::: AUTHORS ::: Gerald SINGHAM Partner Corporate gerald.singham@rodyk.com +65 6885 3644 Mark TAN Partner Corporate mark.tan@rodyk.com +65 6885 3667 Soumya HARIHARAN Foreign Lawyer Corporate soumya.hariharan@rodyk.com +65 6885 3661 Laws In Overview Of The Main Prohibitions Most of members of Association of Souast Asian Nations () are expected to introduce a nation-wide competition policy and law by 2015 in fulfillment of goals of Economic Blueprint. With several companies both domestic and multinational companies operating within region, compliance with respective competition laws in each of jurisdictions will be a continuous process. law compliance in region can be a challenge with companies having to comply with different competition rules applicable in each of member states. Staying compliant with competition law in region thus requires companies and businesses to understand nuances and distinctive features of competition rules in each of se jurisdictions. Presently, only five jurisdictions have generic competition laws namely Singapore, Malaysia, Indonesia, Thailand and Vietnam. While Laos does not have any generic competition statutory legislation in place, it issued a Decree in 2004 with objective of promoting fair business conduct; notably this Decree has yet to be enacted. Similarly, Philippines does not have generic competition statutory legislation in place at present though re are a number of sectoral laws that address anti-competitive conduct and unfair competition in ir respective s. It is understood, however, that both countries are in process of drafting ir generic competition laws in view of 2015 deadline. This article only summarises general aspects of behavior and/or agreements which are prohibited under competition laws, and provides a broad overview of differences in prohibition of such behavior and/or agreements between countries within region 1. Cartels and anti-competitive agreements There has been increased cooperation within nations in relation to competition law. The Experts Group on was a committee created to supervise development of competition law and policy in. With increased regional cooperation in it is likely that various competition regulators could share information regarding cartels and anticompetitive activity in region. This could cause several hurdles for companies when dealing with cartel investigations with different competition law regulators. Leniency varies widely among jurisdictions and certain jurisdictions do not have a leniency regime in place. Furrmore, in certain jurisdictions participation in cartels is a criminal offence. The differences in treatment of cartels within would require companies to have compliance strategies that comply with each jurisdiction without being too strict.
RELEVANT PROVISIONS & REGULATOR Section 34, Act, Chapter 50B The Commission of Singapore (CCS) The Law on No. 27/2004/QH1 1, Art 8 to 10 The Vietnam Authority (VCA) and Vietnam Council (VCC) Article 11, Law No. 5 of 1999 The Commission for Supervision of Business (KPPU) Section 27, Trade Act 1999 The Trade Commission (TCC) Section 4, Act 2010 Malaysia Commission (MyCC) HORIZONTAL AGREEMENTS Assessable under general cartel prohibition. Assessable under general cartel prohibition. Assessable under general cartel prohibition. Assessable under general cartel prohibition. Assessable under general cartel prohibition. VERTICAL AGREEMENTS Excluded pursuant to Third Schedule to Act. Not expressly excluded. Not expressly excluded. Not expressly excluded. Expressly included by section 4 of Act 2010. Vertical agreements that have object or effect of significantly preventing, restricting or distorting competition are expressly prohibited. PENALTIES/ FINES 10% of turnover of business in Singapore for a maximum of three years. penalties will apply from 1 January 2006. penalty ranging from 5% up to 10% of total turnover of organisation in financial year preceding year in which prohibited practice took place. penalty ranging from a minimum of IDR 1 billion up to a maximum of IDR 25 billion. penalty not exceeding THB 6 million. penalty not exceeding 10% of worldwide turnover of an enterprise over period during which an occurred.
CRIMINAL SANCTIONS LENIENCY No criminal sanctions for involvement in cartel activity. Leniency is available at three stages:- (1) 100% immunity for first applicant before investigation has been commenced ; (2) up to 100% reduction for first applicant after investigation has been commenced ; and (3) up to 50% reduction for subsequent applicants with additional information not available to CCS. A leniency-plus program is available for cartel behavior divulged in course of an unrelated investigation. No criminal sanctions in form of imprisonment for involvement in cartel activity. No leniency provision in statutory legislation. Imprisonment for a term ranging from three to six months for persons directly involved in cartel activity. No leniency provision in statutory legislation. However OCED Regulatory Reform Indonesia 2012 recommended that a leniency program be implemented. Imprisonment for a term not more than three years for persons directly involved in cartel activity unless re is evidence to prove that violation was committed without ir knowledge or consent, or that y took reasonable actions to prevent violation. No leniency provision. No criminal sanctions for involvement in cartel activity; however obstruction of investigations or destruction of evidence attract penal sanctions. Leniency is available under section 41 and provides immunity up to a maximum of 100% depending on wher enterprise is first to provide information or evidence to MyCC.
PRIVATE ACTIONS Pursuant to section 86 of Act, third parties that suffered loss due to cartel can sue for damages against infringing parties after CCS has made an decision. Class actions (representative actions governed by order 15, rule 12 of Rules of Court) are available for multiple claimants that have suffered losses as a result of an. Pursuant to article 117(4) of section 8 (Chapter V), third parties that have suffered losses can sue for damages against infringing parties after VCC has made an decision. Available. Third parties that have suffered losses can sue for damages against infringing parties after KPPU has made an decision. Pursuant to section 40, third parties can sue for damages against infringing parties after TCC has made an decision. Class actions may be initiated under Protection Commission or an association under law on consumer protection which has power to initiate an action for claiming compensation on behalf of consumers or members of association. Pursuant to section 64, third parties that have suffered losses can sue for damages against infringing parties after MyCC has made an decision. Abuse of dominance The concept of dominance and treatment of companies with high share also differ between countries in region. Companies with high shares in each of jurisdictions may have to ensure that commercial strategies are applied in a manner which takes into account differences between such treatments. While each jurisdiction differs in its definition of dominance, re is commonality in prohibition that an abuse of dominance is prohibited under each jurisdiction s competition law. Therefore, it is vital to understand legal and economic implications when assessing conduct of such companies. With competition regulators increasing ir focus on abusive practices by dominant companies, it would be prudent for companies to align ir commercial strategy with respective laws. RELEVANT PROVISION Section 47, Act, Chapter 50B Article 13, The Law on No. 27/2004/QH11. Article 5, Law No 5 of 1999 Section 25, Trade Act Section 10, Act 2010
THRESHOLDS FOR DOMINANCE There are no presumptive share thresholds as share on its own does not determine dominance. Market dominance is determined by considering extent to which re are constraints on an undertaking s ability to profitably sustain prices above competitive levels or to restrict output or quality below competitive levels. However an undertaking with a share of 60% and above is likely to indicate dominance. There is a presumptive share threshold and an enterprise is deemed to have dominance (or, in (2), (3) and (4) below, deemed to have collective dominance toger with or respective enterprises in each respective scenario) if it (or group of enterprises) satisfies following conditions:- (1) 30% and above on its own as a single enterprise; (2) a collective 50% and above toger with anor enterprise; (3) a collective 65% and above between three enterprises; or There is a presumptive share threshold and an enterprise is deemed to have dominance (or in (2) with or respective enterprises in each respective enterprises) if it (or group of enterprises) satisfies following conditions:- (1) 50% and above on its own as a single enterprise; or (2) a collective 75% and above between two or three enterprises. There is a presumptive share threshold and an enterprise is deemed to have dominance (or in (2) with or respective enterprises) if it (or group of enterprises) satisfies following conditions: (1) 50% and above and a sales volume of at least THB 1 billion on its own as a single enterprise; or (2) a collective 75% and above and a collective sales volume of at least THB 1 billion between three enterprises. There is a presumptive share threshold and an enterprise with a 60% and above is deemed to have dominance. (4) a collective 75% and above between four enterprises.
PENALTIES 10% of turnover of business in Singapore for a maximum of three years. penalties will apply from 1 January 2006. penalty of 10% of total turnover of organisation for preceding financial year. penalty in amount of a minimum of IDR 1 billion to a maximum of IDR 25 billion. penalty not exceeding THB 6 million. penalty not exceeding 10% of worldwide turnover of an enterprise over period during which an occurred. PRIVATE ACTIONS Available Available Available Available Available Merger control Cross-border mergers have significantly increased within region over last few years. With exception of Malaysia all four countries with general competition legislation have a merger control law in place. Co-ordinating a merger filing requirement with different procedural regimes may be challenging. Companies active in that are significantly involved in mergers and acquisitions need to be aware of different trigger mechanisms (for mandatory filing regimes), filing deadlines, identification of data and information required to be submitted in each jurisdiction. Preparation for a multi-jurisdictional filing would also require a consistent legal position to be submitted to each of different competition regulators for example how a company plans to define a relevant in each of jurisdictions should be consistent. RELEVANT PROVISIONS Section 54, Act, Chapter 50B Section 16 to 24, The Law No: 27/2004/QH 11 Article 28, Law No. 5 of 1999 on prohibition of Monopoly and Unfair Business Practices. The Trade Act 1999. Section 26 of TCA prohibits mergers of businesses that may result in monopoly or unfair competition, as prescribed by TCC. No merger control regime at present.
TYPE OF REGIME (VOLUNTARY/ MANDATORY) Voluntary notification is encouraged for mergers that are likely to substantially lessen competition. Parties are required to do a self-assessment on wher a merger notification should be made to CCS. Mandatory merger notification if thresholds are met. Voluntary premerger notification. Mandatory post-merger notification, if thresholds are met. Mandatory merger notification if thresholds are met. There are currently no jurisdictional thresholds that have been issued. FILING FEES Yes, re are filing fees, as described below. Where turnover of target undertaking or turnover attributed to acquired asset is equal to or less than SGD 200 million, fees are SGD 15,000. Yes, re are filing fees; fees are VND 50 million. No filing fees. No filing fees. Where turnover of target undertaking or turnover attributed to acquired asset is between SGD 200 million and SGD 600 million, fees are SGD 50,000. Where turnover if target undertaking or turnover attributed to acquired asset is above SGD 600 million, fees are SGD 100,000.
PENALTIES Merger parties may face a financial penalty not exceeding 10% of turnover of each relevant merger party. penalty of 1% - 3% of total revenue in financial year prior to year in which re was a failure to notify shall be applied accordingly. penalty of IDR 1 billion for each day of delay up to a maximum fine of IDR 25 billion. If a filing is not made for a merger of businesses under section 26, a person would be liable to a term of imprisonment not exceeding three years or a fine of not exceeding THB 6 million, or both. A repeat offender is liable to double penalty. JOINT VENTURES Joint ventures fall under definition of mergers, as long as it performs on a long lasting basis all functions of an autonomous economic entity. If creation of a joint venture has resulted in a combined share of 30% and 50%, n such a joint venture would be caught by merger control regulations. If creation of a joint venture has resulted in a transfer or an acquisition of actual control of related undertakings, n such a joint venture would be caught by merger control regulations. Furr, green field joint ventures are not subject to merger control requirements. If nature of joint venture involves business operators that may result in a monopoly or unfair competition, such joint ventures will be caught under merger regime.
MERGER THRESHOLDS The CCS is generally of view that competition concerns are unlikely to arise unless:- (1) merged entity will have a 40% or more; or Economic concentrations where parties have a combined share of between 30% and 50% are required to notify. If a merger meets one or more of following thresholds it would have to be notified:- (1) asset value of merged entity exceeds IDR 2.5 trillion; or There are no jurisdictional thresholds. Jurisdictional thresholds are to be set by notification, but no notifications have been issued yet. (2) merged entity will have a between 20% to 40% and post-merger combined three largest firms is 70% or more. Furr, CCS is unlikely to investigate mergers involving small companies where ir turnover in Singapore in financial year preceding transaction of each of parties is below SGD 5 million and combined worldwide turnover in financial year preceding transaction is below SGD 50 million. (2) turnover of merged entity exceeds IDR 5 trillion. These thresholds however are not applicable to transactions involving banks. For mergers involving two or more banks, threshold for notification is IDR 20 trillion.
RODYK & DAVIDSON LLP SINGAPORE 80 Raffles Place #33-00 UOB Plaza 1 Singapore 048624 Tel +65 6225 2626 Fax +65 6225 1838 Email mail@rodyk.com SHANGHAI Unit 23-11 Ocean Towers No. 550 Yan An East Road Shanghai 200001, China Tel +86 (21) 6322 9191 Fax +68 (21) 6322 4550 Email shanghai.mail@rodyk.com LENGTH OF REVIEW Phase 1 Review 30 working days Phase 2 Review 120 working days 45 days with up to two extensions of a maximum of 30 days each. Pre-merger notification:- (1) Phase 1 Review: maximum of 30 working days. (2) Phase 2 Review: maximum of 60 working days. Post-merger notification: Maximum of 90 working days. 90 days. However, if a decision cannot be completed within such period, TCC may extend up to 15 days. Conclusion Within region, five jurisdictions of Cambodia, Philippines, Brunei Darussalam, Lao People s Democratic Republic and Myanmar have yet to enact ir respective generic competition laws. The coming years could possibly be establishment and formative years of new competition regulators within and region would likely be enforcing competition laws more proactively than in past. Given likely growth in competition law environment in, companies would need to embrace competition law compliance within broader risk management environment. Compliance programs that have specific competition law structure and training that are more commonly found in multinational companies will soon be a required feature in local or regional companies. Such companies would need to go beyond regular generic compliance programs and work towards getting ir employees updated with competition law principles which would reby reduce risks of inadvertent s of competition law. Rodyk Reporter June 2013 This article is for general information purposes only. Its contents are not intended to be legal or professional advice and are not a substitute for specific advice relating to particular circumstances. Rodyk & Davidson LLP does not accept responsibility for any loss or damage arising from any reliance This article on is for contents general information of this article. purposes If you only. require Its contents specific are advice not intended or have to any be questions, legal or professional please contact advice and author(s) are not a or substitute our Editor. for specific advice relating to particular circumstances. Rodyk & Davidson LLP does not accept responsibility for any loss or damage arising from any Editor reliance on Claire WONG contents of claire.wong@rodyk.com this article. If you require specific +65 6885 advice 3703 or have any questions, please contact author(s) or our Editor. Rodyk Rodyk & Davidson Davidson LLP LLP 2013. 2012. Limited Limited Liability Liability Partnership Partnership Registration Registration No. No. T07LL0439G. T07LL0439G.