SINGAPORE Law and Practice Contributed by: Lim Chong Kin and Corinne Chew, Drew & Napier LLC
on the specific facts and circumstances of the particular merger under assessment or inves - tigation. The Commission typically adopts the hypothetical monopolist test in defining the rel - evant markets. 2.8 Foreign-to-Foreign Transactions Barring the exceptions set out in the Fourth Schedule to the Competition Act, the Section 54 Prohibition applies to any merger or anticipated merger that has resulted – or may be expected to result – in an SLC within any market in Sin- gapore, regardless of whether or not the parties to the merger have a local presence within Sin - gapore. Similar to mergers involving Singapore merger parties, the notification of foreign-to- Theoretically, one party may meet the indica - tive market 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; foreign transactions is also voluntary. 2.9 Market Share Jurisdictional Threshold • 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 undertaking, which includes the power to block actions that determine the strategic commercial behaviour of the undertaking. Joint control is
characterised by the possibility of a deadlock arising from the power of two or more parent companies to reject proposed strategic deci - sions; therefore, there is a requirement that the shareholders must reach a consensus in deter - mining the commercial activities of the joint ven - ture. A joint venture is subject to the Section 54 Pro - hibition 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 function within the parent com - panies’ 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 development, 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 par - ent companies’ distribution networks or outlets, or relies almost entirely on sales to or purchases from its parent 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 commit - ment of resources by its parent companies. For joint ventures established with a specified dura - tion, the agreement should provide for a suffi - ciently long time period in order to bring about a lasting change in the structure of the under - takings concerned, or otherwise for the possi - ble continuation of the joint venture beyond this period. Conversely, a joint venture established for a short, finite duration will not be considered to be operating on a lasting basis.
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