On 10 September 2020, the Competition and Consumer Commission of Singapore ("CCCS") published its findings and recommendations from its market study on e-commerce platforms. While the market study did not identify any significant competition concerns in the sector, the CCCS has concurrently proposed amendments to six of its guidelines to provide greater clarity and guidance to businesses and competition practitioners. These amendments take into consideration the recommendations from the market study.
| what you need to know - key takeaways |
- Digital platforms continue to face increased scrutiny from competition regulators around the globe. The CCCS market study is the latest example of efforts by governments and regulators to determine whether existing competition frameworks are able to address issues arising from the growth of digital companies.
- The market study concluded that Singapore's competition regime was sufficiently robust to address competition issues that may arise from the proliferation of e-commerce platforms. However, the CCCS noted that it would continue to actively monitor developments in the fast evolving e-commerce market.
- Following recommendations by the market study to provide greater clarity on the application of the Competition Act (Cap. 50B), the CCCS has published proposed changes to its guidelines. These amendments provide further guidance on the CCCS' approach to e-commerce platform operators and other digital companies in the contexts of merger assessments and abuse of dominance investigations.
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CCCS market study
The CCCS market study investigated the business models of e-commerce platforms in Singapore and analysed the potential competition and consumer issues that may arise from the proliferation of these platforms in the market. In particular, the CCCS examined the growth of e-commerce platforms that competed in multiple market segments offering distinct products and/or services. For example, the market study noted the rise of Grab as a regional "super app" which bundled services such as e-payment, marketplaces, ride-hailing and food delivery in a single mobile app.
The CCCS concluded that it did not identify any major competition concerns in the sector and its existing competition framework was sufficiently robust to address any competition issues that may arise. Key findings of the market study include:
- consumers checked multiple platforms and were sensitive to both price and non-price factors, such as platform loyalty, in deciding which platform to use;
- e-payment services by e-commerce platforms were unlikely to be a prerequisite for a platform's success in Singapore;
- lack of data was presently not a significant barrier to entry for e-commerce platforms; and
- data protection was currently not a key parameter of competition amongst e-commerce platforms.
Further, the CCCS also concluded that there was scope to provide further clarity in its guidelines, particularly in relation to how market definition and market power in cases involving digital platforms would be assessed.
Proposed changes to competition guidelines
Following the publication of the e-commerce platforms market study, the CCCS announced its public consultation on proposed changes to six of its competition guidelines. These amendments are intended to provide greater clarity on the conceptual, analytical and procedural frameworks applied by the CCCS under the Competition Act (Cap. 50B).
Taking into consideration the findings from the market study, key proposed changes include:
- explanation of the CCCS' approach to market definition in relation to multi-sided platforms. The CCCS will first identify appropriate theories of harm before considering whether the relevant market should be treated as a single multi-sided market or multiple interrelated single-sided markets;
- clarification that market shares, by themselves, may not necessarily be a reliable guide to assessing market power where the market is characterised by innovation and rapidly changing competition dynamics. Other determinants of market power include the strength of network effects and the control or ownership of key inputs;
- inclusion of innovation as a feature of a competitive market and a factor that the CCCS will assess in the context of the substantial lessening of competition test;
- clarification that difficulties in accessing proprietary rights or data can be barriers to entry and expansion; and
- updated processes and timelines for offering commitments in the context of merger notifications.
Businesses active in the e-platforms industry and/or who contract with such businesses may wish to take note of the proposed changes above and consider the implications of these changes on their respective businesses.
With thanks to Judy Zhao of Ashurst for her contribution.
