June 1, 2012
The Competition Commission of Singapore (the "CCS") published its revised Guidelines on Merger Procedures (the "Guidelines") on 20 June 2012 after conducting a public consultation which began on 20 February 2012 for one month. The revised Guidelines would come into force on 1 July 2012. In the public consultation, the CCS explicitly stated that the key aims of the amendments were to increase transparency of the CCS' procedures to streamline the process as in relation to merger notifications to minimise the burden on parties involved, and to maximise the benefits of Singapore's voluntary merger notification regime.
Broadly, the CCS made three main amendments to the Guidelines to achieve those aims. The CCS introduced: (1) a new process for merger parties to obtain a confidential opinion for confidential mergers; (2) threshold turnover figures for smaller businesses and the likelihood of an investigation on merger situations involving such small businesses; and (3) a more streamlined requirement for information in a Phase 1 assessment of the merger notification.
Merger parties may under the revised Guidelines, request that the CCS provides a confidential opinion on a merger. Merger parties should in the first instance, provide basic preliminary information on the merger (e.g. names of the merging parties, sector, overlapping goods and services, timing, evidence of good faith to proceed with the merger, and reasons for seeking a confidential opinion, etc). Subsequently, the merger parties would be required to provide information, the extent of which is almost as detailed as that required under Form M1.
The CCS stated that when considering a request for a confidential opinion it will not make any third party enquiries, and expects to provide its confidential opinion by 14 working days from receipt of all the required information. The confidential opinion is however, will not be binding on the CCS.
Turnover thresholds for SMEs
The CCS stated that it is not be likely that it would investigate a merger situation that involves only small businesses. The turnover threshold which the CCS is likely to consider a business small is when the turnover in each of the merger parties is below S$5 million, and where a combined worldwide turnover of all the merger parties is below S$50 million. The turnover thresholds to be considered is the turnover for the financial year preceding the transaction.
Process for obtaining Information required in Phase 1 streamlined
The CCS also streamlined the information gathering process required of merger parties in the Phase 1 merger notification so that there would be lesser subsequent information requests after assessment of the filing of Form M1. Merger parties may also discuss with the CCS if they are of the view that some information in Form M1 is not relevant in the assessment of their merger.
Other interesting amendments
Besides the three main amendments above, the CCS also made a few other notable amendments to the revised Guidelines. In particular, the CCS recognised that the merger regime in Singapore is voluntary and provided further guidance and clarity on what should be notify. It did however, also made it clear that there are significant risks of not notifying a merger which substantially lessens competition ("SLC"). If the CCS decides that a merger SLC, it may direct the merged entity to remedy it, for example by divesting all or part of the business. The CCS may also impose financial penalties on all merger parties that implemented a merger which resulted in a SLC.
The CCS also reiterated its ongoing practice of market intelligence gathering (i.e. the CCS keeps markets under review and approaches merger parties of transactions which may raise concerns to gather further information about the transaction and its effect on competition). Separately, the CCS also stated that it would try to maintain similar investigation processes for own initiative merger investigations as notified merger situations.
The CCS has shown in its amendments to the revised Guidelines that it intends to be facilitative towards businesses and minimise the burden of competition law compliance in Singapore. While the CCS is clear in its business friendly stance, it is also cognisant of its statutory duties and the harm of mergers that cause a SLC. The CCS is therefore ready to investigate such potential transactions promptly.
Businesses in Singapore should be familiar with the revised Guidelines, and should seek appropriate competition law advice prior to the implementation of any merger to either: (1) seek a confidential opinion or make a notification to the CCS (for high risk mergers), or (2) assess and rule out the risks of infringing the merger rules in Singapore by restructuring any merger.