SINGAPORE Law and Practice Contributed by: Lim Chong Kin and Corinne Chew, Drew & Napier LLC
Merger parties may notify a merger before, during or after the merger comes into effect. However, there are risks attached to proceeding with a merger before or during notification, as the Commission may com - mence investigations on its own initiative and issue directions or impose financial penalties if any infringe - ment is found. 2.2 Failure to Notify As notification is voluntary, there are no sanctions for failing to notify the Commission of a merger. Merger parties should undertake a self-assessment to deter - mine if notification is appropriate – eg, if they think that the merger may result in an SLC within any market in Singapore. Even if no notification is made, the Commission may nonetheless initiate an investigation if it has reason - able grounds for suspecting that the Section 54 Prohi - bition has been or will be infringed. If the Commission decides that there is or will be an infringement, it may decide on actions to remedy, mitigate or prevent any adverse effects to competition caused by the merger. These actions may include a direction to divest all or part of the business or to unwind the merger (see 5.2 Parties’ Ability to Negotiate Remedies ). If the Commission finds that the infringement was committed intentionally or negligently, a financial pen - alty may be imposed on any of the merger parties, which may not exceed 10% of each party’s business turnover in Singapore for each year of infringement, up to a maximum of three years. 2.3 Types of Transactions In general, mergers and anticipated mergers that have resulted in an SLC within any market in Singapore, or may be expected to do so, will be caught by the Section 54 Prohibition. Internal restructurings or reor - ganisations and operations not involving the transfer of shares or assets typically would not infringe the Section 54 Prohibition. A merger occurs if: • two or more undertakings, previously independent of one another, merge;
• one or more persons or other undertakings acquire direct or indirect control of the whole or part of one or more other undertakings; or • the result of an acquisition by one undertaking (the first undertaking) of the assets (including goodwill), or a substantial part of the assets, of another undertaking (the second undertaking) is to place the first undertaking in a position to replace or substantially replace the second undertaking in the business or, as appropriate, the part of the business in which that undertaking was engaged immediately before the acquisition. While an undertaking’s acquisition of a majority stake in another undertaking is one of the more obvious examples of a merger, the creation of a joint venture through the transfer or pooling of assets may also be subject to the merger provisions. A joint venture may constitute a merger if it is created to perform all func - tions of an autonomous economic entity on a lasting basis and is subject to joint control; see 2.10 Joint Ventures . However, certain transactions do not constitute a merger for the purposes of the Competition Act, including: • if the person acquiring control is a receiver or liqui - dator acting as such, or is an underwriter acting as such; • if all of the undertakings involved in the merger are under the control of the same undertaking, directly or indirectly; • if control is acquired solely as a result of a testa - mentary disposition, intestacy or the right of survi - vorship under a joint tenancy; or • if control is acquired by an undertaking whose nor - mal activities include carrying out transactions and dealings in securities for its own account or for the account of others under the circumstances speci - fied in Section 54 (9) of the Competition Act. The determination of whether a merger exists is based on qualitative rather than quantitative criteria, focusing on the concept of control, which may occur on either a legal or de facto basis.
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