CCCS seeks feedback on proposed clarifications to scope of mitigating factors in its Penalty Guidelines

26 July 2021

From 16 July 2021 to 5 August 2021, the Competition and Consumer Commission of Singapore (“CCCS”) is seeking public feedback on proposed changes to its Guidelines on the Appropriate Amount of Penalty in Competition Cases 2016 (“Penalty Guidelines”). The Penalty Guidelines provide general guidance and information on the methodological approach CCCS adopts to calculate financial penalties for infringements of the Competition Act (“Act”).

The Act gives CCCS the power to impose financial penalties on undertakings for infringing sections 34, 47 and 54 of the Act, which prohibit anti-competitive agreements, the abuse of dominance and mergers that substantially lessen competition respectively.

CCCS is proposing changes to the Penalty Guidelines to provide greater clarity to businesses and competition practitioners on the circumstances in which an undertaking’s role in a section 34 infringement may be deserving of a mitigating discount in the calculation of financial penalties.

CCCS’s view is that to qualify for a mitigating discount, the undertaking will have to provide evidence showing that its conduct had clearly and substantially departed from the understanding or consensus relating to the implementation of the cartel or anti-competitive agreement/arrangement to the point of disrupting its very operation. Key changes include:

• Providing a further example at paragraph 2.15 of the Penalty Guidelines (which sets out a non-exhaustive list of mitigating factors) to illustrate when “substantially limited involvement” by an undertaking in an infringement of section 34 of the Act would amount to a mitigating factor. The proposed text to be added to the list of mitigating factors is as follows: “in the context of a section 34 infringement, where the undertaking (a) provides evidence that its involvement in the infringement was substantially limited, and (b) demonstrates that, during the period in which it was party to the infringement, it actually avoided applying it by adopting competitive conduct in the market;” and
• Introducing a new paragraph 2.16 in the Penalty Guidelines, which further clarifies CCCS’s policy position on the treatment of undertakings that did not play a leader, instigator or pro-active participant role in an infringement. The proposed text is: “For the avoidance of doubt, the fact that an undertaking did not play a leader or instigator role in the infringement or that it was not a pro-active participant in the infringement will not, in itself, be regarded as a mitigating factor. Furthermore, the fact that an undertaking participated in an infringement for a shorter duration than others will not be regarded as a mitigating factor since this will already be reflected in the duration of the infringement at Step 2.” Step 2 of the Penalty Guidelines sets out provisions relating to adjustment for the duration of infringement.

In making these proposed amendments, CCCS considered the mitigating factor of “substantially limited involvement”, found in the European Commission’s 2006 Guidelines on the method of setting fines, and the decisions by the European Commission and the European Courts that have addressed this mitigating factor. These decisions establish a high threshold that an infringing undertaking will need to satisfy before it can have the benefit of a mitigating discount, which is reflective of CCCS’s policy position. Specifically, an infringing undertaking that seeks a mitigating discount needs to show, cumulatively, that (i) not only was its involvement in the infringement substantially limited, but also that (ii) it avoided applying the anti-competitive agreement by adopting competitive conduct on the market. Further, the mere fact that an undertaking did not play a leader or instigator role or participate in the cartel in a pro-active way will not, without more, qualify for a mitigating discount.

Reference materials

The consultation documents can be accessed and downloaded from the CCCS website at www.cccs.gov.sg under the section “Public Consultation”, or click on the following:

• Media release: CCCS consults on proposed clarifications to the scope of mitigating factors in its Penalty Guidelines
• Public consultation on proposed changes to the CCCS Penalty Guidelines  
• Annex A: Proposed Changes to the CCCS Guidelines on the Appropriate Amount of Penalty in Competition Cases
• CCCS Guidelines on the Appropriate Amount of Penalty in Competition Cases (proposed amendments highlighted in yellow)