Prospective Changes to CCCS’ Guidelines on the Substantive Assessment of Mergers

Data

There is ongoing discussion on the importance of data and the treatment of data by various stakeholders. The Personal Data Protection Commission (“PDPC”) is continuing its engagement to promote responsible use of data and data-driven businesses. The PDPC is also finalising regulations on data portability and data innovation and has, as part of the process, released a discussion paper with the CCCS on data portability. 

While CCCS has noted the importance of data in the discussion paper and its market study on e-commerce platforms, feedback received by CCCS suggests that access to data or lack of access is currently not an insurmountable barrier to entry for potential market entrants.

With this in mind, the proposed amendments give greater recognition to data as a parameter of competition. 

There is an express reference to data protection as an aspect of competition on quality, if this is an area in which the merging parties compete on. CCCS will include this when considering the harm to the rivalry process as part of its assessment.

In this sense, it is expressly provided that data protection should be considered as a parameter for the assessment of the level of competition in the market in which the merging parties operate. To this end, the CCCS will include this aspect when considering harm to the rivalry process as part of its assessment.

Furthermore, in considering barriers to entry, CCCS will include access to physical assets, proprietary rights and data as part of its considerations when examining difficulties in accessing key production or supply inputs. 

Innovation

The proposed amendments now include innovation as part of the guidelines’ considerations, highlighting competition concerns that may arise from the potential reduction in innovation due to the proposed merger. 

The guidelines would also better reflect the digital economy where innovators may have a significant impact on the market, disproportionate to their market share. There will now be clear references to potential concerns when the merger involves an important innovator that may not be reflected in its market share or where the merger involves parties with pipeline products. 

Conglomerate Mergers

Under the current guidelines, conglomerate mergers do not typically result in the substantial lessening of competition. 

The proposed amendments still acknowledge that such mergers do not typically result in the substantial lessening of competition but now set out potential competition concerns, especially when the merger parties are in closely related markets. The guidelines would set out examples of potential non-coordinated effects, such as foreclosure where the merged entity ties or bundles products across its various markets which may reduce rivals’ ability or incentive to compete. At the same time, the guidelines would also include factors that CCCS would consider when examining such potential non-coordinated effects, such as the importance of any one of the products from the consumers’ perspective, alternatives to the products, the level of market and consumer preference for the availability of the products individually, and the effect of unbundling and mark up of individual products by resellers.

For more information please contact Sandra Seah and Jonathan Kao.