14 March, 2012

On 9 March 2012, the Competition Commission of Singapore (“CCS”) announced that it had issued a Proposed Infringement Decision (“PID”) against Batam Fast Ferry Pte Ltd (“BFS”) and Penguin Ferry Services Pte Ltd (“PFS”). BFS and PFS both operated ferry services from Habourfront in Singapore; however, PFS now operates under a different name (Sindo Ferry Pte Ltd), after being acquired by the SIF Group in July 2011.

The PID was issued in respect of an alleged contravention of section 34 of the Competition Act (Cap.50B) (“Act”), which prohibits agreements which have the objective or effect of preventing, restricting or distorting competition in Singapore. As the PID has not been made publicly available, details of the precise nature of the parties’ conduct in question are still unknown to the public. However, CCS has indicated that the parties exchanged sensitive and confidential price information in respect of the routes operated by them between Harbourfront and Sekupang, Batam, and Harbourfront and Batam Centre.

Exchanging sensitive and confidential price information can be indicative of the existence of a price-fixing arrangement between entities. Such an act can also constitute a contravention under the section 34 prohibition in its own right, as explained in CCS’s guidelines. The primary concern arising out of exchanging sensitive price information is that it undermines the natural state of competition between the parties, where pricing decisions would otherwise be made independently. With the knowledge of how each party will behave, the entities could coordinate their commercial behaviours, thereby reducing competition that would have existed without such an exchange.

CCS indicated that, as a general principle, exchange of information between competitors is more likely to have an appreciable adverse effect on competition if:

(a) the number of undertakings operating in the market is small;

(b) the exchange of information takes place frequently;

(c) the information exchanged is sensitive and confidential in nature; and

(d) the information exchanged is limited to certain participating companies to the exclusion of their competitors and buyers.

All of the five previous infringement decisions made by CCS in respect of section 34 of the Act, have involved elements of information exchange as a supporting factor to price-fixing or bid-rigging arrangements. The fact that the PID represents the sixth time that CCS has objected to information exchanges between competitors, indicates that businesses should be quick to audit their interactions with competitors to ensure on-going competition law compliance.

The PID is not an infringement finding in itself, but is an indication that CCS intends to make an infringement finding, pending final representations from the parties involved. Procedurally, parties are given six weeks to make their representations, and are afforded an opportunity to review CCS’s file on the matter. In this case, CCS has indicated that parties have been given until 23 April 2012 to make their representations.

Should CCS proceed to issue a final infringement decision, the parties may lodge a Notice of Appeal to the Competition Appeal Board within eight weeks of CCS’s decision. The merits of any possible appeal remain to be seen, and whilst section 34 cases are largely factual in nature, some parties have had success in reducing the financial penalties imposed by CCS in such cases.