SINGAPORE Law and Practice Contributed by: Lim Chong Kin and Corinne Chew, Drew & Napier LLC
typically adopts the hypothetical monopolist test in defining the relevant markets. 2.8 Foreign-to-Foreign Transactions Barring the exceptions set out in the Fourth Sched - ule to the Competition Act, the Section 54 Prohibition applies to any merger or anticipated merger that has resulted in an SLC within any market in Singapore, or may be expected to do so, regardless of whether or not the parties to the merger have a local pres - ence within Singapore. Similar to mergers involving Singapore merger parties, the notification of foreign- to-foreign transactions is also voluntary. 2.9 Market Share Jurisdictional Threshold Theoretically, one party may meet the indicative mar - ket share thresholds in the absence of a substantive overlap. However, notification of the merger to the Commission is recommended only where there are concerns that the merger will lead to an SLC in any market in Singapore. 2.10 Joint Ventures The merger provisions apply to joint ventures that constitute a merger – ie, if they: • are subject to joint control; • operate in the market and perform all the functions of an autonomous economic entity operating in that market; and • are intended to operate on a lasting basis. Joint control exists where two or more parties are able to exercise decisive influence over the undertak - ing, which includes the power to block actions that determine the strategic commercial behaviour of the undertaking. Joint control is characterised by the pos - sibility of a deadlock arising from the power of two or more parent companies to reject proposed strategic decisions; therefore, there is a requirement that the shareholders must reach a consensus in determining the commercial activities of the joint venture. A joint venture is subject to the Section 54 Prohibi - tion only if it operates in the market and performs all the functions of an autonomous economic entity. A joint venture that only takes over one specific func - tion within the parent companies’ business activities
without access to the market will not come under the purview of the Section 54 Prohibition – for example, if the joint venture is limited to research and develop - ment, or production only, or the distribution or sales of its parent companies’ products. However, a joint venture that makes use of one or more of its parent companies’ distribution networks or outlets, or relies almost entirely on sales to or purchases from its par - ent companies for an initial start-up period, is not precluded from being regarded as performing all the functions of an autonomous economic entity, if it is geared to play an active role in the market. A joint venture that constitutes a merger must be intended to operate on a lasting basis, which may normally be demonstrated by the commitment of resources by its parent companies. For joint ventures established with a specified duration, the agreement should provide for a sufficiently long time period in order to bring about a lasting change in the structure of the undertakings concerned, or otherwise for the possible continuation of the joint venture beyond this period. Conversely, a joint venture established for a short, finite duration will not be considered to be oper - ating on a lasting basis. 2.11 Power of Authorities to Investigate a Transaction The Commission may conduct an own-initiative inves - tigation into mergers that were not notified if there are reasonable grounds to suspect that the Section 54 Prohibition has been or will be infringed. The Com - mission may also investigate a merger based on infor - mation from complaints by third parties or its market intelligence function. There is no statute of limitations on the Commission’s ability to investigate a merger or apply sanctions. If the Commission carries out an own-initiative inves - tigation and identifies an SLC, it may direct the par - ties to remedy the SLC. The Commission also has the power to impose financial penalties on parties; see 5.1 Authorities’ Ability to Prohibit or Interfere With Transactions .
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