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Competition watchdog allows tie-ups on essential supplies during pandemic

Competition watchdog allows tie-ups on essential supplies during pandemic

Source: Business Times
Article Date: 21 Jul 2020
Author: Vivienne Tay

In a guidance note issued on Monday, the competition watchdog said that it will assume - for a temporary period - that such tie-ups are "likely to generate net economic benefits" and are therefore "unlikely" to infringe the Competition Act.

The Competition and Consumer Commission of Singapore (CCCS) will "generally" not investigate certain collaborations between competitors when it comes to the supply of essential goods or services in Singapore, amid the ongoing novel coronavirus outbreak.

These collaborations should sustain or improve the supply of essential goods or services, be limited in scope and time, and also not involve price-fixing, bid-rigging, market sharing or output limitation.

In a guidance note issued on Monday, the competition watchdog said that it will assume - for a temporary period - that such tie-ups are "likely to generate net economic benefits" and are therefore "unlikely" to infringe the Competition Act.

This Covid-19 guidance note applies to such collaborations which commence from Feb 1, 2020 and expire by July 31, 2021.

For collaborations that end after July 31, 2021, CCCS will evaluate them using the criteria applicable under normal circumstances, for their entire duration. That is, CCCS will assess whether it raises competition concerns and if so, whether the tie-up fulfils the criteria of generating net economic benefits in normal circumstances.

The competition watchdog on Monday noted that the disruption arising from the pandemic may require companies to temporarily collaborate to sustain or improve the supply of essential goods or services.

"Such collaborations may need to be put in place quickly during this period," CCCS said. Under normal circumstances, some of these partnerships would have required further assessment for net economic benefits.

An example of a collaboration that can fall under the latest guidance note would be where businesses agree to share production lines or inputs to increase the total production of Covid-19 testing kits or its components.

Agreements, including collaborations, which satisfy the net-economic-benefits criteria under the Competition Act in normal circumstances are already excluded from Section 34 of the Act, thus they do not need to come under the Covid-19 guidance note.

Similarly, agreements entered into with, or on behalf of, the Singapore government or any statutory body are already excluded under Section 33(4) of the Act.

CCCS encouraged businesses to perform their own assessment first to determine whether their collaboration falls within the framework set out in the guidance note.

Those that wish to collaborate on essential goods and services but have queries may contact CCCS for clarification at [email protected]

However, the competition watchdog cautioned businesses against taking advantage of the coronavirus pandemic "as a cover to engage in anti-competitive activities that do not generate net economic benefits". CCCS retains the discretion to investigate such cases.

More information on the Covid-19 guidance note can be accessed and downloaded from the CCCS website under the section "Competition Act and Guidelines".

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.

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