Government Approval for Industry-changing Mergers and Acquisitions before Announcement

Singapore adopts a voluntary merger notification system, which is similar to that adopted in the UK, Australia and New Zealand.

Under this regime, there is no mandatory requirement for merger parties to notify their merger situations to the Competition and Consumer Commission of Singapore (CCCS). Instead, merger parties conduct a self-assessment and, if they are of the view that their merger may give rise to potential competition concerns, they may apply to CCCS for a formal decision on whether their merger would infringe the Competition Act. Where merger parties have doubts on novel or complex issues relating to their merger, they may also approach CCCS for advice on a confidential basis.

On the other hand, under a mandatory notification regime, all merging parties that cross pre-determined notification thresholds have to notify the competition authority, regardless of whether there are competition issues or not. This imposes compliance costs on businesses and may impede commonplace market activities. It also requires a larger commitment on the competition authority’s resources to ensure that all mergers that cross the notification thresholds are duly notified and to review these mergers.

A voluntary notification regime thus strikes a balance between regulating competition and being pro-business. CCCS is allowed to more efficiently utilise its resources to proactively scan for un-notified mergers that may give rise to competition concerns and look into such problematic mergers, instead of regulating and reviewing merger notifications under a mandatory notification regime.

If merger parties proceed to complete an anti-competitive merger without notifying CCCS and CCCS has reasonable grounds to suspect that a merger has infringed the Competition Act, CCCS is empowered to conduct a full investigation and to issue the necessary directions to remedy any anti-competitive effects, including the winding up of the merger and the imposition of financial penalties. CCCS may also impose interim measures to protect public interest, where urgent action is required to prevent market confusion and job disruption, while it completes its investigations.

I thank the Senior Parliamentary Secretary for his answer. Just two supplementary questions. Firstly, would the Senior Parliamentary Secretary acknowledge that there are risks in the voluntary notification system vis-a-vis a mandatory one, in the sense that, if a merger or an acquisition is found to be illegal after the fact, there could be costs borne by employees, customers and even the wider society for that merger or acquisition to be unwound or to be mitigated after the fact. For example, employees could be let go, brands could be dissolved or removed, products could be withdrawn. It may be very difficult, if not impossible, to make restitution for all those events after the fact.

I think there was a recent case where some of these factors came into play. It is not my intention to talk about the specific case I know of that is on-going, but I am really just querying the general principle. How do we manage those downside costs and risks? Particularly, in light of the fact that while there are some jurisdictions that have voluntary notification. The US and the EU, I believe, have mandatory notification beyond certain thresholds. The US has the Hart-Scott-Rodino pre-merger notification requirement above the threshold of about $76 million, which is reviewed regularly and inflation-adjusted —

Yes. And so, in the EU, there is a similar one. The second question that I have is in regard to compliance cost. I do recognise what the Senior Parliamentary Secretary said on compliance cost, that we do not want to "over egg the pudding" and increase compliance cost unnecessarily. But would that not really go to the question of thresholds? You can set a dollar threshold and the market share change threshold high enough so that the vast majority of M&A would not be affected. So, the question of compliance cost, could it not be addressed through a mandatory notification regime which has sufficiently high thresholds?

I thank the Member for his two supplementary questions which actually speak to a single question that underpins what he raised. He is basically asking will a mandatory notification system be able to address situations where the prospective merging parties, for whatever reasons, do not make known the merger in advance.

We have mentioned that Singapore's voluntary notification regime is similar to that in the UK, Australia and New Zealand. And, indeed, there are other jurisdictions that have a mandatory merger notification regime, such as the EU, Vietnam, the Philippines and the United States; which include the Hart-Scott-Rodino Act, which the Member has raised.

But even in these jurisdictions where there is mandatory notification, the same situation can arise where companies that are determined to implement an anti-competitive merger still choose to go ahead without notifying the competition authorities. So, in summary, it is important, generally speaking, that any competition commission has the ability to address unnotified mergers that are found or determined to be anti-competitive. And our regime, which follows elements from other jurisdictions, addresses that.