Yes. Mergers and similar transactions are subject to the provisions of the Competition Act 2004 (“Act”). Specifically, Section 54 of the Act prohibits any merger which results or may be expected to result in a substantial lessening of competition (“SLC”) within any market in Singapore for goods or services.

The Competition and Consumer Commission of Singapore (“CCCS”) is the national regulatory agency. Note, however, that mergers involving undertakings active in certain industries may fall under the purview of other regulators, such as the Info-communications Media Development Authority ("IMDA"), the Monetary Authority of Singapore ("MAS") and the Energy Market Authority ("EMA"). This is not an exhaustive list.

Decisions by CCCS may be appealed to the Competition Appeal Board.

No, there is no supranational regulatory agency with exclusive competence. 

There are merger filing requirements as set out in the Act. The merger filing requirement for notification of mergers to CCCS is voluntary. However, CCCS takes a very strict view of the regime and where thresholds are crossed will expect a notification for a merger for clearance to CCCS to be filed under Sections 57 and 58 of the Act. Substantive and procedural requirements for filing a merger are set out in the Competition (Notification) Regulations 2007 and in the CCCS Guidelines on the Substantive Assessment of Mergers and the CCCS Guidelines on Merger Procedures respectively.

Section 54 of the Act defines a merger as where —

1. two or more undertakings, previously independent of one another, merge;
2. one or more persons or other undertakings acquire direct or indirect control of the whole or part of one or more other undertakings; or
3. the result of an acquisition by one undertaking (the first undertaking) of the assets (including goodwill), or a substantial part of the assets, of another undertaking (the second undertaking) is to place the first undertaking in a position to replace or substantially replace the second undertaking in the business or, as appropriate, the part concerned of the business in which that undertaking was engaged immediately before the acquisition.

The general rule is that where a transaction leads to a change in control of the whole or part of one or more undertakings, it will be deemed a “merger” and hence subject to the provisions of the Act. Additionally, transactions that result in the establishment of a new business (a joint venture) controlled by two or more businesses or persons already controlling one or more businesses will also constitute a merger under certain conditions.

Change in control can be direct or indirect, such that the following transactions, without being exhaustive, are all capable of amounting to mergers:

1. ownership of, or the right to use all or part of the assets of an undertaking;
2. conclusion of agreements that transfer or grant rights to exercise decisive influence over all or part of an undertaking; or
3. creation of a full-function joint venture, i.e. an undertaking subject to joint control by its parent undertakings, and which performs all the functions of an autonomous economic entity on a lasting basis.

Under the Act, an acquisition of control will not amount to a merger and, therefore, will not fall under the merger regime where control is acquired by an undertaking the normal activities which include the carrying out of transactions and dealings in securities for its own account or for the account of others and:

1. the control concerned is constituted by the undertaking’s holding, on a temporary basis, securities acquired in another undertaking; and
2. any exercise by the undertaking of voting rights in respect of those securities, whilst that control subsists: (i) is for the purpose of arranging for the disposal of all or part of the other undertaking or its assets or securities within a period of 12 months (which may be extended by CCCS) from the date on which control of this other undertaking was acquired; and (ii) is not for the purpose of determining activities of the other undertaking, that could affect competition in markets for goods or services in Singapore.

Minority investments that confer the acquirer joint or sole control of an undertaking amount to a merger. It is highly recommended that such a merger be notified to CCCS, where the indicative notification thresholds are crossed. This can occur where minority shareholders have additional rights which allow them to veto or have an affirmative say on decisions that are essential for the strategic commercial behavior of the undertaking (such as decisions relating to business plans, budget and appointment of senior management) or where a minority shareholder is highly likely to achieve control over decisions made at shareholders’ meetings, for example, due to patterns of attendance and voting at such meetings. Under the CCCS Guidelines on the Substantive Assessment of Mergers, the ownership of 30% to 50% of the voting rights of an undertaking gives rise to a rebuttable presumption that decisive influence exists.

Yes, foreign-to-foreign transactions are subject to the provisions of the Act. The test is whether the merger would result in an SLC in any market in Singapore.

The relevant thresholds for notification are where post-merger the merged entity will have a market share of 40% or more, or the merged entity will have a market share between 20 to 40% and the combined market share of the three largest firms post-merger is 70% or more.

This is because of the strict position that CCCS takes that where thresholds are crossed, there is likely to be an SLC. For parties to assess whether to notify CCCS of their transaction, they must first conduct an analysis of the relevant market, which can extend beyond Singapore. This is an involved, but essential, process.

Note that notification is also recommended where the thresholds are not crossed, but there is nevertheless an SLC in the market.

The filing of mergers to CCCS is voluntary. However, CCCS takes a very strict view of the regime and where thresholds are crossed or near the threshold levels, CCCS will expect a notification for merger clearance to CCCS. Separately, note that notification to certain sectoral regulators (see our response to "Identify the applicable national regulatory agency/agencies") is mandatory.

There is no prescribed time by which notification has to be filed. Yet, where a filing is necessary, this must be done as soon as possible, and prior to the implementation of the merger.

No. There is no automatic waiting period or standstill requirement in Singapore. However, CCCS has the power to impose interim measures on the parties prior to completing its assessment of a notified merger or an own-initiative investigation, including prohibiting the completion or the implementation of the merger or including the need to continue to hold businesses separate while CCCS is reviewing the merger and until such time as CCCS has made a determination on the merger.

The initial filing is done by completing the prescribed application form (Form M1) and submitting the completed Form M1 (and supporting documents) to CCCS. Form M1 is a very detailed document that requires information such as:

1. ownership structures and financial information of the merger parties (and the group to which they belong);
2. description of the relevant markets;
3. market shares of the merger parties and their competitors;
4. details of the parties’ customers and 
5. applicant’s competitive assessments and arguments on the effects of the merger on the relevant markets (or related markets, in the case of conglomerates)
   
   

Yes, an administrative fee has to be paid to CCCS at the time of filing. The amount to be paid ranges from S$5,000 (in the case where the acquirer (in the case of an acquisition of control) or all the merger parties (in the case of a merger) are small or medium-sized enterprises (i.e. annual sales turnover of not more than SGD 100 million or not having more than 200 employees) to S$100,000 (in the case where the turnover of the target undertaking or turnover attributed to the acquired asset is above S$600 million).

Upon receiving a merger notification (i.e., a complete Form M1 and supporting documents and the administrative fee), CCCS will begin Phase 1 of its merger review which CCCS will aim to complete within 30 working days. Straightforward cases without competition concerns will be cleared in Phase 1. If CCCS finds that it is not able to issue a favorable decision at the end of the Phase 1 review, CCCS will notify the parties involved of the competition concerns it has identified and give them an opportunity to respond to such concerns, including by putting forward commitments. If the parties’ commitment proposal is accepted in principle by CCCS in Phase 1, CCCS will commence a 50-working day administrative timeline (that is separate from the 30-working day review period) to seek public or industry feedback on the commitments proposal. Where necessary, CCCS may give written notice to extend this administrative timeline by up to 40 working days.

If the parties do not offer commitments or if CCCS finds that the commitments are insufficient, the review will proceed to a Phase 2 review which requires the parties to submit further information under a Form M2. The Phase 2 review is to be completed within 120 working days from receipt of the complete Form M2 and supporting documents.

The timelines provided above are indicative and not binding on CCCS, although CCCS typically works within them. They also do not take into account the ability of CCCS to stop the clock in the event the notifying parties do not provide, within a stipulated time, information requested from them by CCCS for the purpose of its review.

The substantive test for clearance is whether the merger has resulted, or the proposed merger is likely to result in an SLC within any market in Singapore for goods or services. The test is applied by comparing the extent of competition in the relevant market with and without the merger. In assessing whether there is an SLC, any likely efficiencies to be gained are considered.

Potential SLC due to horizontal mergers may be indicated by non-coordinated effects, coordinated effects or both.

Non-coordinated effects are likely where the merger allows the merged entity to profit from an increase in price or reduction in output/quality due to the loss of competition. Characteristics of a market in which a merger may lead to non-coordinated effects include:

1. a small number of firms in the market;
2. significant market power held by merger parties;
3. merger parties are close rivals;
4. consumers have little choice of alternative suppliers;
5. the merged entity’s competitors have little spare capacity to expand supply if the merged entity reduces output;
6. it is difficult for competitors to react quickly to changes in price, output or quality;
7. there is no strong competitive fringe capable of sustaining sufficient levels of most-merger rivalry; and
8. one of the merger parties is a recent new entrant or a strong potential new entrant that may have had a significant competitive effect on the market since its entry or which was expected to grow into an effective competitive force.

Non-coordinated effects may also occur in markets where innovation is an important feature of competition, and where one or more of the merging parties is an important innovator in ways not reflected by market shares (for example, one of the merging parties is an innovative and fast-growing new entrant, or the merger is between two important competing innovators that have “pipeline” products relating to a specific product-market).

Coordinated effects are likely where the merger allows firms in the market to align their behavior, and explicitly or tacitly collude with one another to increase the price, reduce quality or reduce output. Characteristics of a market in which a merger may lead to coordinated effects include:

1. the ability for firms to align their behavior in the market;
2. an incentive for firms to maintain coordinated behavior; and
3. coordinated behavior is sustainable in the face of other competitive constraints in the market.

Non-horizontal mergers (i.e., vertical mergers or conglomerate mergers) may also result in SLC.

Vertical mergers may cause an SLC  if the vertically-integrated firm has the ability to foreclose rivals from either upstream or downstream markets and/or increases the risk of collusion (for example, by providing the merged entity access to commercially sensitive information of non-integrated rivals).

Conglomerate mergers may lead to SLC where the merger parties are in closely related markets (for example, merger parties sell complementary products or products that are generally or likely purchased together by the same set of buyers for the same end-use). This circumstance may lead to an SLC when the combination of products in related markets confers upon the merged entity the ability and incentive to leverage a strong market position from one market to another by means of tying, bundling or other forms of exclusionary conduct.

In making its assessment, CCCS will consider factors such as the market shares of the parties and their competitors, barriers to entry/expansion in the market, countervailing buyer power and net economic efficiencies.

CCCS can make the following decisions:

1. approval (clearance) of a merger or anticipated merger;
2. approval (clearance) of a merger or anticipated merger subject to commitments;
3. prohibition of anticipated merger; or
4. a decision that a completed merger has infringed the Act.

Note that where clearance is obtained for an anticipated merger, the decision is typically only valid for a specified period of time (generally one year). However, CCCS will take account of the circumstances of each merger situation when specifying the duration of any validity period. If the anticipated merger is not implemented within this period, the clearance will lapse.

Yes. This can be done at any time before CCCS makes its decision on the merger. This can also be done at the end of a Phase 1 review where CCCS has expressed concerns with the merger and seeks to move it into a Phase 2 review.

Whilst there is no requirement to obtain approval of a proposed transaction before implementing it, CCCS has the power to investigate any proposed or implemented merger if it suspects that the merger would result or has resulted in an SLC in Singapore. If CCCS makes a decision that a merger has resulted in an SLC, it can impose on the parties any direction it considers appropriate to bring the infringement to an end including, for example, a direction to divest part of the assets, unwind the merger and/or impose financial penalties of up to 10% of the infringing parties’ turnover in Singapore for the period of the infringement. Additionally, CCCS may issue interim directions while reviewing a notified merger or convert a notified merger into an investigation or investigate an unnotified merger, which includes a direction to the parties not to implement their proposed merger or to hold the business separate.

While inadvertent mistakes will not be penalized, it is an offense under Section 77 of the Act to recklessly or intentionally submit false or misleading information to CCCS. This applies to both applicants and third parties who provide information to CCCS for the purposes of the notification. If there are material changes to information already provided, the applicant(s) must inform CCCS of such changes.

CCCS may impose financial penalties of up to 10% of the infringing parties’ turnover in Singapore for the period of the infringement up to a maximum of 3 years. Additionally, CCCS can impose other sanctions, including requiring behavioral commitments to be provided, ordering limited structural remedies such as divestment of assets or in the worst-case scenario for unwinding. The key aim is to impose such directions it considers appropriate to bring the infringement to an end.

Yes, it can and has done so. CCCS can conduct its own investigations at any time on any proposed or implemented merger that has not been notified if it suspects that the merger would result or has resulted in an SLC in Singapore. In such a case, CCCS can issue interim measures to halt the merger while it is conducting its investigation or issue any such direction that it deems fit before the investigation is concluded. Further, there is no timeline for CCCS to conduct its investigation, which can, therefore, last for several months. CCCS also provides channels for third-party complaints of mergers that may infringe the Act, and it monitors mergers notified or announced in places other than Singapore.

CCCS can commence the process by first carrying out informal checks and making informal inquiries with the parties, competitors and customers of the merged entity, and with other third parties. When CCCS deems it has reasonable grounds to suspect that the transaction may infringe or has infringed Section 54 of the Act, it can commence a formal investigation. CCCS can issue a notice to any person to obtain information that relates to any matter relevant to the investigation. In doing so, CCCS can conduct interviews as well. If required, CCCS can also enter premises under Sections 64 or 65 of the Act, with or without a warrant, to obtain information and copies of documents, among other things. Note that there is nothing to prevent CCCS from commencing investigations immediately without undertaking the informal checks first.

Following the investigations, if a proposed infringement decision is made, CCCS will give written notice to persons likely to be affected by the decision. Parties affected can make representations before it finalizes the decision under Section 68 of the Act. Penalties and other remedies may be imposed in the final infringement decision.

CCCS encourages merger parties to conduct a self-assessment of whether a notification may be necessary. Its position is that strict penalties will be imposed if CCCS concludes that an infringement has occurred based on its own investigations. While provisional prohibitions have been issued on some notified mergers, CCCS typically accepts commitments offered following such provisional decisions if they sufficiently address the identified competition concerns. Hence, the final decision of conditional clearance is commonly granted in such cases. In 2018, CCCS for the first time imposed financial penalties and remedies on parties for putting into effect a merger that led to an SLC. This decision was upheld by the Competition Appeal Board ("CAB"). Commenting on the CAB decision, CCCS emphasized that, while Singapore has a voluntary notification merger regime, this does not mean that there are no risks to parties proceeding with a merger before first notifying CCCS. CCCS takes a very strict view of the regime and where thresholds are crossed will expect a notification for a merger for clearance to CCCS.

With sustainability being one of the forefront issues globally, CCCS is looking closely at sustainability collaborations and how such collaborations will be assessed under competition laws. On 20 July 2023, CCCS launched a public consultation on proposed guidance for evaluating environmental sustainability collaborations amongst competitors.

In addition to the effects of the merger, it is also important that merging parties review in detail the transaction documents as certain clauses, such as non-compete clauses or exclusive purchase clauses, may potentially infringe the prohibition against anti-competitive agreements contained in the Act. Where such clauses are ancillary to the merger, they have to be notified and will be reviewed at the same time as the merger. If such clauses are not ancillary to the merger, CCCS will not clear such clauses. If such clauses are nevertheless implemented upon the merger clearance, CCCS will not hesitate to investigate the implementation as resulting in potential anti-competitive agreements and issue financial penalties on the parties if an infringement is found.