CCCS roars into action with enforcement proceedings against bid rigging agreements
On 4 June 2020, the Competition and Consumer Commission of Singapore (CCCS) issued an Infringement Decision against three companies for their involvement in anti-competitive agreements to rig tenders issued by Wildlife Reserves Singapore (WRS) for the provision of building, construction and maintenance services.
WRS, which operates major tourist attractions including Singapore Zoo, Night Safari and River Safari, submitted a complaint to the CCCS in August 2015 after receiving anonymous tip-offs that tenders it had issued were being rigged.
In April 2016, the CCCS commenced investigations against three companies—Shin Yong Construction, Geoscapes and Hong Power Engineering—and conducted simultaneous inspections at their properties in October 2016. All three parties subsequently admitted to having been a party to an anti-competitive agreement to rig bids and applied for leniency.
The CCCS found that the parties had exchanged bid information and coordinated cover bids, in contravention of section 34 of Singapore’s Competition Act. This prohibits agreements which have as their object or effect the prevention, restriction or distortion of competition within Singapore. In its Section 34 Guidelines, the CCCS has made it clear that it considers that bid-rigging agreements will always have an appreciable adverse effect on competition.
The CCCS imposed financial penalties totalling S$32,098 on the parties for their involvement in the bid-rigging agreement, with each of the parties granted a discount for leniency. The maximum penalty that the CCCS can impose is 10% of the business’ Singapore turnover for each year of infringement, up to a maximum of three years.
Increased enforcement action in the Asia-Pacific region
The CCCS’s Infringement Decision follows a trend of increased enforcement activity by competition regulators in the Asia-Pacific region, particularly in relation to cartel conduct and matters affecting construction industry. Since the first infringement decision was issued in 2007, the majority of published investigations by the CCCS have related to bid-rigging and price fixing.
Other Asian competition regulators have similarly focussed on bid-rigging and other forms of cartel conduct. For instance, the majority of competition cases brought by the Malaysia Competition Commission relate to cartel conduct, and it has stated that it has made “the fighting of cartels its highest priority”.
Companies that do business in the Asia-Pacific region need to be aware that they are subject to competition laws in those jurisdictions, and that their regulators are increasingly active. Importantly, the competition laws of a foreign country may also apply to cartel conduct that occurs in Australia (or elsewhere) if it also distorts competition in those jurisdictions.
In Australia, the ACCC has named conduct affecting competition in the commercial construction sector as a 2020 enforcement priority, with a focus on large public and private projects and conduct impacting small businesses. Cartel conduct is also an enduring enforcement priority for the ACCC, particularly since the commencement of the criminal cartel regime in 2009. ACCC Chair, Rod Sims, has commented that “cartel conduct is so detrimental to consumer welfare and the competitive process that it will always be an enforcement priority for the ACCC”.
The shared concerns over cartel conduct in Australia and Asia—and the increasing levels of cooperation between regulators in these jurisdiction—highlight that bid-rigging and other forms of collusive conduct will remain a major enforcement priority in the Asia-Pacific region for the foreseeable future.