SINGAPORE Law and Practice Contributed by: Lim Chong Kin and Corinne Chew, Drew & Napier LLC
5.2 Parties’ Ability to Negotiate Remedies Generally, merger parties are encouraged to take the initiative to propose appropriate commitments to rem - edy, mitigate or prevent any competition concerns at any time before the Commission decides on the merg - er. The Commission will only accept commitments that are proportionate and sufficient to clearly address the identified adverse effects on competition. Even if merger parties propose commitments, the Commis - sion may consider and impose alternative remedies. The Commission may consider either structural or behavioural remedies. These are generally preferred over financial penalties to restore competitive condi - tions in the market, although financial penalties may be imposed to reflect serious infringements and deter Of the two types of remedies, structural remedies are generally preferred to behavioural remedies because they clearly address the market structure issues that gave rise to the competition problems and, once implemented, require little ongoing monitoring by the Commission. Typically, structural remedies involve the sale of one of the overlapping businesses that led to the competition concern. The Commission consid - ers that, ideally, this should be a self-standing busi - ness that is capable of being fully separated from the merger parties and, in most cases, will be part of the acquired enterprise. future infringements. Structural Remedies The sale should be completed within a specified period, subject to the Commission’s approval of the buyer. This is to ensure that the proposed buyer has the necessary expertise, resources and incentives to operate the divested business as an effective com - petitor in the marketplace. Otherwise, it is unlikely that the proposed divestiture will be an effective remedy for the anti-competitive elements identified. In appropriate cases, the Commission will also con - sider other structural or quasi-structural remedies, such as the divestment of the buyer’s existing busi - ness (or part of it) or an amendment to intellectual property licences. The Commission must approve the buyer before the sale to ensure that the buyer is able to act as an effective competitor in the market.
Behavioural Remedies The Commission will consider behavioural remedies in situations where divestment is considered to be impractical or disproportionate to the nature of the concerns identified. In some cases, behavioural rem - edies may also be necessary to support structural divestment. In determining which remedies would be appropriate and comprehensive, the Commission will take into account how effectively the action would prevent, remedy or mitigate the competition concerns caused by the merger. The Commission’s starting point will be to choose the remedial action that will restore the competition that has been – or is expected to be – substantially reduced as a result of the merger. Given that the effect of a merger is to change the structure of the market, remedies that aim to restore all or part of the pre-merger market structure are likely to be a more direct way of addressing the adverse effects, although other remedies may be considered in view of the associated costs and effectiveness. 5.3 Legal Standard When deciding on the appropriate remedy, the Com - mission will consider the effectiveness of different remedies and their associated costs, having regard to the principle of proportionality. 5.4 Negotiating Remedies With Authorities As the Commission may accept commitments at any time before making its decision, parties can generally propose commitments at any time during the Com - mission’s review or investigation. While merger parties are encouraged to take the initiative to propose com - mitments that they think may be appropriate to meet any competition concerns, the Commission may also invite merger parties to consider whether they want to offer commitments. Phase 1 and 2 Reviews If the Commission identifies competition concerns in Phase 1 which indicate that a Phase 2 review may be appropriate, those concerns will be communicat - ed to the applicant(s) in writing through the Phase 1 Issues Letter, which will indicate that the Commission is unlikely to clear the merger if the concerns remain unaddressed. This presents the applicant(s) with a
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