Client Update February 2007

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1 Highlights Asia / Australia...1 Singapore...1 Indonesia South Korea Australia Europe...3 European Union...3 Italy Finland United States Concluding Words...5 Law Bites February 2007 We are pleased to circulate our second monthly review of recent developments in competition law around the world. The purpose of this review by Rajah & Tann s Law Team is not to give an exhaustive overview of all the cases or new legislations developing globally, but rather to highlight cases that, in our view, could be of interest in the Singapore context. We hope that these updates will provide useful information to you when reviewing your activities under competition laws. ASIA / AUSTRALIA Singapore General In a written answer to MP Siew Kum Hong, the Minister for Trade and Industry has pointed out that, since 1 January 2006, the Commission of Singapore ( CCS ) has received twelve complaints and seven notifications for guidance. The CCS has already assessed and issued guidance on three notifications. Whilst the CCS has closed five complaints, it has initiated formal investigations into three others. The CCS has issued its first ever decision under the Act (Chapter 50B) (the Act ). The CCS ruled that the agreement between Qantas Airways Limited and British Airways Plc, which potentially fell within the ambit of the anti-competitive agreement prohibition of Section 34 of the Act is nevertheless excluded from the Act as the agreement results in a Net Economic Benefit to Singapore. The decision follows the joint notification by Qantas and British Airways of their agreement to the CCS. Rajah & Tann s Law Team acted for the Applicants in this landmark decision. The CCS has also issued a draft favourable decision in relation to a co-operation agreement between Qantas Airways Limited and Orangestar Investment Holdings Pte Ltd (holding company of Jetstar Asia and Valuair) that allows them to coordinate their flying operations and activities. The CCS proposes to rule that the co-operation agreement is excluded from the Section 34 prohibition under the Net Economic Benefit exclusion. However, it has decided to conduct a public consultation on this proposed favourable decision. This is the first time that the CCS is resorting to this unprecedented procedure. 1

2 Contacts Kala Anandarajah Partner Direct: (65) Facsimile: (65) Dominique Lombardi Foreign Lawyer Direct: (65) Facsimile: (65) Indonesia The Business Supervisory Commission ( KKPU ) has imposed a SGD169,000 fine on Suraco, the main dealer of Yamaha motorcycles in South Sulawesi province, for violating the Anti- Monopoly and Unfair Business Law. This legislation notably prohibits undertakings from conducting activities that prohibit and / or obstruct a certain business actor from conducting the same business activities in the market concerned. The KPPU found that Suraco s practice to impose different payment conditions on dealers of Yamaha motorcycles depending on whether they only sell Yamaha motorcycles or also sell other brands was discriminatory. South Korea The Korean Fair Trade Commission ( KFTC ) has announced a total fine of 52.6 billion won (SGD 85.8 million) on four oil refiners (SK Corp, Hyundai Oilbank, GS Caltex and S-Oil) for colluding to raise prices for petrol, diesel and kerosene from April to June The KFTC is also reported to have fined ten petrochemical companies a total of more than SGD170 million for fixing prices of plastic products. Five oil refiners (SK Corp, SK Incheon Oil, Hyundai Oilbank, GS Caltex and S-Oil) have been ordered by a South Korean court to pay the government compensation worth 81 billion won (SGD million). This follows a decision by the KFTC in 2001 to impose fines over 190 billion won (over SGD 310 million) on the five oil refiners for rigging bids for the supply of oil for military use. Australia Please feel free also to contact the Knowledge & Risk Management Group at eoasis@rajahtann.com The Federal Court of Australia has imposed a penalty of AUD 3.4 million (SGD 4.1 million) on skincare and cosmetics company Jurlique and founder, Dr Klein, for having prevented retailers for discounting Jurlique products. This restrictive practice had lasted more than ten 2

3 years. This is the highest ever penalty for resale price maintenance in Australia. Further, an injunction has been granted that restrains the Jurlique companies and Dr Klein from engaging in such practices for 5 years. The current management of Jurlique companies has reportedly offered a court-enforceable undertaking to put in place a compliance program Companies should be aware that certain arrangements with a union which prevent them from acquiring goods or services from or supplying goods or services to another person are illegal under the Act, said the Chairman of the Australian and Consumer Commission ( ACCC ). IPM, a power station operator, has been fined AUD 120,000 for entering into an arrangement in August 2001 with the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia ( CEPU ) under which IPM was prevented from engaging electrical contractors who did not have an enterprise agreement with the CEPU to perform work at the power station. Last month, the CEPU was fined AUD 125,000 on the same grounds. The ACCC has initiated proceedings against two cardiothoracic surgeons practicing in the Adelaide metropolitan area. The two surgeons have allegedly acted to prevent another cardiothoracic surgeon from gaining accreditation at a private hospital and obtaining appointments at a variety of hospitals. The two surgeons also prevented a fourth surgeon from operating at a private hospital in Adelaide whilst attempting to enter into a market-sharing agreement with him. In Australia, as in Singapore, proceedings for such anticompetitive conducts may be initiated against individuals. EUROPE European Union The European Commission has fined the Otis, Kone, Schindler and ThyssenKrupp groups a record 992,000,000 euros (SGD 1.9 billion). The Commission has found that for at least ten years, the companies have rigged bids for procurement contracts, fixed prices and allocated projects to each other, shared markets and exchanged commercially sensitive information in relation to installation and maintenance of lifts and escalators in Belgium, Germany, Luxembourg and the Netherlands. The offices of several producers of power transformers, which are key components in electricity transmission and distribution networks, have been raided by European Commission s officials in France, Germany and Austria. The European Commission suspects that the companies 3

4 concerned may have violated the prohibition of anti-competitive agreements and practices such as price-fixing. Italy The Antitrust Authority ( AGCM ) has fined half a dozen companies for market sharing in the market for marine paints, which are used for the maintenance of cargo ships and passengers liners. The total fines amount to 4.3 million euros. The companies involved agreed to respect traditional customer relationships, ie each company was free to re-supply its own customers, without fearing any competitive pressure from the other parties to the agreement. Finland The Finnish Authority ( FCA ) has found that three large paper manufacturers (Metsäliitto Osuuskunta, UPM Kymmene Oyj and Stora Enso Oyj) had engaged in unlawful price and information exchange to restrict competition between them in the procurement of raw wood. The matter came to light through a leniency application made by UPM. The FCA has proposed (as in Finland, the FCA does not itself impose the fines) that Stora Enso Oyj and Metsäliitto Osuuskunta be fined a total of more than SGD100 million. UPM, which blew the whistle on this arrangement, was granted full immunity from the fines. United States The Federal Trade Commission has announced a consent order settling the charges brought against MiRealSource. MiReal Source is a corporation owned by real estate brokers who supply real estate brokerage services to home sellers and prospective purchasers seeking homes in Southeastern Michigan. It comprised 7000 real estate professionals who utilize the MiRealSource Multiple Listing Service ( MLS ) as a primary tool for doing business. MLS allows real estate brokers in the same area / region to submit their listings to a central service, which then dispatches the information among brokers. The complaint by the FTC alleged that the rules and policies adopted by MiRealSource restrain competition in limiting the publication and marketing of certain sellers properties based on the terms of their listing contracts. In particular, Exclusive Agency Listings were excluded entirely from MiRealSource MLS. An Exclusive Agency 4

5 Listings would allow the property owner, who has appointed a listing broker as an exclusive agent, to sell its property without assistance of the listing broker. In such cases, the listing broker receives only a reduced commission or no commission at all. According to the FTC, such conduct deny home sellers choices for marketing their homes and deny home buyers the chance to use the internet easily to see all of the houses listed by real estate brokers in the area, making their search less efficient. Under the consent order, MiRealSource has agreed to abandon its collusive conduct and to provide its services to all member brokers, regardless of the type of listing contract they choose. In a Department of Justice s on-going investigation in the marine products industry, the former president of a marine products company has agreed to plead guilty for its participation in rigging bids and allocating customers for contracts of marine foam-filled fenders and buoys and for contracts of plastic marine pilings. The executive was also charged to have colluded to bribe an employee of the City of New York. He has agreed to serve 30 months in prison and pay a S$100,000 criminal fine and to cooperate with DOJ s investigation. Two executives have agreed to plead guilty, pay a fine (USD 10,000) and serve jail time (6 months) for having rigged bids on US Navy contracts for metal sling hoist assemblies. In particular, they have engaged in discussions in relation to the sale of metal sling hoist assemblies to the US Navy and agreed not to compete on certain contracts either by not submitting bids, by alternating winning bids or by submitting intentionally high prices or bids. Concluding Words If you would like more information on the above, please contact Kala Anandarajah and Dominique Lombardi whose numbers appear on the left of page 2, or contact the & Trade Law Team at competitionlaw@rajahtann.com, and we would be happy to assist you. Rajah & Tann is one of the largest law firms in Singapore, with a representative office in Shanghai. It is a full service firm and given its alliances, is able to tap into resources in a number of countries. Rajah & Tann is firmly committed to the provision of high quality legal services. It places strong emphasis on promptness, accessibility and reliability in dealings with clients. At the same time, the firm strives towards a practical yet creative approach in dealing with business and commercial problems. The information contained in this Update is correct to the best of our knowledge and belief at the time of writing. The contents of the above are intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice for any particular course of action as the information above may not necessarily suit your specific business and operational requirements. It is to your advantage to seek legal advice for your specific situation. In this regard, you may call the lawyer you normally deal with in Rajah & Tann or the Knowledge & Risk Management Group at eoasis@rajahtann.com. 5