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2007/CPDG/WKSP/007

Competition Law and SMEs in Singapore

Submitted by: Singapore

3rd Training Course on Competition Policy Singapore

1-3 August 2007

3 rd APEC Training Course on

Competit ion Policy

Sing apore

August 1 , 2 0 0 7

Competit ion Law andSMEs in Sing apore

OVERVIEW

Background: SMEs in Singapore

Competition Law and SMEs in Singapore

An Example from the CCS’ Experience

Background: SMEs in Singapore

Definition of SMEs

Fixed assets of less than$15 million Less than 200 workers

Manufacturing Services

Basic Statistics on SMEs Account for more than 95% of companies in

Singapore

Contribute to 42% of GDP

Employ 57% of the workforce

Distribution of SMEs: Number of companies: 94% (service) 6%

(manufacturing)

Share of GDP: 34% (s) 8% (m)

Share of employment: 47% (s) 10% (m)

Shaping the development ofSMEs in Singapore

SpringSingapore

InternationalEnterprise

(IE)

CompetitionCommissionof Singapore

(CCS)Non-

governmentalorganizations/associations

1. Buildcapabilities2. Provide

Access/Support

Ensure a levelplaying field

1. Promotevibrancy

2. Facilitatenetworking &informationexchange

Promoteoverseas

growth forSingapore-

basedcompanies

OVERVIEW

Background: SMEs in Singapore

Competition Law and SMEs In Singapore

An Example from the CCS’ Experience

Why Competition Law?

Economic Review Committee (ERC)—established in 2002 toreview Singapore’s development strategy

PromoteEnterprise

Growth

Phased Implementation ofCompetition Act

Phased implementation:

– Phase I: 1 Jan 2005 – The CCS was set-up

– Phase II: 1 Jan 2006 – Enforcement/appeal

provisions on anti-competitive agreements and

abuse of dominance to come into force

– Phase III: 1 July 2007 - M&A provisions came

into force

Our Approach Focus on activities that have an appreciable adverse effect oncompetition in Singapore

Recognize that agreements between SMEs are rarely capable ofhaving an appreciable effect on competition

S34 indicative appreciability threshold - 20% market share

S54 merger thresholds - CCS is unlikely to intervene in amerger situation unless:– the merged entity will have a market share of at least 40%; or– the merged entity will have a market share of between 20% and

40% AND the post-merger combined market share of the threelargest firms (CR3) is at least 70%

Minimize Regulatory Burden

Self-Assessment

Voluntary Notification

Simplifying the complaint process &providing how-to-guides for making acomplaint with the CCS

Outreach Efforts to SMEs

Purpose• Increase awareness of anti-competitive practices• Tap on SMEs as a good source of leads

Efforts• Singapore Chambers of Commerce & Industry• Trade Associations• Other government agencies

OVERVIEW

Background: SMEs in Singapore

Competition Law and SMEs in Singapore

An Example from the CCS’ Experience

Price Recommendation by Coffee-shops

Media coverage on price recommendations forcoffee drinks by two coffee-shop associations Combined membership of around 700 out of more than

2,000 coffee-shops in Singapore

Made a joint announcement for adjustment in coffee drinkprices

Gave members price guidelines, but claimed they did notrequire members to adjust their prices uniformly

The CCS’ focus was to help the trade associationsunderstand and comply with the Competition Act.

Challenges Price recommendation by coffeeshop

associations highlights some of the challengescommon to dealing with SMEs Low awareness/understanding of competition law

Mindset: many trade associations traditionally have“protected” members by recommending prices and donot see this as a problem

The perception that the CCS is against price increases

Thank You