Price-Fixing, Bid-Rigging and Other Anti-Competitive Practices to Avoid

Last updated on January 12, 2024

Toy figures of businessmen gathered together, as if in a discussion, as they stand on a piece of newspaper printed with a dollar sign

In 2020, the Competition and Consumer Commission of Singapore (CCCS) issued an Infringement Decision against three businesses – CU Water Services Pte. Ltd., Crystalene Product (S) Pte. Ltd., and Crystal Clear Contractor Pte. Ltd. – for infringing section 34 of the Competition Act.

The businesses had engaged in bid-rigging conduct relating to tenders called for the provision of maintenance services for swimming pools, spas, fountains and other water features at developments such as hotels and condominiums. They exchanged information and coordinated their bids for the maintenance services.

The CCCS fined CU Water $308,680, while Crystalene and Crystal Clear were fined $41,541 and $68,793 respectively.

The Four “Evils” of Competition Law

Under section 34 of Singapore’s Competition Act (CA), business entities are prohibited from entering into any agreement or engaging in any concerted practice with the object or effect of preventing, restricting or distorting competition.

The CCCS Guidelines on the Section 34 Prohibition 2022 highlight certain activities deemed to have the object or effect of restricting competition. This includes the four “evils” of Competition Law:

  1. Price-fixing
  2. Bid-rigging
  3. Market sharing
  4. Limiting output or controlling production or investment

These activities are considered serious infringements of the CA and as they are usually deemed to have anti-competitive effects. It is therefore important that businesses learn to recognise such practices and understand why they are considered anti-competitive.

1. Price-fixing

Price-fixing is the practice whereby competitors agree to fix, control or maintain the prices of goods or services.

This can be done through direct collusion between competing firms i.e. firms explicitly agree to maintain prices at a specified level or indirectly, through the exchange of price information or the setting of recommended prices by industry associations.

For instance, in as in the case of Price fixing in Modelling Services, the Association of Modelling Professionals (AMIP) acted as the intermediary to fix prices for modelling services. 11 modelling agencies met together under the auspices of the AMIP to discuss, plan and agree upon the prices for modelling services.

Such anti-competitive behaviours do not have to be recorded in writing. A verbal understanding at, for instance a trade association meeting or at a social event, may be sufficient to show that there was a price fixing agreement.

2. Bid-rigging

Bid-rigging occurs when competitors agree on who should win a tender.

In support of the cartel member designated to ‘win’ the tender bid, other cartel members may suppress their bids or submit bids with much higher prices than they would otherwise offer.

Typically, cartel members take turns to be the designated ‘winner’ as in the case of Motor Vehicle Traders. Such a practice distorts competition and the party inviting the tender is likely to pay higher prices than in a competitive bidding process.

3. Market sharing

Market sharing is the practice where competitors divide up the consumer markets in various ways, such as by geographical area or customer types and agree to keep to their allotted segment of the market.

Market sharing thus allows competitors to avoid direct competition by keeping within their allotted market segments. This results in higher prices for consumers.

4. Limiting output or Controlling Production or Investment

Production control involves an agreement between competitors to limit the quantity of goods or services available in the market. By controlling the supply or production of goods or services, the cartel is able to, indirectly, increase prices to maximise their profits.

Defences Available to Businesses Accused of Anti-Competitive Behaviour

The Third Schedule of the CA contains the defences applicable to a section 34 infringement.

Notably, under paragraph 9 of the Third Schedule, section 34 does not apply to agreements that produce Net Economic Benefits (NEB). NEB will be found where an agreement contributes to an improvement in production, distribution or promotion of technical or economic progress.

A notable example of where the then-Competition Commission of Singapore made a finding that an agreement produces NEB is the cooperation agreement between Qantas airways and Orangestar Investments (the holding company of Jetstar Asia and Valuair). In this case, the then-Competition Commission of Singapore found that there would be NEB in terms of better air connectivity and cost savings in parties’ operations through better scheduling and a wider scope of inventory control.

What Should Businesses Do to Avoid being Slapped with CCCS’ Infringement Actions?

Be cautious when attending meetings with anti-competitive objectives

Besides steering clear of anti-competitive business practices like the four “evils”, it is important to note that the CCCS takes a wide definition of the terms “agreement” and “concerted practice”.

Agreements are not limited to legally enforceable agreements and need not be written; it may include verbal gentlemen’s agreements. Also, physical meetings are not necessary for the competition authorities to make a finding that an agreement has been concluded. All that is required is a concurrence of wills between cartel members.

Therefore, firms must exercise caution when attending meetings with competitors as there is a risk that it could be considered part of a cartel if the meetings were organised with an anti-competitive objective in mind. The fact that a party had played limited role or might not have fully committed to its implementation or participated under pressure does not absolve it of liability. At most, it will be taken into consideration when fixing the amount of financial penalty imposed.

In some situations, firms may find themselves unwittingly caught up in such practices, i.e. pricing strategies are discussed at the meeting despite not being on the agenda. The CCCS has stated that it is important that the firm writes to its competitors and/or the trade association that it does not wish to be considered a member of the cartel or to continue to participate in such meetings.

Rely on the Net Economic Benefits defence

Firms may also choose to rely on the NEB defence if they are reasonably confident that it applies to the agreement at hand.

Seek guidance on their agreement from the CCCS

As a best practice however, firms should seek guidance from the CCCS on whether their agreement is a section 34 infringement. Guidance can be sought either on a confidential basis under section 43 of the CA or on a non-confidential basis under section 44 of the CA. No penalty will be imposed during the period of notification even if the agreement is subsequently found to be in violation of section 34.

Alternatively, firms can consult experienced corporate lawyers for legal advice on how they can structure their agreement to avoid falling foul of Singapore’s competition laws.

Appointment and Removal of Company Officers and Other Key Personnel
  1. What is a Nominee Director & How to Appoint One in Singapore (With FAQs)
  2. Independent Directors: Who are They and What is Their Role?
  3. Board of Advisors: Who Are They and What Is Their Role?
  4. Appointing Company Directors in Singapore: Eligibility, Process etc.
  5. Managing Director vs CEO in Singapore: Roles and Obligations
  6. Guide to Directors' Remuneration in Singapore
  7. Directors' Duties in Singapore
  8. Shadow Directors: Who are They and What Duties Do They Owe to the Company?
  9. How to Remove a Director from a Company in Singapore
  10. Removal and Resignation of Company Auditor in Singapore
  11. Appointing a Company Secretary: Roles and Responsibilities
  12. Appointing an Authorised Representative for Foreign Companies in Singapore
  13. Process Agents in Singapore
Holding Meetings
  1. What are Annual General Meetings (AGMs) in Singapore?
  2. How to Hold Extraordinary General Meetings (EGMs) in Singapore
  3. How to Hold a Board Meeting in Singapore
Shareholder Matters
  1. Share Buybacks in Singapore: Procedure, Cost and More
  2. How to Split Shares (or Stocks) in a Singapore Company
  3. 2 Ways to Remove a Singapore Company Shareholder ASAP
  4. What are Treasury Shares? Guide for Singapore Companies
  5. A Guide to Paid-Up Capital in Singapore
  6. Preparing a Register of Shareholders for a Singapore Company
  7. How to Issue Shares in a Singapore Private Company
  8. Guide to Transferring Shares in a Singapore Private Company
  9. Your Guide to Share Certificates in Singapore: Usage and How to Prepare
  10. Shareholder Rights in Singapore Private Companies
  11. Shareholder Roles and Obligations in Singapore Companies
  12. Dividend Payments Guide for Singapore Business Owners
  13. Share Transmission: What Happens If a Shareholder Dies in Singapore?
  14. How to Reduce the Share Capital of Your Singapore Company
  15. Buy-Sell Agreements: How to Write & Fund Them in Singapore
  16. Oppression of Minority Shareholders
  1. Is Your Business Collaboration Competition Law-Compliant?
  2. Explained: Registered Filing Agent for Singapore Businesses
  3. Transfer Pricing Obligations of Singapore Companies
  4. Adhering to Trading Sanctions and Restrictions in Singapore
  5. Cyber Hygiene Compliance Guide for Singapore Companies
  6. Corporate Social Responsibility For Businesses in Singapore
  7. A Guide to Food Standards in Singapore
  8. Essential Regulatory Compliance Guide for Singapore Companies
  9. Dormant Companies and Their Filing Obligations in Singapore
  10. Anti-Money Laundering Regulations and Your Business: What You Need to Know
  11. Price-Fixing, Bid-Rigging and Other Anti-Competitive Practices to Avoid
  12. Can Singapore Businesses Legally Conduct Lucky Draws?
  13. Restaurant Inspection and Food Safety Rules in Singapore
Company Management
  1. Does Your Company Need a Legal Team (In-House Counsel)?
  2. Acqui-Hiring of Singapore Companies: How Does It Work?
  3. Can a Company Director Take Legal Action Against Another Director?
  4. How to Change the Name of Your Singapore Company
  5. Can Directors be Liable for Company Debts in Singapore?
  6. Company Loans to Directors/Shareholders in Singapore
  7. 3 Types of Insurance Every Singapore Business Needs
  8. Creating and Registering Charges in Singapore: Guide for Companies
  9. Guide to Effective Business Continuity Planning in Singapore
  10. Business Asset Sale & Disposal in Singapore: How Do They Work?
  11. 5 Ways To Resolve Business Partnership Disputes in Singapore
  12. How to Commence a Derivative Action on Behalf of a Company in Singapore
  13. Business Will: How to Pass on Your Business to Your Successors in Singapore
Company Documents
  1. Record-Keeping Requirements for Singapore Companies
  2. Company Constitutions in Singapore and How to Draft One
  3. Company Memorandum and Articles of Association
  4. Company Resolutions: What are They?
  5. Board Resolutions in Singapore
  6. Minutes of Company Meeting in Singapore: How to Record
  7. How to Set Up a Register of Controllers
  8. How to Set Up a Register of Nominee Directors
  9. Guide to Filing Financial Statements for Singapore Business Owners
  10. Filing Annual Returns For Your Business
Tax, Accounting and Audit Matters
  1. Carbon Tax in Singapore: What is the Rate and Who Must Pay?
  2. Laws and Penalties for GST Evasion in Singapore
  3. 6 Common Taxes in Singapore For Individuals & Businesses
  4. Singapore Corporate Tax: How to Pay, Tax Rate, Exemptions
  5. Start-Up Tax Exemption Guide for New Singapore Companies
  6. GST Registration: Requirements and Procedure in Singapore
  7. What is Withholding Tax and When to Pay It in Singapore
  8. Singapore Influencers: Here's How to Calculate Your Income Tax
  9. Investigating Tax-Evading Business Owners in Singapore
  10. Small Business Accounting Services in Singapore
  11. Company Audits in Singapore: Requirements and Exemptions
Data Protection
  1. Suspect a PDPA Data Breach? Here's What to Do Next
  2. Must You Notify PDPC About a Data Breach in Your Business?
  3. Data Room: Should Your Singapore Company Set Up One?
  4. Victim of a Data Breach? Here’s What You Can Do
  5. Summary: Your Organisation's 10 Main PDPA Obligations
  6. Essential PDPA Compliance Guide for Singapore Businesses
  7. PDPA Consent Requirements: How Can Your Business Comply?
  8. Is It Legal for Businesses to Ask for Your NRIC in Singapore?
  9. How To Prevent Unauthorised Disclosure When Processing and Sending Personal Data
  10. Cloud Storage of Personal Data: Your Business’ Data Protection Obligations
  11. Drafting a Comprehensive Privacy Policy For Your Singapore Website
  12. GDPR Compliance in Singapore: Is it Required and How to Comply
  13. Appointing a Data Protection Officer For Your Business: All You Need to Know
  14. How Can Companies Dispose of Documents Containing Personal Data?
  15. Check the Do-Not-Call Registry Before Marketing to Singapore Phone Numbers
  16. How to Legally Install CCTVs for Home/Business Use in Singapore
  17. Is Web Scraping or Crawling Legal in Singapore?
  18. Legal Options If Employees Breach Confidentiality in Singapore
  1. Social Media Marketing: Legal Guide for Singapore Businesses
  2. Your Guide to E-commerce Website Terms of Service in Singapore
  3. Dealing with Defamation of Your Business: Can You Sue?
  4. Sending Email Newsletters That Comply With Singapore Law
  5. A legal guide to drafting a social media policy for your company
  6. Your Guide to a Media Release Form in Singapore
  7. Your Guide to an Influencer Marketing Agreement in Singapore
  8. Outdoor Advertising: How to Legally Display Public Ads in Singapore
Fintech and Payment Services Advisory
  1. A Guide to Digital Bank Regulation in Singapore
  2. Applying for a Major Payment Institution Licence in Singapore
  3. Applying to the MAS FinTech Regulatory Sandbox
  4. Payment Services Act Licensing Guide for Fintech Businesses
  5. How to Get a Payment Service Provider Licence in Singapore
  6. Financial Adviser's Licence Guide for Singapore Businesses
  7. Capital Markets (CMS) Licence Requirements in Singapore
  8. How to Offer E-Wallet Services in Singapore: Licensing Guide
  9. Digital Payment Token Services Licence Guide in Singapore
  10. How to Legally Offer Crypto Services in Singapore
  1. Starting a Franchise in Singapore: What Franchisors Should Look Out For
  2. Running a Franchise in Singapore: What To Look Out for as a Franchisee
Debt Restructuring
  1. What is Judicial Management and How It Works in Singapore
  2. Schemes of Arrangement: How They Work and How to Apply
  3. Informal Debt Restructuring and Workout in Singapore
Ending a Business
  1. How to Restore a Struck-Off Company in Singapore
  2. Claw-Back of Assets From Unfair Preference and Undervalued Transactions
  3. Should You Save or Close Your Zombie Company in Singapore?
  4. Voluntary Suspension of Business in Singapore: How to Handle
  5. Winding Up a Singapore Company: Grounds and Procedure
  6. Closing Your Singapore Business: What You Need to Settle
  7. Striking Off a Company
  8. Restoring a Company That was Struck Off Without You Knowing
  9. Dissolution of partnerships in Singapore
  10. What Should a Creditor Do When a Company Becomes Insolvent?
  11. How to File a Proof of Debt Against a Company in Liquidation
  12. Validation of Payments Made by Companies Being Wound Up