Jurisdiction - Singapore
Reports and Analysis
Singapore – Proposed Revisions to Merger Control Procedures.

25 February, 2012

 
 

The Competition Commission of Singapore (“CCS”) is conducting a public consultation on proposed revisions to its Guidelines on Mergers Procedures (“Draft Revised Guidelines”). The closing date of the public consultation is 20 March 2012.

 

The key proposed amendments include:

 

(a) self-assessment on whether notification is necessary;

(b) new process to obtain advice from CCS for confidential mergers;

(c) clarification on the treatment of confidential information;

(d) streamlining of information requirements;

(e) emphasising the benefits of pre-notification discussions; and

(f) clarifying the role of third parties and complainants.

 

SELF-ASSESSMENT ON WHETHER NOTIFICATION IS NECESSARY

 

A simplified self-assessment tool has been introduced for businesses to consider whether they should notify their merger to CCS. The Draft Revised Guidelines provide guidance on the various types of mergers that should be notified to CCS.

 

For example:

 

(a) Mergers involving two small companies with relatively low turnover in Singapore (where the turnover in Singapore in the financial year preceding the transaction of each of the parties is below S$5 million and the worldwide turnover of each of the parties is below S$10 million) are unlikely to raise competition concerns. 

 

(b) Where merger parties supply goods or services of the same description in Singapore, and their share of supply of those goods or services exceeds 40% of the total supply in Singapore, merger parties are strongly encouraged to notify.

 

Co-Head, Competition Law and Regulatory Practice Group at Drew & Napier, Ms Ng Ee-Kia, says:

 

"The new turnover threshold implicitly recognises that mergers involving relatively smaller undertakings are less likely to have an impact on the economy, further underscoring that the economic standard applied in Singapore for competition law assessments is the total welfare standard. Practically, the turnover thresholds, and the share of supply threshold will provide further guidance to businesses in the context of self assessments, and in considering the important question of whether it is necessary to file a notification."

 

NEW PROCESS TO OBTAIN ADVICE FROM CCS FOR CONFIDENTIAL MERGERS

 

Significantly, CCS is proposing a new process whereby merger parties can obtain a confidential opinion from CCS on whether a merger is likely to raise concerns, with the qualification that such advice is provided without having taken into account third party views.

 

Under the current regime, CCS is unable to accept the notification of an anticipated merger if it is still confidential. The new process is a welcome change, especially for confidential mergers involving listed companies.

 

Co-Head, Competition Law and Regulatory Practice Group at Drew & Napier, Mr Lim Chong Kin, says:

 

"CCS has always been live to the sensitivities surrounding confidential mergers, but the new draft guidelines signifies another positive step in that regard. The ability to seek a confidential opinion from CCS avoids the necessity for a formal notification, though provides an avenue for greater certainty. Ultimately, the proposed amendments offer an important and useful litmus test in the merger context."

 

CLARIFICATION ON THE TREATMENT OF CONFIDENTIAL INFORMATION

 

The Draft Revised Guidelines also clarify what type of information is likely to be considered confidential by CCS and how CCS deals with redactions of confidential information from the published decision.

 

CCS has also cautioned that where CCS considers that the confidentiality claims made in respect of the notification or any other submission are excessive or unreasonable, it may “stop the clock” on the assessment process until such time as the applicants file a non-confidential version that meets CCS’s requirements.

 

STREAMLINING OF INFORMATION REQUIREMENTS

 

To streamline the merger assessment process, CCS has also fine-tuned the information requirements in the first phase of a merger assessment (“Phase 1”) so that there would be fewer information requests to the parties and, consequently, a lower likelihood of any delay in the assessment process.

 

The expected time frames for CCS’s assessments remain unchanged. The Phase 1 review, which entails a quick assessment and allows CCS to give a favourable decision with respect to merger situations which do not raise competition concerns, is expected to be completed within 30 working days. CCS will endeavour to complete the more complex Phase 2 review, which is undertaken where CCS is not able to conclude that the merger does not raise competition concerns in Phase 1, within 120 working days.

 

EMPHASISING THE BENEFITS OF PRE-NOTIFICATION DISCUSSIONS

 

The proposed revisions also emphasise the purpose and benefits of pre-notification discussions with CCS. For example, the Draft Revised Guidelines make clear that where the merger parties consider that some of the requested information contained in the form which is used for the Phase 1 review (“Form M1”) is not relevant to the assessment of their merger, they can discuss this with CCS in pre-notification discussions.

 

RESOLVING COMPETITION CONCERNS IN PHASE 1 BY WAY OF COMMITMENTS

 

The Draft Revised Guidelines set out a process whereby CCS and the merger parties can resolve competition concerns in Phase 1 by way of commitments. Although this will lengthen the Phase 1 process, if the commitments are accepted by CCS, CCS will issue a favourable decision and so dispense with the necessity for a Phase 2 assessment.

 

CLARIFYING THE ROLE OF THIRD PARTIES AND COMPLAINANTS

 

The Draft Revised Guidelines clarify the role of third parties and complainants in the merger review process and the treatment of complaints and information from third parties (including confidentiality requests).

 

It is important to note that CCS, when conducting investigations, has the power to require information or documents from any person under section 63 of the Competition Act. The refusal by any person to comply with such requirement or the provision of false or misleading information to CCS constitutes an offence.

 

REFERENCES
 
Please click here to access the Draft Revised Guidelines and details of CCS’s public consultation.
 
 
For further information, please contact:
 
Cavinder Bull, Partner, Drew & Napier
 
Lim Chong Kin, Director, Drew & Napier
 
Ng Ee Kia, Director, Drew & Napier
 

 

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