I am buying a company (or a business). Is the Competition Act relevant? Singapore M&A Lawyer: Yes

Introduction

You are buying a company or a business.
How is the Competition Act ("CA") relevant to the transaction?
As we will see, the CA applies to essentially all private enterprises and buying a company (or a business) almost always raises questions under the CA. Because of this, it is vital to study the buying decision in the context of the CA before proceeding.

Aim of the CA

The CA aims to promote the efficient functioning of markets in order that they will work well and create opportunities and choices for businesses and consumers in Singapore.
It does this by regulating the conduct of market players.
Mainly, it prohibits anti-competitive activities that unduly prevent, restrict or distort competition in Singapore.

The CA applies to Whom & What

The CA applies to commercial and economic activities by private sector "undertakings".
The CA defines “undertaking” to mean:
any person, being an individual, a body corporate, an unincorporated body of persons or any other entity, capable of carrying on commercial or economic activities relating to goods or services.
It does not matter whether they are owned by a foreign entity or a local entity, or whether or not they are government-linked companies.
E.g.'s include individuals, sole proprietorships, partnerships, companies, trade or professional bodies and non-profit organisations.
The CA does not apply to the Government, statutory bodies or entities acting on their behalf.

The CA came into Force, When

The CA: Main Prohibitions

There are 3 main "Don't's":
Anti-Competitive Agreements
these are agreements (or concerted practices) that prevent, restrict or distort competition
Abuse of Dominant Position
this is where companies (or businesses) that have substantial market power prevent or hamper others from competing effectively
Mergers that substantially reduce competition
these refer to transactions that result in a substantial reduction in competition

The CA: Adverse Consequences of Breaches

Reputational Damage

your business may suffer from an adverse hit (or impact) to its reputation and goodwill in the eyes of its customers and/or the public

Operations Interruptions

your operations, activities and/or conduct may have to be stopped or adjusted (as required by the CA or as directed by the Competition and Consumer Commission of Singapore ("CCCS"))

Penalties under CA

your business may be fined by the CCCS up to 10% of its turnover within Singapore for each year of breach, up to a maximum of three years

Third Party Claim(s)

your business can face claims from any party which suffered losses directly resulting from any anti-competitive behaviour that it (your business) was involved in.

Action

If you have any questions or wish to review the purchase of any company (or business), please feel free to call Lam & Co. at 6535 1800.