COMPETITION (AMENDMENT) BILL

COMPETITION (AMENDMENT) BILL: Order for Second Reading read.

The Minister of State for Trade and Industry (Mr Lee Yi Shyan): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

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Overview of the Competition Act

The Competition Act aims to promote the efficient functioning of Singapore’s markets and strengthen our economy. The Act prohibits activities that unduly prevent, restrict or distort competition.

When the Competition Bill was passed in Parliament in October 2004, it was announced that the Act would be implemented in phases. We have followed the plan and made good progress since. Allow me to highlight the key milestones.

The Competition Commission of Singapore (CCS) was established on 1st January 2005. A year later, on 1st January 2006, the first two key prohibitions of the Competition Act came into effect. They are: section 34 - the prohibition against anti-competitive agreements, decisions and practices - and section 47 - the prohibition against the abuse of dominance.

So far, the CCS has received three notifications for decision, seven notifications for guidance and 14 complaints. The majority of the complaints relate to anti-competitive agreements under section 34. They involve practices such as co-operation agreements between competitors, standard contract terms, exclusive contracts, bid-rigging and the bundling of products. The CCS has closed out about half of these cases, while the rest are still under investigation. The CCS has also actively carried out outreach and education programmes to gain public support for and foster understanding of our competition law.

The third and final component of the Competition Act: section 54 - the prohibition against mergers that substantially lessen competition - is the main subject of today’s Bill.

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Overview of the merger regime

Singapore is a small and open economy. Some degree of rationalisation and consolidation is inevitable to achieve economies of scale and, in some instances, minimum operating scale. Hence, it is proposed that only mergers that substantially lessen competition and which do not have offsetting efficiencies will infringe the Act.

In preparing for the merger regime, like the other prohibitions, the CCS studied international best practices. The study showed that changes to the proposed merger regime were needed to better align it with international best practices. Industry and lawyers had also provided feedback to the CCS on areas for improvement. As these changes would have a wide-ranging impact on mergers that affect Singapore markets, the CCS conducted a public consultation from October to November last year, on the amendments as well as its proposed guidelines. The feedback gathered was carefully considered and, where appropriate, included into this Bill or the CCS’ guidelines. I would like to thank all the individuals and professional bodies that had provided useful feedback.

The Act currently provides for a voluntary merger notification system. This means that merger parties will self-assess if their merger would lead to a substantial lessening of competition. If they are of the view that there could be competition concerns, they can apply to the Commission for a definitive decision. As most mergers are unlikely to raise competition concerns, we will retain the voluntary notification system. A system requiring mandatory notification of mergers would be more onerous on businesses and impose unnecessary costs. The Commission will publish

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guidelines shortly to help businesses assess whether to notify their mergers and outline its procedures and method for assessing mergers.

Specific amendments and rationale

Sir, let me now outline the main amendments in the Bill.

Clause 8 introduces the key amendments to the merger regime. First, the Act will be amended to allow merger parties to notify the CCS for a decision on their anticipated mergers that are no longer confidential. The Act currently allows businesses to obtain CCS’ assessment of a merger only after it has been completed. This is not ideal, because merger parties will face significant costs if they are required to unwind a completed merger found by the CCS to be anti-competitive. Businesses can, however, still decide to opt to notify the Commission after a merger has been completed.

_Removal of provision of confidential guidance by the CCS
_

Second, the provisions allowing merger parties to apply to the CCS for confidential guidance on a merger will be removed. Experience in the UK and Australia has shown that such guidance is of minimal value to businesses as the competition authority would not be able to get market feedback or issue a definitive decision, ie, the guidance may be reopened if there are further complaints. The removal of this provision will also streamline the merger notification process. To assist merger parties, the CCS will hold informal, confidential pre-notification discussions with the merger parties on how to file notifications and, where possible, highlight potential areas of concern.

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Power to take pre-emptive action

Third, the Act will be amended to give the CCS power to take pre-emptive action. I had earlier mentioned that the merger parties are expected to self-assess and decide if they should notify a merger to CCS for a decision. Similarly, parties will be allowed, at their own risk, to proceed with an anticipated merger or to further integrate a merger, while a notification or investigation is pending CCS' decision. The amendments will empower CCS to prevent parties from taking actions that would prejudice the consideration of the merger or to impose directions or remedies to address the competitive harm. This is on the basis that the CCS has reasonable grounds to suspect that a merger is anti-competitive. As a matter of urgency, the Commission will also be allowed to take action to prevent serious irreversible damage or protect the public interest, thereby obviating significant costs of unravelling a merger. The CCS already has the power to do so with respect to the sections 34 and 47 prohibitions.

Power to accept and vary commitments

Fourth, the CCS will be able to accept commitments. Commitments are undertakings given by merging parties binding them to act in a specific way to address competition concerns arising from a merger. They are given in exchange for clearance of the merger, and are widely used overseas to clear a merger speedily. The use of commitments will save both merger parties and the Commission valuable resources and time.

Let me use an example to illustrate how pre-emptive action and commitments may be used. The UK competition authority recently examined the merger of two waste management companies. In doing so, it sought undertakings from the two companies to, amongst others, not

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further integrate the two companies before a decision was issued. Such interim directions serve to prevent the companies from taking any action that may prejudice the authority's consideration of the merger. Subsequently, when it was assessed that the merger would result in substantial lessening of competition, the UK authority allowed the merger to proceed provided the two companies agreed to undertake specific actions or commitments to address competition concerns, such as the divestment of certain assets.

Exclusions from the Act

Clause 24 amends the Fourth Schedule to clarify the types of mergers that are excluded from the Act. These fall into two categories.

First, mergers are excluded if the written law requires them to be approved by a Minister or a regulatory authority. This exclusion, however, does not extend to mergers approved only by the court or by the shareholders of a company, without any sectoral regulatory oversight. The amendment also clarifies that mergers under the purview of the Monetary Authority of Singapore, including mergers covered under instruments, such as directives, notices and licensing conditions, are excluded.

Second, mergers are excluded if the economic efficiencies to Singapore resulting from the merger outweigh any substantial lessening of competition caused by the merger. Such mergers may lead to greater innovation or choice, higher quality and lower costs. They are of overall benefit to Singapore and should be allowed to proceed. Other competition authorities also take a similar approach. For instance, the Australian Competition and Consumer Commission allowed the only two glass container manufacturers in Australia to merge in 1991 on grounds of

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public benefit. In arriving at its decision, the Australian authority considered, amongst others, the merger's positive impact, in terms of wider consumer choice, greater economies of scale, and the improved quality and safety of goods.

The Bill also contains ancillary amendments that clarify matters such as the interpretation of control, definitions such as what constitutes a joint venture merger, the powers of the District Court in enforcing directions, and the inter-relationship of the sections 34 and 47 prohibitions vis-a-vis the merger regime.

Other non-merger related amendments

In addition, the Bill introduces amendments that fine-tune the Act and enable the CCS to better carry out its functions.

Power to require documents or information that is not in the public domain for market inquiries and notifications

Clause 9 empowers the CCS to require documents or information that is not in the public domain for market inquiries and notifications. Currently, industry players or third parties can refuse to provide the CCS with information even if the CCS has reasonable grounds to suspect a market competition distortion or an infringement. This information can play a critical role in helping the Commission to understand the intricacies of market practices and their competitive impact, thereby leading to sounder and more robust decisions. The amendment will allow the CCS to require any person to furnish information and documents when it is assessing notifications for decisions or conducting market inquiries. It may only invoke this power when it has reasonable grounds to suspect that the Act has been infringed, or that competition in a particular market is restricted.

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Ability to prescribe decisions that can be appealed

Clause 17 gives the Minister the power to prescribe the types of CCS decisions that can be appealed. This power, which currently resides with the CCS, is more appropriately vested in the Minister.

Ability to augment resources

Amendments are also made to enable CCS to deploy temporary external staff to assist in investigations.

In summary, the amendments will reinforce the ability of CCS to enhance the efficiency of Singapore's markets and strengthen our economic competitiveness. Mergers and acquisitions are part and parcel of business activity environment. The amendments will ensure that they do not harm Singapore's overall competitiveness while maintaining the smooth functioning of the economy. They will also help to better empower the CCS to achieve this goal.

Sir, I beg to move.

Question proposed.

Mr Inderjit Singh (Ang Mo Kio): Mr Speaker, Sir, I support the amendments proposed in this Bill, but I also think that we could have covered more ground in it to establish a firmer competition regime in Singapore.

Sir, I welcome the inclusion of anticipated mergers within the competition regulatory framework. It is also a good timing for this amendment as all around the world, we are seeing waves of mega mergers and, if not regulated, it could result in distortions of the marketplace as some entities attain dominant positions in the market.

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Although some mega-entities bring with them efficiencies for the consumers, the regulation should however ensure a dominant position is not abused over a period of time, even if it may have been all right at the time of the merger.

Problems can arise if an entity only comes under regulatory scrutiny after it has merged, as the Minister has mentioned. If it is found to be anti-competitive under the applicable regulatory regime, then that merged entity may well be forced to break up, or to alter its business in the territory. De-merging is an expensive and complex exercise. Forcing such companies to take corrective action post-merger, when problems could have been foreseen before the merger took place, is economically inefficient.

That is why I welcome the new section 56 which allows entities that are considering merging to come forward to the regulator and ask for a decision on whether the anticipated merger, if carried into effect, may infringe the section 54 prohibition (which regulates anti-competitive mergers).

I note however that the proposed new section 56(3) allows the Minister to provide by regulations that only prescribed types of anticipated mergers may be notified to the Competition Commission. I would think that if a company is in doubt as to whether it will infringe the section 54 prohibition, then it should come forward anyway, regardless of the type of merger.

I therefore would like to ask what types of anticipated mergers the Minister is being given the power to prescribe as requiring notification. Is it to be by market share, whereby anticipated mergers that lead to the merged entity controlling, say, x% of the market must be notified to the Commission, or is it by sector of the economy, for example, mergers of entities

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within the manufacturing sector or sub-sectors that must be notified?

While the Minister may be concerned about certain types of mergers, that would not prevent other mergers from possibly being uncompetitive. It would be better to put the onus on the parties considering a merger to come forward and seek a decision.

Sir, I notice that there is no time limit proposed for the Commission to revert with its decision. I think that such a time limit should be built in, say, for example, three months, which can, by permission of the Minister, be extended by another one or two months, so that the companies can have certainty within an acceptable period of time. This is important so that companies can plan their business activity as it affects their operations here in Singapore.

Sir, I now turn to the decision-making process of whether anticipated mergers and mergers do infringe the section 54 prohibition. The proposed amendments to section 57 deal with anticipated mergers. Section 57(2) sets out that the Commission may make a decision on whether the section 54 prohibition will be infringed by an anticipated merger if it is carried into effect, and that if the prohibition will not be infringed, whether this is because of an exclusion whether by way of section 57(b)(i), an exemption under section 57(3) and section 57(b)(ii) or because of a commitment that has been accepted by the Commission in section 60A or section 57(b)(iii).

Sir, for transparency and to allow the public to scrutinise why certain mergers were allowed, it would have been better to require the Commission to explain the reason why a particular proposed merger falls within an exclusion.

A similar argument would apply to the consideration by the Commission of

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mergers under the proposed new section 58.

Let me now comment on the commitments that can be accepted by the Commission. On commitments, section 60A allows the Commission to accept a commitment that would mitigate the substantial lessening of competition or adverse effects that may result from a merger or anticipated merger under scrutiny.

The Commission does not have the power to require commitments. These have to be made on the initiative of the party offering the commitment. But there may be situations where the Commission evaluates a merger or anticipated merger and feels that it would infringe the section 54 prohibition, but this infringement could be mitigated by some minimum safeguards or assurances given by the concerned entities as to how they would behave in the future after they have merged. I can recognise the discomfort with the Commission telling these entities how to do their business or advising them as to the minimum safeguards that they need. However, the Commission should be allowed to highlight areas of concern where safeguards would be needed.

To that end, the Commission should be given the power to require minimum assurances, which can be re-evaluated or adjusted, say, every 12 months, as part of an ongoing review into a situation where there is some potential form of infringement. At the very least, the Commission could be given the power to request the entities for a proposal of assurances covering certain areas of market conduct by these entitles. This would facilitate the process of consideration of mergers or anticipated mergers by the Commission, and also engage entities in a continuous dialogue if the Commission feels that there is some potential area for infringement, as the business environment changes over a period of time.

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Section 60B is useful in that once a decision is made to accept a commitment from a party, the Commission must decide that there is an infringement of the section 54 prohibition. This serves as an incentive to comply with the commitments.

I propose however a mezzanine-level decision should be built in, where the Commission can decide that the merger may infringe the section 54 prohibition but that as a commitment has been accepted, the Commission is therefore satisfied that it does not.

Sir, such a power would be useful in view of the removal of the existing section 60(2)(a), which allowed in the past the Commission to reopen a decision that the merger would not infringe the section 54 prohibition on the basis that the Commission has reasonable grounds for believing that there has been a material change of circumstances since it gave its decision in the past. Removing this power means that the Commission cannot reopen the decision even if new material effects of a merger come into light after the decision has been made,

as long as the Commission was given proper information by the entities at the time it was deciding and based its decision on the information that was not incomplete, false or materially misleading. As business environment changes, circumstances could change but now this Commission will not be allowed to reopen the case.

I note that the Commission can re-examine market abuses as and when they occur, even in the case of mergers that are approved. For the Commission to start a new investigation shortly after approval was given to a merger upon application would likely lead to uneasiness among businesses. It would therefore be good if the Commission can give red-flags for certain items where businesses know

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that the Commission will bring ongoing scrutiny as a preventive measure rather than coming back and investigating the situation.

Sir, giving the Commission the power, as part of its decision-making process, would require commitment and also a power to reserve the right to require commitments going forward would go some way to correcting market abuses that could occur in the future, even if they are not foreseeable when the merger is being considered.

Sir, the provision in the proposed amendment of section 85 for commitments to be registered in the District Court as if they were orders of the Court and enforced accordingly is, I think, likely to prove unworkable in practice.

Many commitments would have been in the nature of restrictive covenants or commitments to do certain things. To enforce these would be in the nature of enforcing specific performance. I am given to understand from some of my lawyer friends that where damages are adequate remedy, specific performance is usually not ordered by the Court. This is because of the public policy of not forcing parties to do things that they have decided that they did not want to do. It may be better instead therefore to punish a breach of commitment with a fine whose amount can be tailored to ensure that there is no incentive of non-adherence to the commitment. I therefore request that the Minister reconsider this provision as it will be difficult to enforce.

Sir, on stripping of immunity, section 59(5) and (6) (in the case of anticipated measures) and section 60(5) and (6) (in the case of mergers) provide for stripping of the immunity given by a decision that no infringement will or has occurred by the anticipated merger or merger.

All that is required once the decision has been made to strip the immunity is

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that the notice is given to the affected party that the immunity is to be stripped. The notice can even under subsection 6 provide that the immunity be stripped retrospectively.

Sir, there is no provision in allowing the affected party to make representations before this is done and it is very onerous for the companies then. We should build in this provision in fairness to entities that may have gone to significant cost and taken much effort to merge. There is also no reason why a power to require further commitment cannot be applied in this case to mitigate the breaches of the section 54 prohibition.

Sir, some other areas of concern, first of all, on stay. Provision should be made allowing parties affected and appealing against decisions of the Commission to apply to the Board or to the High Court or District Court for an interim order allowing a stay of execution of the decision in appropriate cases.

In the light of the likely complexity of the competition law matters, I would suggest that the appointment of a specialist judge at the Subordinate Courts or perhaps even at the High Court be considered to hear competition-related matters.

Sir, finally, I note that we have decided again not to bring the telecommunications sector within the fold of the general Competition Act framework. It is still regulated by the Code of Practice for Competition in the Provision of Telecommunications Services and therefore excluded from the Competition Act. My concern is that we would develop two separate bodies of law and regulations for these sectors in time to come. It may be better to consider integrating these bodies of regulations now when it is still early enough as the competition law is still in its infancy in Singapore. It may be harder to integrate

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these later. In fact, the telecommunications sector is quite open right now, and I see no reason why we still want to regulate it separately from the rest.

Sir, on the whole, I think that the Bill is well thought out. I do however believe that it can be further improved as suggested in my speech. Sir, I support the Bill.

Mdm Ho Geok Choo: Sir, I support the amendments in this Bill.

Sir, Singapore has grown and prospered as an open economy and we continue to do so in a world economy that encourages free and open trade. As a member of the WTO and as a signatory of several Free Trade Agreements, we also embrace the ideal of open competition.

In preparing for this new era of open and free global trade, we have deregulated and liberalised a number of economic sectors, including banking, telecommunications and others. Singapore companies must anticipate the entry of new, and perhaps bigger and stronger, foreign entities as their competitors. They will have to design and develop new competitive strategies to continue growing and compete effectively in the new economic landscape.

One such response may be to enter into corporate mergers and acquisitions, either with local or even with new foreign partners. The Government must be proactive to these changes. We must strengthen our laws to ensure that such corporate mergers, acquisitions and other forms of partnerships do not create monopolistic entities that are detrimental to Singapore's open, competitive and pro-business environment. Indeed, our open, pro-business environment has become our differentiator and competitive advantage, and we must ensure nothing blunts this edge.

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Sir, I do have a few questions to raise for clarification on this Bill. First, may I know the rationale for replacing the criterion for a joint venture to be considered a merger, from its function on an "indefinite basis" to one that functions on a "lasting basis"? How does the law differentiate between "indefinite basis" and "lasting basis"?

Secondly, in the matter of the Fourth Schedule, paragraph 2: "The section 54 prohibition shall not apply to any merger if the economic efficiencies arising or that may arise outweigh the adverse effects due to the substantial lessening of competition in the relevant market in Singapore."

Sir, this argument can be potentially contentious. It is not unusual for business dealings, including mergers, to be packaged with the most noble objectives. The road to heaven, they say, is paved with good intentions. Yet, mergers which initially demonstrate great economic efficiencies may not be able to sustain them in the dynamics of the business world, where change is the only constant. Even merged entities themselves undergo transformations and further mergers. Many are overtaken by new technology, new competitors, new business processes as to themselves become uncompetitive.

I would like to know the circumstances under which such "dispensations" are given, and what safeguards there are for the section 54 prohibitions to apply if the economic efficiencies from these mergers are themselves outweighed by the adverse effects on the competitive climate.

In other words, if these mergers prove later to be uncompetitive, can the section 54 or other prohibitions apply?

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Sir, with these concerns, I rise to support the passing of the Competition Bill.

The Minister of State for Trade and Industry (Mr Lee Yi Shyan): Mr Speaker, Sir, I would like to thank the Members of this House who have spoken and given their support for the Amendment Bill. Let me address the points they have raised.

Mdm Ho Geok Choo asked why the criterion for a joint venture merger is being changed from an
"indefinite basis" to a "lasting basis". Under the current definition, joint ventures with long but definite periods, for example, 10 years, may not be regarded as mergers of indefinite basis even if they result in a lasting change in the merger parties' structure and eliminate competition between them. This is undesirable as the impact of such joint ventures on competition will be similar to that of a merger. The new definition will subject them to the merger regime. The term "lasting basis" is also used by the European Union. What constitutes a lasting basis will depend on the facts. For example, the US competition authorities use 10 years as a benchmark although the duration will vary according to industries' specific circumstances, such as technology life-cycles.

Mr Inderjit Singh sought clarification on the types of anticipated mergers that merger parties may be required to notify. Sir, the purpose of section 56(3) is to allow the Minister to specify the anticipated mergers can only be notified after they are no longer confidential. This is to allow the CCS to consult and seek views from other market players, stakeholders and competition so that a well-informed and robust decision can be made.

I must point out that there is no requirement for mergers or anticipated

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mergers to be notified to the CCS as notification is voluntary under our merger regime. Basically, merger parties with some concerns can choose to notify the CCS of the merger. The Act facilitates this process. Of course, parties can also choose to notify the CCS after the merger is effected or not at all. It is entirely their own choice and they should make their own commercial assessment. The CCS will soon publish guidelines to help merger parties assess whether their mergers are likely to infringe the Act.

Mr Inderjit Singh pointed out that the CCS does not have the power to require commitments and suggested that it should at least have the power to require assurances or to vary commitments. While Mr Singh is right that the CCS does not have the power to require commitments, I should point out that the CCS can invite the merger parties to propose suitable commitments to address competition concerns. I would like to assure Members of this House that only after CCS has been satisfied with the proposed commitments that it would allow the merger parties to proceed with the merger. If there is a need to, commitments can be varied and substituted.

Mr Inderjit Singh asked whether it is workable to register commitments in court to enable them to be enforced as order of courts. He suggested that it might be better to punish a breach of a commitment with a fine whose amount can be tailored to ensure disgorgement of the benefit by non-adherence to the commitment.

This may not be a good idea, as a breach of commitment is not a criminal offence. It might be more appropriate to treat commitments similar to directions issued by the CCS, ie, by registering them in court, and failure to comply with them will constitute contempt of court which is punishable by normal court sanctions, including fines.

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At this juncture, I should also mention that I will be moving a Notice of Amendment shortly after this. The Notice will address typographical errors in the Bill and will clarify Mr Inderjit Singh's query on allowing a merger to proceed where the Commission accepts a commitment that will address competition concerns.

Mdm Ho Geok Choo asked how net economic efficiencies will be treated in the merger regime and whether there are any safeguards if the efficiencies cannot be sustained.

Sir, as a general policy, it may be unfair to require merger parties to unwind a merger cleared by the CCS if it is subsequently found to be anti-competitive due to unforeseen changes in its operating environment. The CCS may only re-visit its decision if, among other reasons, the information on which it based its decision was materially incomplete, false or misleading.

Let me assure Members that a merger must meet a set of strict conditions before it can qualify for the net economic efficiencies exclusion. The merger parties must show verifiable evidence of the benefits that are likely to materialise within a reasonable period of time as a direct consequence of the merger.

Furthermore, the efficiencies must be sufficient to outweigh any competitive harm caused by the merger. In addition, the benefits, such as lower cost, greater innovation or choice, or higher quality products, must flow to the markets in Singapore.

Mergers that only create profits for themselves alone will not qualify for the efficiency argument. To ensure that the merger entity does not engage in anti-competitive behaviour, the other provisions under the Competition Act, ie, the provision against anti-competitive

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agreements and the abuse of dorminant position, will still apply to it even after it has been cleared on grounds of efficiencies.

Sir, I shall now move on to address the procedural aspects of the merger regime raised by Mr Inderjit Singh. Before I do so, I should mention that the procedures have been designed to provide as much certainty and transparency to businesses while balancing the need for fairness and flexibility. Mr Inderjit Singh suggested that limits be set for the Commission to revert its decision on anticipated mergers. I agree. The CCS adopts a two-phase approach in assessing notified mergers.

Mergers that clearly do not pose competition concerns will be cleared within phase one which is expected to last no more than 30 working days, and only mergers that can potentially pose competition concerns will undergo a more in-depth phase-two assessment which is expected to last no more than 120 working days. These indicative timeframes are comparable to the international best standards and the CCS will publish the time norms and other procedural details in its guidelines to be issued shortly when the Bill has been passed.

The CCS will also be fair and transparent in its processes. Where it is practical to do so, it will publish reasons for its decisions, including why a merger falls within an exclusion from the Act. If it intends to remove the immunity conferred by a favourable decision, the CCS will consult the relevant parties and give them opportunity to make representations. Again, this will be included in CCS' guidelines to be published.

Mr Inderjit Singh suggested that CCS should, upon approving the merger, make the merger parties aware that the

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Commission will continue to scrutinise the merger parties' business practices. Sir, we agree. The CCS will identify competition concerns during the assessment of the merger and communicate with the parties concerned. The Commission can examine market abuses as and when they occur even in the case of mergers that have been approved.

Sir, I will now touch on the sectoral exclusions from the Competition Act. Mr Inderjit Singh suggested that we should consider integrating the regulatory framework in the telecommunications sector within the fold and framework of the generic Competition Act. This indeed is our longer term goal. When the Competition Act was enacted in 2004, the number of sectoral authorities and respective regulatory frameworks had already been established. To acknowledge their continued operations, the Competition Act has provided exclusions from sections 34 and 47 in the Third Schedule and exclusions from section 54 are given in the Fourth Schedule of the Act.

The Government then explained that the sectoral regulators, such as the Info-Comm Development Authority, will continue to have oversight of their respective sectors. This is because these regulators are in a better position to handle competition issues in their sectors. Nonetheless, the Government remains committed to the goal of alignment and coordination of the various competition regimes. An inter-agency committee has been operating since 2005 to coordinate the application of competition law at the different sectors in Singapore. The Ministry of Trade and Industry had also earlier indicated that it will review sectoral exclusions under the Competition Act three years after the Act has been enforced, ie, in 2009.

Finally, I will touch on the queries relating to how the Competition Act is

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generally enforced. Mr Inderjit Singh expressed concerns that the CCS' powers of investigations are rather extensive and that taking documents during the investigation may be disruptive to business activities. I would like to assure the Member that the appropriate safeguards have been built into the Act. For example, the CCS must have reasonable ground to suspect an infringement before it can invoke its powers to require information or documents. The CCS also is mindful of the need to minimise unnecessary inconveniences to businesses when it conducts its investigations. As such, it will generally take copies of documents and will leave the originals with the business owners and, if the originals are taken, the parties will be allowed to make copies for their use.

Mr Inderjit Singh also raised concerns about procedural fairness with regard to the appeal process and legal privilege. I should clarify that the Competition Appeal Board can order the suspension of a CCS decision while reviewing an appeal. As for legal privilege, the Act clearly states that the power to require disclosure does not extend to communication between a lawyer and its client. Although the CCS has the power to require the name and address of the client, this is only to allow the CCS to ascertain that the communication was indeed privileged and to ascertain if the client wishes to waive legal privilege.

As for his suggestion to appoint a specialist judge at the Subordinate Courts or even perhaps at the High Court to hear competition-related matters, this is something that is best left to the courts to decide. I should mention, however, that appeals against CCS' decisions are heard in the first instance by the Competition Appeal Board, which is a panel of persons appointed by MTI for their expertise and experience in competition-related matters. The Board is made up of lawyers,

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including a few senior counsel and former High Court judges, economists, accountants and representatives from the banking and business sectors. The Chairman of the Board is Mr Thean Lip Ping, who was previously a Judge of Appeal.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Mr Lee Yi Shyan].

Bill considered in Committee.

The Minister of State for Trade and Industry (Mr Lee Yi Shyan): Clauses 1 to 7 inclusive ordered to stand part of the Bill.

Clause 8 –

Mr Lee Yi Shyan: Sir, I beg to move,

(1) In page 15, line 15, after "will", to insert "not"; and

(2) In page 15, line 28, after "has", to insert "not".

Sir, clause 8 proposes for a non-infringement decision to be made upon the acceptance of commitment. The amendments are necessary to rectify the typographical errors created by the omissions of the word "not".

Amendments agreed to.

Clause 8 , as amended, ordered to stand part of the Bill.

Clauses 9 to 24 inclusive ordered to stand part of the Bill.

Bill reported with amendments; read a Third time and passed.

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Mr Speaker: Order. I propose to take the break now. I suspend the Sitting and will take the Chair again at 4.10 pm.

Sitting accordingly suspended

at 3.50 pm until 4.10 pm.

Sitting resumed at 4.10 pm

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[Mr Speaker in the Chair]: