There has been a recent development in competition law in Singapore with the ruling by the Competition Commission of Singapore (“CCS”) in respect of the issue of abuse of dominant under the Competition Act by NTUC Income (a local insurance company) and ironically the Consumers Association of Singapore (“Case”).

In Singapore the Competition Act Chapter 50B seeks to prohibit anti-competitive activities that unduly prevent, restrict or distort competition. The Act has provided three main prohibited foci.

a) “the section 34 prohibition” – which deals with anti-competitive agreements, decisions and practices;

b) “the section 47 prohibition” – which deals with abuse of a dominant position; and

c) “the section 54 prohibition” – which deals with mergers and acquisitions that reduce lessen competition.

With respect to the, Section 47, the said section provides that any conduct on the part of one or more undertakings which amounts to the abuse of a dominant position in any market in Singapore is prohibited. Such conduct may, in particular, constitute such an abuse if it consists in —

(a) predatory behaviour towards competitors;

(b) limiting production, markets or technical development to the prejudice of consumers;

(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; or

(d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of the contracts.

In a recent matter which was brought before the CCS by a educational institution Stansfield College, NTUC Income was the only insurance company to be appointed by Case to sell insurance to private schools in Singapore such as Stansfield College in order to provide the tuition fee insurance required by private schools to enrol foreign students under Case’s “CaseTrust” accreditation scheme. This scheme enables an institution to be accredited by Case, which would be a selling point for the institution.

Case’s Student Protection Scheme (SPS) safeguards students’ fees, should a private school fold. A school taking in foreign students would have to buy insurance for its students or set up an escrow account, which disburses fees to the school in installments, which safeguards the fees in event the school closes suddenly.

Stansfield College complained to CCS that NTUC Income and Case were being monopolistic; however Case maintained that despite opening up the scheme to other underwriters, only NTUC responded willingly.

The CCS then conducted a study which echoed NTUC Income’s and Case’s stand on the matter as it was learnt that NTUC Income was not the only recourse for the private schools. There were two options — the schools could either buy insurance for students to safeguard their money or set up an escrow account. They also had three other service providers to choose from.

NTUC Income provided insurance coverable under the scheme, while DBS Bank and HSBC Bank could provide schools with the escrow scheme. Moreover, CCS further noted that Case and NTUC Income were not in direct business competition with Stansfield College.

In view of those factors the complaint was dismissed by the CCS as the scheme was deemed not to fall under Section 47 of the Competition Act.