Asia Pacific Competition Law Bulletin

Introduction

Welcome to the October 2016 edition of our bi-monthly Asia Pacific Competition Law Bulletin. As

with our other editions, this bulletin has been produced in collaboration with expert local law firms

around the region: Allens (Australia, New Zealand), DFDL (Cambodia), Vinod Dhall in collaboration

with TT&A (India), Widyawan & Partners (Indonesia), Mori Hamada & Matsumoto (Japan), Allen &

Gledhill LLP (Singapore), Lee & Ko (South Korea) and Tsar & Tsai Law Firm (Taiwan). We hope

you continue to find it a useful source of information on antitrust developments across the Asia

Pacific region.

In the area of enforcement, agencies across the region are continuing to be active across a wide

range of sectors: we report on the Booking.com probe in Australia, a bid rigging prosecution in

Hong Kong, a cement cartel case in India, and new investigations in New Zealand, Singapore and

Indonesia.

Merger control remains an important consideration for businesses with activities in in the Asia

Pacific region, and we report on a number of new merger clearances in Singapore and a reminder

on the failure to notify in China.

As competition law and policy continue to develop across the region, we included stories on draft

laws and amendments to regulations and guidance in Cambodia, South Korea, and Thailand. In

Australia, a major reform of the country’s competition regime is now under public consultation,

following last year’s Harper Review.

Australia Cambodia China

Hong Kong India Indonesia

Japan New Zealand Singapore

South Korea Taiwan Thailand

Australia

By Robert Walker and Darcy McLennan, Allens

Government releases exposure draft legislation implementing Harper

Review

On 5 September 2016, the Australian Government released an exposure draft of the Competition

and Consumer Amendment (Competition Policy Review) Bill 2016, which, if enacted, will

implement reforms proposed by the Harper Competition Policy Review.

The Harper Competition Policy Review (2014-2015) was the most significant review of Australian

competition law and policy since 1993. It made a suite of recommendations, which were generally

well received by the Australian Government and thus the exposure draft incorporates a majority of

the reforms proposed by the Harper Review.

Key reforms contained in the exposure draft include:

• Broadening the prohibition against misuse of market power, such that any firm

with a substantial degree of market power will be prohibited from engaging in

conduct with the purpose, effect or likely effect of substantially lessening

competition in any market;

• Various changes to the cartel conduct laws, including strengthening the joint

venture defence, extending the prohibition of output restrictions to include

restriction on acquisitions of goods or services as well as supply, and adding the

phrase “in trade or commerce” to restrict the application of the cartel laws to

conduct occurring within Australia, or between Australia and other jurisdictions;

• Extending the prohibition against anti-competitive agreements to capture anti-

competitive concerted practices which fall short of a contract, arrangement or

understanding;

• Removing the per se nature of the prohibition against third line forcing, meaning

that third line forcing conduct will only be prohibited if it has the purpose, effect or

likely effect of substantially lessening competition;

• Combining the current formal notification and authorisation processes for

mergers, meaning that the Australian Competition and Consumer Commission

will assess applications for authorisation of mergers in the first instance (rather

than the Australian Competition Tribunal); and

• Amending the criteria for declaration of access to critical infrastructure.

Related links

The exposure draft can be found here.

The Government’s media release accompanying the exposure draft can be found here.

Expedia and Booking.com agree to amend contracts with Australian hotels

On 2 September 2016, following an investigation by the ACCC similar to that taken by numerous

national competition authorities in Europe, Expedia and Booking.com have agreed to amend price

and availability parity clauses in their contracts with Australian hotels and accommodation

providers.

The ACCC launched an investigation into the competitive effect of parity clauses requiring

accommodation providers to offer the best price and availability to online travel sites. Like a

number of national competition authorities in Europe, the ACCC raised the concern that such

clauses prevent both competitors and consumers from negotiating better deals directly with the

accommodation provider. The ACCC conducted targeted market inquiries and, in particular,

consulted with Australian accommodation providers. In order to resolve the ACCC's investigation,

Expedia and Booking.com have agreed to remove clauses from their agreements which require

Australian accommodation providers to:

• Offer room rates that are equal to or lower than those offered on any other online

travel agent;

• Offer room rates that are equal to or lower than those offered on an

accommodation provider's offline channels;

• Make all remaining room inventory available; and

• Offer the same number and same type of rooms offered to any other online travel

agent.

Related links

The ACCC's media release can be found here.

Cambodia

By David Fruitman, DFDL

Cambodian competition law moves forward

Cambodia is the last of the ASEAN Member State to enact a competition law. The process so far

has been unfortunately lengthy and lacking transparency as to the progress being made. The

latest public circulation of “Version 5.5” of the Draft Law on Competition of Cambodia is therefore a

major step forward. Version 5.5 represents a significant improvement over previous drafts with a

greater focus on traditional competition law concerns and a more streamlined and cohesive

enforcement structure.

However, it is hoped that a number of its provisions will be refined further in future iterations and

that significant guidance and clarification will be provided prior to implementation. Given

Cambodia’s lack of experience with competition law, consideration will hopefully be given to a

phased implementation of the substantive prohibitions and an initial grace period without active

enforcement, during which enforcement authorities may focus on institutional development,

education and advocacy initiatives. Given the requirements needed to finalise and enact the

competition law, the timetable for enactment and implementation remains unclear. Some of the

key provisions in Version 5.5 are outlined below.

Substantive Prohibitions

Version 5.5 addresses both vertical and horizontal anti-competitive agreements. For the latter, the

latest draft prohibits parties, who operate, or are likely to operate, at the same level of production

or distribution, from entering into agreements which have the object or effect of price fixing, limiting

goods or services, allocating territories or customers, bid rigging, boycotting or otherwise

significantly preventing, restricting or distorting competition in a market.

Vertical agreements are addressed through various means. Regardless of dominance in a relevant

market, resale price maintenance and vertical agreements that have the object or effect of

significantly preventing, restricting or distorting competition in a market are prohibited. A non-

exhaustive list of potentially prohibited agreements includes various resale restrictions and tied

selling.

Dominant entities are also prohibited from abusing their market power. While the draft contains a

general definition of dominance, specific guidance on how dominance will be determined is yet to

be provided. The list of potentially abusive conduct includes refusing access to essential facilities,

tied selling, selling below cost and requiring or inducing exclusivity. While the language is subject

to interpretation, it appears that this list may also be non-exhaustive.

Business combinations (i.e. mergers and acquisitions) that significantly prevent, restrict or distort

competition in a market, or that are likely to have such an effect, are prohibited.

The enforcement authority is also granted the power to introduce a pre-merger notification regime.

The definition of “business combination” is currently limited to share acquisitions or acquisitions of

assets used to conduct a business. Clarification of the current definition and increasing its scope

will likely prove useful.

Additionally, the draft law includes a potentially broad prohibition on knowingly assisting any of the

prohibited conduct described above. Given the substantial penalties available, this prohibition will

hopefully be clarified and given a narrow scope prior to implementation.

Exemptions

A variety of exemptions are provided in Version 5.5:

The prohibition against abuses of dominant position will not apply to conduct

which has reasonable commercial justification or represents a reasonable

commercial response to market entry or conduct;

Prohibitions against anti-competitive horizontal and vertical agreements will not

apply if a party to the relevant agreement can demonstrate that:

1. Identifiable technological, efficiency or social benefits directly arise from

the agreement;

2. Such benefits only arise because the agreement has an anti-competitive

effect;

3. The agreement’s benefits outweigh its anticompetitive effects; and

4. The agreement does not completely eliminate competition.

If the above criteria are met, the Commission may grant an exemption before the

relevant agreement is entered into or before the relevant business combination is

completed. Such an exemption may be subject to conditions. An individual

exemption may therefore not be available if a potentially anti-competitive

agreement has been entered into, even if its effectiveness is conditional on

competition law clearance; however, business combinations will benefit from a

more permissive treatment;

The Commission may grant block exemptions if it believes that conditions noted

above are likely to apply to certain categories of anti-competitive agreements.

Scope

From a geographical perspective, the proposed draft incorporates any prohibited conduct which

may cause harm to competition in Cambodia regardless of whether the conduct occurs inside or

outside the country. In additional, the draft broadly applies to all persons conducting business,

including private organisations, state owned enterprises, individuals, for profit and not-for-profit

organisations and charitable organisations.

Enforcement institutions

Two entities are contemplated for the enforcement of the competition law: the Competition

Commission and the Directorate. The Commission is to be composed largely of representatives or

nominees of government Ministries including the Director-General of the Directorate. The

Commission’s responsibilities include issuing orders against parties who infringe the law (including

imposing administrative fines and non-criminal sanctions); issuing regulations and implementing

the competition law; and monitoring and supervising the Directorate. While Commission meetings

will not be public, all final decisions of the Commission will be public.

The Directorate will be established as part of the Ministry of Commerce, but reports only to the

Commission. The primary responsibilities assigned to its Director-General include investigating

potential violations of the law and making recommendations to the Commission (including

proposing voluntary resolutions for Commission approval). The Director-General may have such

additional authority as may be granted by the Commission to implement the competition law.

Guidance on the structure and operations of the Directorate are expected to be provided as

Version 5.5 contains sparse detail beyond some basic investigatory powers.

Penalties

With respect to the substantive prohibitions, the Commission may impose administrative fines of

up to 10% of the total earnings of any individual over the period that violations took place or, for

legal persons, 10% of total revenues in Cambodia over that period. The Commission may also

incorporate remedial actions and sanctions in a Final Order. The provided list of potential remedial

orders includes:

Prohibiting continuation of infringing conduct;

Requiring sale of specified assets or parts of business;

Mandating the license or transfer of intellectual property;

Requiring compensation to damaged parties;

Taking specified actions necessary to restore competition;

Returning unlawfully obtained profits to identifiable victims, private organisations

representing victims and, if any unlawful profits are not otherwise distributed, to

the Cambodian treasury;

Filing compliance reports;

Paying for the Directorate’s experts retained in relation to the remedies; and

Any other remedial action that the Commission considers necessary or

appropriate.

Fines and imprisonment are provided for where an individual violates provisions in relation to the

Commission’s information gathering powers. The fines may be amended by sub-decree providing

important flexibility to modify the fines to ensure that they are effective deterrents in the future.

Related links:

The draft Cambodian Competition Law can be found here.

China

By Fay Zhou and Yuan Cheng

MOFCOM continues to keep an eye on non-compliance with notification

obligations

With fines totalling RMB 1.15 million imposed on five companies (including multinational, Chinese

state-owned and domestic privately-owned companies) in three separate merger transactions, the

Ministry of Commerce (“MOFCOM”) has continued to crack-down on failures to notify merger

transactions.

Notably, MOFCOM continues its inquiry into the high-profile Didi/Uber China acquisition, which is

intended to combine two of the largest online taxi service platforms in China. The transaction was

completed in 2 August 2016 without notification to MOFCOM. Later, a complaint was reportedly

filed with MOFCOM alleging that the Didi/Uber China transaction did not comply with merger filing

requirements. It is understood MOFCOM has at least twice spoken with the relevant personnel of

Didi and required the provision of transaction details and the reasons for non-notification. This

case is significant as it involves a number of controversial issues, including the calculation of

turnover for platform-operating companies, the treatment of variable interest entity (VIE)

structures, and whether MOFCOM will exercise its residual jurisdiction to look into a below-

threshold merger on the basis of potential competition concerns. It is unclear whether MOFCOM

has launched a formal investigation or if its inquiry is only of a preliminary nature at this stage.

MOFCOM’s continued monitoring of allegedly missed filings reaffirms its message to the business

community that companies should take their filing obligations seriously. In addition, companies

should be aware that the risk of detection increases significantly if a complaint is lodged with

MOFCOM.

Hong Kong

By Clara Ingen-Housz, Marcus Pollard and Alexander Lee

Hong Kong Competition Commission leaves vessel discussion agreements

outside of proposed exemption

On 14 September 2016, the Hong Kong Competition Commission (“Commission”) announced its

intention to adopt a Block Exemption Order (“BEO”), conditionally exempting certain agreements

between shipping liners from the Competition Ordinance (“CO”).

In December 2015, the Hong Kong Liner Shipping Association (“HKLSA”) applied for an

exemption covering two main types of agreements between carriers:

Vessel Sharing Agreements (“VSAs”) under which liners agree on technical and

operational arrangements and exchange or charter vessel space; and

Voluntary Discussion Agreements (“VDAs”) which allow liners to exchange data

about supply and demand and discuss guidelines on recommended rates.

Both types of agreements, although are today a common practice in the Hong Kong shipping

industry, risk being in violation of the CO if an exemption order is not granted by the Commission.

The Commission’s proposed BEO and the Statement of Preliminary Views is a watershed moment

for the liner shipping industry. HKLSA had asked for an exemption for both types of agreements,

modelled after other Asian jurisdictions such as Singapore and Malaysia, where both VSAs and

VDAs are considered legal under their respective competition laws. As was broadly expected, the

Commission has proposed to exempt VSAs. However, the exemption is subject to a market share

cap of 40%, which is lower than that requested by the applicant and lower than competing

shipping hubs such as Singapore.

More significantly, the Commission has not proposed to exempt VDAs. Noting the international

divergence on how these agreements are assessed, it intends to reject the HKLSA’s claimed

efficiencies. The Commission was of the view that, as VDAs involve parties exchanging

information on pricing and services terms and jointly issuing non-binding pricing guidelines , VDAs

could potentially harm competition in contravention of the CO.

In rather strong terms, the Commission rejected the HKLSA’s claimed efficiencies. It noted that,

even if VDAs gave rise to any efficiencies, they would not satisfy the conditions of the economic

efficiency exclusion under the CO as narrowly interpreted by the Commission. In particular, the

Commission was of the preliminary view that:

Rate stability, as claimed in the application, is questionable in practice and is

unlikely to amount to an “efficiency” for the purpose of the CO;

While service stability may be accepted as an economic efficiency, there was

insufficient evidence to establish a causal link between VDAs and the claimed

service stability;

The fact that some pricing recommendations are not implemented in practice was

taken by the Commission as a sign of price volatility, and contrary to the

applicants’ claim that such recommendations help achieve rate stability; and

Rate and surcharge transparency arising from the pricing guidelines issued

pursuant to VDAs is questionable in the circumstances, and generally cannot be

considered as an “efficiency” for purposes of the CO.

In addition, the Commission considered that it was difficult to see how customers benefit from the

claimed efficiencies and, even if there were any efficiencies, there were alternative economically

practicable and less restrictive means of achieving them. For instance, rate stability may be

obtained through fixed rate contracts with customers; service stability and rate and surcharge

transparency may be achieved through enhancing the scope of publicly available information.

The Commission therefore decided not to include VDAs in the scope of the proposed BEO.

Nevertheless, the Commission has proposed a 6-month transition “grace period” starting from the

date of the Commission’s final decision on the application. This will give parties a period of time to

make the necessary changes to their practices and ensure compliance with the CO.

The Commission has now opened a three month consultation period on the proposed BEO.

Taking into account the Commission’s review of submissions and consideration of new evidence it

receives, a BEO is unlikely to be adopted before mid-2017.

Former subcontractor jailed for 35 months in first building renovation bid-

rigging case

On 29 September 2016, the District Court sentenced the subcontractor in the Garden Vista case to

35 months imprisonment after he pleaded guilty to four counts of conspiracy to offer an advantage

to an agent.

The former owner of the construction company admitted that, between 2005 and 2014, he

conspired with members of a bid-rigging cartel to offer HKD 45 million in bribes to various persons

involved the management of two residential estates in Hong Kong. In exchange, the bid-riggers

secured bids for consultancy and building renovation services at the residential estates.

Renovation costs for one of these estates, Garden Vista, exceeded HKD 260 million.

The judge reduced the sentence to account for the fact that the defendant pleaded guilty and

collaborated with the Independent Commission against Corruption, and that the case raised

homeowners’ awareness of the problems in the building maintenance sector.

The Competition Commission noted the sentence in a press release and invited the public to

report potential bid-rigging to the Commission.

India

Vinod Dhall and Avinash Amarnath, in collaboration with TT&A

Competition Commission of India imposes penalty of USD 1 billion on

cement companies

On 31 August 2016, the Competition Commission of India (“CCI”) imposed penalties amounting to

approximately USD 1 billion on 10 cement companies and the Cement Manufacturers Association

(“CMA”), their trade association, for cartelisation. The CCI issued its final order pursuant to the

directions ordered by the Competition Appellate Tribunal remanding the matter back while setting

aside the CCI’s original order on grounds of violating principles of natural justice.

Whilst the CCI did not find any direct evidence of cartelisation, it noted that the cement companies

used the platform provided by CMA to share commercially sensitive information regarding

production and dispatch with a view to restrict production and supply in the market. Further, the

CCI examined economic evidence (such as parallelism in prices and dispatch) before concluding

that the cement companies had colluded with each other to fix prices.

The CCI has directed CMA to cease collecting and circulating prices and information to member

cement companies relating to production.

Related files:

A copy of the order of the CCI is available here.

Indonesia

Perdana Saputro, Widyawan & Partners

Indonesian competition authority probes container freight companies

Following reports of alleged excessive pricing by freight forwarders between the Indonesian island

of Batam and Singapore, the Indonesian competition authority (“KPPU”) opened an investigation

into potential collusion between the freight forwarders.

The case is the latest in a string of enforcement actions around the world against alleged price-

fixing by shipping companies and others in the shipping industry. For example, freight forwarders

were fined by China’s National Development and Reform Commission for cartel activities in

January this year.

The investigation will test the KPPU’s ability to gather evidence, despite its limited investigation

powers under Indonesian law. It is expected that the KPPU will rely on economic evidence and

comparison of shipping fees to establish a finding of collusion between the parties. In addition, the

case provides an opportunity for the KPPU to collaborate with the Competition Commission of

Singapore.

Japan

Kenji Ito and Aruto Kagami, Mori Hamada & Matsumoto

JFTC publishes report on trade practices in the mobile phone market

On 2 August 2016, the Japan Fair Trade Commission (“JFTC”) published a report on certain trade

practices in the mobile phone market. In the spirit of facilitating entry by mobile virtual network

operators (“MVNOs”), the report addresses certain trade practices of mobile network operators

(“MNOs”) from competition law and policy perspectives. The report sheds light on how the JFTC

views some of the wide-spread industry practices recently adopted by MNOs.

According to the report, there are 227 MVNOs operating in Japan and they account for 6.9% of the

domestic mobile phone market. The report attributes these relative low market shares to

insufficient competition in the market and identifies certain trade practices of MNOs which the

JFTC considers potentially problematic.

In Japan, mobile phones are almost always sold together with network subscription contracts with

MNOs. The price of handsets can be paid off in monthly instalments, and the customer can receive

a significant discount on the purchase price in the form of a discount on monthly communications

charges so long as the customer maintains the network subscription contract for a certain period of

time. The report states that such industry-wide trade practices of bundling may have an

exclusionary effect against potential entry by MVNOs and may amount to a contravention of the

Anti-Monopoly Act.

Furthermore, historically speaking, most of the mobile phones sold in Japan were SIM-locked. The

report states that SIM locking increases the switching cost from the customers’ viewpoint and may

have an anti-competitive effect on competition among MNOs, and between MNOs and MVNOs.

The report addresses several other issues, including restrictive covenants in network subscription

contracts, MVNO’s access to network infrastructures and databases.

Related Links:

The JFTC report on competition policy issues in the mobile phone market (in Japanese) can be

found here.

JFTC’s annual report for 2015

On 27 September 2016, the JFTC published it 2015 annual report.

According to the report, the JFTC investigated 138 cases for potential violation of the Anti-

Monopoly Act and completed its investigations in 123 out of 138 cases. The JFTC used its

enforcement powers (cease and desist orders and surcharge orders) in 9 cases. 2 of these cases

were price cartels, 5 cases were bid-rigging cases and 2 related to activities by trade associations.

The number of cases resulting in the use of enforcement powers is in a steady decline, from 22 in

2011 to 9 in 2015. The JFTC received a total of 102 leniency applications in 2015.

In terms of the surcharges imposed by the JFTC, a total of 8.5 billion JPY was imposed against 31

addressees. Again, the data shows a steady decline in the last three years: down from 30.2 billion

JPY against 181 addressees in 2013 and 17.1 billion JPY against 128 addressees in 2014.

The JFTC received 295 merger notifications, 281 of which were cleared in phase one. A total of 8

cases were cleared in phase two. In contrast to the number of cartels, the number of notifications

the JFTC receives in a year is in a steady increase: up from 264 in 2013 and 275 in 2014. The

number of foreign-to-foreign transactions notified is also increasing: 18 in 2013, 41 in 2014 and 45

in 2015.

Related Links:

JFTC 2015 Annual Report (in Japanese) can be found here.

The English summary of previous years can be found here.

New Zealand

By Robert Walker and Luke Callaghan, Allens

AirAsia heeds Commerce Commission warning over opt-out pricing and

payment processing fee

Malaysian airline AirAsia has agreed to amend its booking processes when selling airline tickets to

New Zealand customers online. Specifically, AirAsia has agreed to disclose mandatory processing

fees at an early stage of the booking process and to introduce an alternative payment method to

allow these fees to be avoided entirely. AirAsia has also agreed to end its pre-selection of checked

baggage.

As part of a focus on the travel industry, the Commerce Commission investigated AirAsia's

practice of pre-selecting checked baggage at an extra cost to the advertised flight price as well as

its disclosure of mandatory processing fees during the booking process. The Commerce

Commission concluded that by pre-selecting checked baggage and therefore requiring customers

to opt-out from this added fee and by failing to adequately disclose mandatory processing fees,

AirAsia was misleading customers as to the true price of its services.

AirAsia has agreed to sell checked baggage on an ‘opt in’ basis and to disclose processing fees at

an early stage of the booking process. AirAsia has also introduced an alternative payment method

that enables customers to avoid the fee entirely.

Commerce Commission Chair Dr Mark Berry said:

“Since we began investigating opt out pricing last year we have now seen seven

companies put an end to this practice, which is great for consumers. We have made

our position very clear on this issue and expect businesses to stick to an ‘opt in’ sales

approach to avoid any possibility of breaching the Fair Trading Act.”

Related links:

The Commerce Commission's media release can be found here.

Singapore

Daren Shiau and Elsa Chen, Allen & Gledhill LLP

CCS investigation into online food delivery industry

On 25 August 2016, the Competition Commission of Singapore (the “CCS”) announced that it had

ceased its investigation into the online food delivery industry. In its assessment, the CCS

concluded that at present, there were no concerns with the state of competition in the market.

However, the CCS would continue to closely monitor the market as the common usage of

exclusive agreements in the industry could be problematic in the future. Vertical restraints continue

to be a focus for the CCS in its investigations. While vertical restraints are excluded from the

prohibition against anti-competitive agreements, they are nonetheless subject to, and closely

examined under, the abuse of dominance prohibition. Although this is the third publicised

investigation by the CCS into exclusive agreements in the past 15 months, it is the fifth such

publicised investigation by the CCS into vertical restraints in the same period.

The investigation was triggered by complaints in relation to an alleged anti-competitive practice by

an online food delivery provider in Singapore. The CCS found that the online delivery food provider

had entered into exclusive agreements with certain restaurants including food and beverage

outlets such as fast food outlets and cafes.

The main online food delivery services providers include Deliveroo, FeastBump, foodpanda,

Gourmet to Go, UberEats, and What to Eat, which allow customers to browse and order online

from a selection of restaurants’ menu items for delivery. Further, online food delivery services also

serve as a marketing channel for restaurants to reach a wider pool of customers without

expanding their dine-in services.

The CCS found that currently, exclusive agreements between online food delivery services

providers and restaurants have not harmed competition. After the CCS commenced the

investigation, a delivery provider stopped introducing exclusive agreements with restaurants, but at

the same time other providers have been using such agreements to gain market share.

The CCS stated that, while competition law in Singapore does not per se prohibit businesses from

achieving market power or striving towards it, businesses with a dominant market position are

prohibited from preventing their competitors from competing effectively or shutting them out of the

market through exclusive business practices such as exclusive agreements with their suppliers or

customers. If such conduct is found to harm competition, CCS can take enforcement action.

Related Links:

The CCS media release on investigation into online food delivery industry can be found here.

CCS issues first clearance of an acquisition of manufacturing site and plant

as a notifiable merger

On 24 August 2016, the CCS announced its clearance decision for the proposed acquisition by

Samwoh Premix Pte. Ltd. (“SWPPL”) of the property together with the building and asphalt premix

manufacturing plant situated at 55 Kranji Crescent, Singapore, from competitor Ley Choon

Constructions and Engineering Pte. Ltd. (“LCCE”). Notably, this is the first transaction in which the

CCS considered the acquisition of real property and a manufacturing plant to constitute a notifiable

merger under the Competition Act.

SWPPL is a wholly-owned subsidiary of Samwoh Corporation Pte. Ltd. (together the “Samwoh

Group”) and LCCE is a wholly-owned subsidiary of Ley Choon Group Holdings Limited (together

the “Ley Choon Group”). Both manufacture asphalt premix which is the main product used for

surfacing roads and pavements.

Allen & Gledhill LLP was the Singapore antitrust counsel involved in securing the clearance.

The CCS had sought feedback from customers and competitors in examining the impact of the

transaction. The CCS cleared the transaction on the basis that:

The transaction does not involve the transfer of customer purchases or

employees;

Post-transaction, the Ley Choon Group would continue to compete with the

Samwoh Group in the market for the production of asphalt premix in Singapore,

through its production of asphalt premix in another manufacturing plant;

Customers view asphalt premix as homogenous, and are able to switch between

suppliers with low or marginal costs; and

There is sufficient excess capacity in the market for the production of asphalt

premix to meet the demand of Samwoh’s customers if they decide to switch their

demand to other manufacturers.

Related Links:

The CCS’ decision can be found here.

CCS clears non-horizontal merger involving semiconductor manufacturing

tools

The CCS announced on 22 August 2016 that it had cleared the proposed acquisition by ASML

Holding N.V. (“ASML”) of Hermes Microvision, Inc. (“HMI”) (collectively “the Parties”). The CCS

concluded that the proposed transaction, if carried into effect, is unlikely to substantially lessen

competition in Singapore as part of the markets for the worldwide supply of lithography equipment,

overlay metrology equipment, process control software and wafer inspection equipment.

Allen & Gledhill LLP acted as Singapore antitrust counsel for ASML in securing the clearance

The CCS concluded that the relevant geographic scope of the relevant markets is global as the

supply of the Parties’ products may not be constrained by the location of the suppliers’ business

operations. Third party feedback received by the CCS also confirmed that for lithography

equipment, customers source their supply of such equipment worldwide.

The rationale of the proposed transaction was to expand the Parties’ range of products to better

serve their customers and offer more advanced tools. The CCS noted that proposed transaction

will not result in any increment in the Parties’ market shares or any change in the level of

concentration in each of the relevant markets as there are no overlapping goods or services sold

by the Parties globally and in Singapore.

The CCS therefore proceeded to assess whether the proposed transaction is likely to substantially

lessen competition, in particular conglomerate effects, in the relevant markets.

After reviewing the Parties’ submissions and feedback from customers and competitors, the CCS

concluded that:

Barriers to entry and expansion in the relevant markets exist but are not

insurmountable;

There is some degree of countervailing buyer power and existing competitors

supplying optical inspection tools and developing e-beam inspection tools will

continue to exert a competitive constraint on the merged entity;

Non-coordinated and coordinated effects are unlikely to arise as there are no

overlapping products sold by the Parties globally, including in Singapore; and

In relation to conglomerate effects, there is no evidence from the submissions of

the Parties that they intend to bundle or tie their lithography equipment with e-

beam inspection tools post-merger. There is also no evidence from third-party

feedback indicating that the Parties will have a significant prospect of bundling or

tying their lithography equipment with e-beam inspection tools.

Related Links:

The CCS’s decision can be found here.

CCS clears full-function joint venture for heavy maintenance services

On 1 August 2016, the CCS announced the clearance decision on the proposed joint venture

between Airbus Services Asia Pacific Pte. Ltd. and SIA Engineering Company Limited (collectively

referred to as the “Parties”). The CCS concluded that the proposed JV, if carried into effect, is

unlikely to substantially lessen competition for the global supply of heavy maintenance services to

commercial aircraft in Singapore.

Allen & Gledhill LLP was the Singapore antitrust counsel involved in securing the clearance.

In reviewing the proposed JV, CCS contacted 14 competitors, such as airlines with maintenance,

repair and overhaul capabilities and other independent service providers, and 15 customers.

While the Parties submitted that the relevant overlapping services are the service markets for

heavy maintenance and line maintenance for all commercial aircraft, the CCS only considered

the provision of heavy maintenance for commercial aircraft as the proposed JV will not be directly

involved in providing line maintenance for Airbus Aircraft Types.

In the proposed JV, the Parties will operate their own hangar facility in Singapore and provide

heavy maintenance services for certain Airbus aircrafts to customers in the Asia Pacific region.

The CCS also noted that the supply is global as customers are flexible in terms of the location of

heavy maintenance service providers.

Taking into account the Parties’ submissions and feedback from customers and competitors, the

CCS cleared the proposed JV on the basis that:

There are sufficient alternative providers of heavy maintenance services to

Singapore customers globally;

Barriers to entry and expansion are not insurmountable. There have been several

recent new entries as well as expansions by current players;

Major airlines have significant countervailing buyer power; and

Customers (i.e. airlines) are in possession of the repair manuals so that the

proposed JV is unlikely to prevent competition in heavy maintenance services,

notwithstanding Airbus Group’s status as the aircraft manufacturer.

Related Links:

The CCS’ decision can be found here.

South Korea

By Yong Seok Ahn and Bryan Hopkins, Lee & Ko

The KFTC amends its leniency guidelines

The Korean Fair Trade Commission (“KFTC”) has recently amended its cartel leniency guidelines.

The amendments came into effect on 30 September 2016. Several amendments are significant for

practitioners and businesses considering seeking leniency. We highlight the three main

amendments below.

Successor of Leniency Orders

Until the recent amendments, if a first leniency applicant lost its leniency status (for instance, for

failing to fully cooperate or for having been determined to be a repeat cartelist), then the second

leniency applicant would automatically become the first leniency applicant. However, under the

new guidelines, in order for the second leniency applicant to succeed the first leniency applicant, it

must (like the original first leniency applicant) have provided evidence of the cartel’s existence

prior to the KFTC gathering enough evidence of the cartel by itself. As the KFTC would normally

get the evidence of the cartel from the first leniency applicant before it was disqualified, the

practical effect or result of the new guidelines is that the second leniency applicant would see no

escalation in status even though the first leniency applicant lost its status.

The Order and Time of Leniency Applications

Until the recent amendments, leniency applications could be made by post, fax, email or in-person.

However, the guidelines were silent as to whether a leniency application could be made through

other means. The guidelines also did not specify which medium of submitting leniency applications

took precedence or when the receipt of the leniency application itself was considered made. The

guidelines have been amended to clarify those issues. From now on, leniency applications can

neither be submitted by post nor can they be submitted through other means. They can only be

submitted via fax (to a dedicated fax number), email or in person. Also, when the leniency

applications are submitted via fax or email, they must be submitted to an exclusive fax number or

a specific email address.

In terms of timing, the guidelines have been amended to provide that when the leniency

applications have been submitted by fax or email, the time of submission shall be when the fax or

email have been received. When an oral application is made, the time of the submission shall be

when the oral application started. It therefore is suggested that, to ensure prompt, effective and

timely submission of a leniency application, the application be sent by both email and fax at the

same time.

Amnesty Plus

The KFTC leniency guidelines include an amnesty plus programme. If a company who is subject

to an administrative fine for a cartel, reports on other cartels that the company or organisation is

involved in and meets the relevant requirements, the KFTC may grant a reduction in fines. The

reduction in fines for the primary cartel is based on the size of the other cartel(s) as follows:

1. If the revenue size of the other cartel(s) equals to or exceeds 400% of the size of

the primary cartel, the amnesty plus applicant will receive a 100% reduction in

fines.

2. If the revenue size of the other cartel(s) is less than 400% but is equal to or more

than 200% of the primary cartel, the amnesty plus applicant will receive a 50%

reduction in fines.

3. If the revenue size of the other cartel(s) is less than 200% but more than 100% of

the primary cartel, the amnesty plus applicant will receive a 30% reduction in fines.

4. If the revenue size of the other cartel(s) equals or is less than 100% the size of the

primary cartel, the amnesty plus applicant will receive up to 20% reduction in fines.

The previous amnesty plus programme dealt with the issue of calculating revenue when granting a

reduction in fines. The revised guidelines have been amended to make it clear that the revenue of

all other cartels will be combined when deciding the reduction in fines for the primary cartel.

Taiwan

Matt Liu and Elvin Peng, Tsar & Tsai Law Firm

TFTC issues ruling regarding concurrency between the Taiwan Fair Trade

Act and other laws

Article 46 of the Taiwan Fair Trade Act (“TFTA”) stipulates the priority of the TFTA over competition

matters. The TFTA has precedence over other laws with regards to the governance of any

enterprise’s conduct in respect of competition. However, the TFTA shall not be applied where other

laws provide relevant provisions that do not conflict with the legislative purposes of the TFTA. On

August 4, 2016, the Taiwan Fair Trade Commission (“TFTC”) issued a ruling further elaborating the

application of Article 46.

The TFTC clarified that Article 46 is only applicable where an act of an enterprise complies with

other laws but is prohibited by the TFTA.

The TFTC then stated that, when determining whether the interpretation and application of

particular laws could result in a conflict against the legislative purposes of the TFTA, the TFTC will

consider the following factors:

1. The enactment, amendment and enforcement of the particular laws (for example,

whether the purpose of the TFTA was considered during the enactment, or

whether the competent authority in charge of that industry adopts necessary

measures to ensure the competition on the relevant market);

2. The competitive situation of the relevant market (including market concentration,

market entry barriers, interest of consumers, and so on); and

3. Other factors which show that the legislative purpose of the TFTA has been

served.

For instance, a price control mechanism adopted by another law for the regulation of a natural

monopoly industry will not be considered to be in violation of the TFTA. Overall, the TFTC’s ruling

stresses the priority of the TFTA with regard to competition matters.

Thailand

Pornpan Chayasuntorn, Ueamduean Jerasantpich and Wilailuk Okanurak, Linklaters

Bangkok

Thai Trade Competition Commission arranged seminars on competition

policy and law enforcement

On 25 September 2016, the Office of Thai Trade Competition Commission (“OTCC”) arranged a

seminar among the state agencies, the judicial authorities and the enforcement authorities to

create a clearer path to the future enforcement of Thailand’s competition law.

On 26 September 2016, the OTCC also held a public seminar, “Independent Competition

Authorities: A Key to Success of Competition Policy and Law Enforcement”, where guest speakers

from the Australian, Japanese, Singaporean and Indonesian competition authorities gathered to

share their stories about enforcement policies and procedures, the legal framework of penalties

and remedies in those jurisdictions, the factors to be taken into account for enforcement of

competition law and case studies. The OTCC aims to take these as guidelines to build a more

efficient and effective competition law regime in Thailand.