Singapore: Adopted CCCS Guidelines on Market Definition

On 21 December 2021, the Competition and Consumer Commission of Singapore (CCCS) adopted revised guidelines on the section 47 prohibition of the Competition Act 2004, which prohibits conduct which amounts to an abuse of a dominant position in the Singapore market. The guidelines set out factors and circumstances that the CCCS may consider in determining whether an undertaking has engaged in conduct that is considered an abuse of a dominant position in the market. The guidelines were revised to offer clearer guidance on assessing market power and identifying potentially abusive conduct in the digital era. The guidelines propose a two-step test, where it needs to be assessed whether an undertaking is dominant in a relevant market and if it is abusing that dominant position in that market. In order to assess potential dominance, it is necessary to identify the relevant market, broken down into the relevant product market and the geographical market. Market power arises when an undertaking does not have sufficiently strong competitive pressure and has the ability to sustain prices above competitive levels profitably or to restrict output or quality below competitive levels. Under section 47 of the Act, there are no market share thresholds for defining dominance, although it is an important factor in assessing dominance, together with the positions of other undertakings operating in the same market and how the market shares have changed over time. Generally, the CCCS considers a market share above 60% as likely to indicate that an undertaking is dominant in the relevant market. However, dominance can also be established with a lower market share, where, for example, entry barriers can prevent undertakings from competing with an undertaking. The guidelines further touch upon collective dominance, where two or more undertakings collectively abuse a dominant position. Once dominance in a relevant market is established, potential abuse needs to be investigated. One form of abuse is exclusionary behaviour, which includes excessively low prices, certain discount schemes, refusals to supply, vertical restraints, or the leveraging of market power, which forecloses markets or weakens competition. The CCCS undertakes an economic effects-based assessment to determine whether the conduct has, or is likely to have, an adverse effect on the process of competition.