SINGAPORE Law and Practice Contributed by: Lim Chong Kin and Corinne Chew, Drew & Napier LLC
2.4 Definition of “Control” Decisive Influence
2.5 Jurisdictional Thresholds The Commission is unlikely to investigate a merger involving only small companies where the following applies in the financial year preceding the merger: • each party’s turnover in Singapore was below SGD5 million; and • the combined worldwide turnover of all the parties was below SGD50 million. The Commission generally takes the view that compe - tition concerns are unlikely to arise in, and the Com - mission is unlikely to investigate, a merger situation unless the market share of the merged entity will be: • 40% or more; or • between 20% and 40%, and the post-merger mar - ket share of the three largest firms is 70% or more. As merger notification is voluntary, these Commis - sion-set thresholds are only indicative. Mergers that fall below these thresholds may still be investigated in appropriate circumstances if there is strong evidence of an SLC. Conversely, mergers that meet or exceed the above thresholds are not necessarily prohibited under Sec - tion 54 of the Competition Act. Merger parties are encouraged to carry out self-assessments as to whether their transaction is likely to lead to an SLC in any market in Singapore and if notification to the Commission is recommended. There are also prescribed notification thresholds in the merger control regimes of some sectors regulated by industry-specific statutes. 2.6 Calculations of Jurisdictional Thresholds The indicative thresholds are calculated on the basis of market shares; see 2.5 Jurisdictional Thresholds . 2.7 Businesses/Corporate Entities Relevant for the Calculation of Jurisdictional Thresholds Market share thresholds are based on how the market is defined and this, in turn, is dependent on the spe - cific facts and circumstances of the particular merger under assessment or investigation. The Commission
Control is the ability to exercise “decisive influence” in relation to the activities of an undertaking. This requires consideration of all relevant circumstances of the case and not only the legal effect of any instru - ment, deed, transfer, assignment or other act. As provided in Section 54 (3) of the Competition Act, control of an undertaking is deemed to exist if decisive influence is capable of being exercised, particularly by: • ownership of, or the right to use all or part of, the assets of an undertaking; or • rights or contracts that enable decisive influence to be exercised with regard to the composition, voting or decisions of the organs of an undertaking. The Commission considers that decisive influence is deemed to exist if there is ownership of more than 50% of the undertaking’s voting rights. Where own - ership is between 30% and 50% of the undertak - ing’s voting rights, there is a rebuttable presumption that decisive influence exists. “Voting rights” refers to all the voting rights linked to the share capital of an undertaking and currently exercisable at a general meeting. That said, control could potentially be estab - lished at levels below these indicative thresholds if other relevant factors (eg, other forms of voting rights) provide strong evidence of control. De Facto Control The Commission may also assess whether a party has de facto control over an undertaking, on a case- by-case basis. There is no precise criterion for determining when an acquirer obtains de facto control. For example, deci - sive control may exist where minority shareholders have additional rights that allow them to veto deci - sions that are essential for the strategic commercial behaviour of the undertaking, such as the budget, business plans, major investments, the appointment of senior management or market-specific rights. The acquisition of a minority shareholding that confers decisive influence over an undertaking could amount to a merger that is reviewable by the Commission.
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