merger situation.
The Revised Guidelines make clear that the CCS is unlikely to investigate a merger situation involving small businesses, and provides some guidance on the circumstances where it would be appropriate to notify the CCS. For example:
(i) mergers are unlikely to require notification where (a) mergers are between companies that each have a Singapore turnover below S$5 million, and (b) the combined worldwide turnover in the financial year preceding the merger of all of the parties is below S$50 million; and
(ii) notification is strongly encouraged where (a) the merged entity will have a market share of 40% or more, or (b) the merged entity will have a market share of between 20% to 40% and the post-merger aggregate market share of the 3 largest firms in the market is 70% or more.
· The CCS’ market intelligence function and role of complainants
The Revised Guidelines remind parties that the CCS may conduct investigations of mergers if there are reasonable grounds for suspecting that an SLC has resulted or will result if an anticipated merger is carried into effect. The CCS may become aware of such mergers through its market intelligence function and/or complaints from third parties. In such cases, the CCS will approach the merger parties or third parties to gather further information about the transaction and its effect on competition.
The Revised Guidelines also clarify that the CCS is not obliged to follow up or investigate complaints from third parties.
· Confidential advice from the CCS
While merger parties are required to carry out their own self-assessment in their decision to notify CCS of their merger situation, the Revised Guidelines introduces a new process where the CCS offers confidential advice to merger parties, subject to the following
(ii) the proposed merger must not be in the public domain;
(iii) in CCS’ view, the merger situation must raise a genuine issue relating to the competitive assessment in Singapore (e.g. if there is a lack of relevant precedents and therefore CCS’ approach to the merger situation is genuinely in doubt); and
(iv) the requesting merger party or parties must keep the CCS informed of significant developments in relation to the merger situation in respect of which confidential advice was obtained.
Prior to the Revised Guidelines, an application for a decision by the CCS as to whether a merger may lead to an SLC could only be made where the merger had been made public. This confidential process will be especially useful for mergers involving listed companies.
· Confidential information
Merger parties are currently required to provide both confidential and non-confidential versions of their submissions to the CCS. The non-confidential version may be used by the CCS for the purposes of facilitating discussions with third parties and/or publishing a non-confidential version of its decision without delay. Under the Revised Guidelines, the CCS cautions against overly wide confidentiality claims and clarifies that confidentiality should only be asserted over information that can reasonably be considered to be commercially sensitive or relating to the personal affairs of an individual. The Revised Guidelines also set out certain categories of information which are unlikely to be viewed as confidential by
The Revised Guidelines state that where the CCS considers the confidentiality claims to be excessive or unreasonable, it may delay the review process until such time as the applicant files a non-confidential version that meets its requirements.
· Pre-merger exchange of information
The Revised Guidelines recommend merger parties to exercise caution in the exchange of commercially sensitive information (e.g. prices and customer details) prior to the completion of a merger as such exchange of information may infringe Section 34 of the Competition Act which prohibits anti-competitive agreements such as price fixing agreements.
The Revised Guidelines refine the process by which the merger parties together with the CCS can resolve competition concerns in Phase 1 by way of commitments which remedy, mitigate or prevent SLC. To accommodate the commitments procedure in Phase 1, it may be necessary to extend the Phase 1 indicative timeline. The CCS is entitled to terminate the commitments process at any time. If the commitments are accepted by the CCS, the CCS will make a favourable decision and dispense with the Phase 2 review.
The Revised Guidelines are available for download from the CCS’s website at: http://www.ccs.gov.sg/content/dam/ccs/PDFs/CCSGuidelines/Revised%20Merger%20Guidelines%20Procedures%202012.pdf.
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