Yes, competition law applies to small businesses in Singapore. The Competition Act 2004 prohibits agreements between businesses that restrict competition (section 34), abuse of a dominant position (section 47) and mergers that substantially lessen competition (section 54). Most ordinary SME contracts are safe, because agreements between small firms are generally not treated as having an appreciable effect. The exception that catches SMEs is the hardcore cartel: fixing prices, rigging bids, sharing customers or markets, or limiting output with a competitor. Those are treated as serious whatever your size, and can attract penalties of up to 10% of Singapore turnover per year of infringement.
Who enforces competition law, and does it cover a company my size?
The Competition and Consumer Commission of Singapore, which now uses the short name CCS, administers the Act. The Act applies to “undertakings”, meaning any person or entity carrying on commercial or economic activity. That includes companies of every size, sole proprietors, partnerships, and trade associations and chambers whose decisions affect their members’ commercial behaviour.
For agreements, size matters in one specific way. CCS’s published guidance says an agreement will generally have no appreciable adverse effect on competition where:
- the parties are competitors and their combined market share does not exceed 20% in any affected market;
- the parties are not competitors and each has no more than 25% of any affected market; or
- every party to the agreement is an SME, which CCS defines as a business with annual sales turnover of not more than S$100 million or not more than 200 employees.
These safe zones do not apply to price fixing, bid rigging, market sharing, or limiting production or investment. CCS treats those restrictions as always appreciable, even between very small firms, and its FAQ says the onus is then on the SMEs to show the agreement does not breach section 34. In other words, being small protects ordinary commercial arrangements, not cartels.
What can I not agree with a competitor?
Section 34 catches agreements, decisions of associations and concerted practices that have the object or effect of preventing, restricting or distorting competition in Singapore. An “agreement” does not have to be written or signed. A WhatsApp exchange, a nod at a dinner, or a shared understanding reached over several calls can be enough. The following are the high-risk categories for SMEs:
- Price fixing: agreeing selling prices, minimum prices, surcharges, discounts, or the timing and size of price increases.
- Bid rigging: agreeing who will win a tender, submitting a deliberately high “cover” quote, or taking turns to win. Our article on what happens to an SME in a bid rigging investigation explains CCS’s powers and the investigation process.
- Market or customer sharing: agreeing not to approach each other’s customers, or dividing territories or product lines.
- Output limitation: agreeing to cap capacity, production or supply.
- Exchanging competitively sensitive information: sharing current or future prices, margins, bid intentions, customer lists or capacity plans with a competitor. Even without an express agreement, this can amount to a concerted practice.
Which everyday situations carry the most risk?
| Situation | Risk level | Why | Safer approach |
|---|---|---|---|
| Two contractors agree who will quote lowest for a client’s tender | High | Bid rigging is a hardcore restriction regardless of size | Price and bid independently; refuse any discussion |
| A trade association circulates “recommended rates” for members | High | Association decisions can breach section 34 even if not binding | Associations should not recommend prices; publish only historical, aggregated data |
| Competitors share planned price increases at an industry dinner | High | Exchange of future pricing intentions | Leave the conversation and record that you did |
| Two small firms form a disclosed consortium to bid for a contract neither could perform alone | Usually lower | Genuine joint bidding can be pro-competitive if it is transparent to the buyer | Document why the joint bid is needed and tell the buyer |
| You set terms for your own distributor or reseller | Usually excluded | Vertical agreements are excluded from section 34 | Still avoid conduct that could be abusive if you are dominant |
| You hold most of a niche market and refuse to supply a rival’s customers | Depends | Section 47 applies only to dominant businesses | Have an objective, documented business reason |
For more on lawful collaboration in public procurement, see our guide to consortium bids for government tenders.
What about agreements with my suppliers and distributors?
Agreements between businesses at different levels of the supply chain, such as a manufacturer and its distributor, are called vertical agreements. Under paragraph 8 of the Third Schedule to the Act, vertical agreements are excluded from the section 34 prohibition, unless the Minister specifies otherwise by order. The exclusion covers intellectual property terms that are ancillary to the supply, but not stand-alone licensing agreements, which are assessed separately.
Two cautions. First, the exclusion does not apply to section 47, so a dominant supplier can still abuse its position through exclusive dealing or discriminatory terms. Second, if your distributor is also your competitor, for example because you sell directly in the same market, the arrangement may have horizontal elements that need a closer look. Commercial terms on exit, stock and territory are covered in our article on drafting distribution agreement exit terms.
Could my company be “dominant”?
Being dominant is not unlawful; abusing dominance is. CCS’s guidance says that, as a starting point, a market share above 60% is likely to indicate dominance, although dominance can be found at lower shares depending on barriers to entry and other factors. Markets can be defined narrowly, so a specialist SME can be dominant in a niche product or location.
Section 47(2) gives examples of abuse, which CCS explains further in its guidelines on the Act: predatory behaviour towards competitors; limiting production, markets or technical development to the prejudice of consumers; applying dissimilar conditions to equivalent transactions with other trading parties; and tying contracts to unrelated supplementary obligations. If you believe you are the main or only supplier of something customers cannot easily source elsewhere, review your pricing, exclusivity and refusal-to-supply decisions with that list in mind.
Do I need CCS approval to buy a competitor?
Singapore has a voluntary merger regime. There is no legal requirement to notify CCS of agreements, conduct or mergers; it is for the parties to ensure their transaction is lawful. CCS’s guidance indicates that competition concerns are unlikely to arise unless the merged business will have a market share of 40% or more, or between 20% and 40% where the three largest firms together hold 70% or more. If your acquisition approaches those levels, consider a self-assessment and possibly a notification before completion. Non-compete clauses given by a seller of a business are a separate question from employee restraints; for employees, see our guide on enforcing non-compete clauses against former employees.
What are the consequences of breaching the Act?
- Financial penalties. Under section 69, where an infringement was committed intentionally or negligently, CCS may impose a penalty of up to 10% of the business’s Singapore turnover for each year of infringement, for up to three years.
- Directions. CCS can direct the parties to end the infringement, and a direction can be registered as a court order.
- Void terms. A provision that infringes section 34 and is not otherwise excluded or exempted is void to that extent and cannot be enforced.
- Claims by victims. Under section 86, a person who suffers loss directly from an infringement may sue the infringing business, but only after CCS has made an infringement decision and any appeal has been concluded. CCS’s guidance says these actions must be brought within two years of the decision or the determination of the appeal, whichever is later.
- Publicity. Infringement decisions are published on CCS’s public register, which can affect tender eligibility and customer trust.
What if we have already been involved in a cartel?
CCS runs a leniency programme for cartel activity. Under CCS’s guidance, the first business to provide evidence of a cartel before an investigation starts can receive total immunity from financial penalties, if it meets conditions such as full cooperation and not having been the initiator. A business that comes forward after an investigation has begun may still obtain a reduction of up to 100%, and later applicants may receive a reduction of up to 50%. Because the benefit depends on being first, speed matters. Speak to a competition lawyer before contacting CCS, and preserve all documents.
How do I build a simple competition compliance routine?
- Identify who meets competitors. Sales staff, estimators, business development managers and anyone who attends trade association meetings.
- Write a one-page rule. No discussion of prices, margins, bids, customers, territories or capacity with competitors, in any setting or app.
- Brief staff at induction and yearly. Use real situations from your industry, such as a supplier’s tender or a rate card.
- Control trade association participation. Ask for agendas in advance, check minutes afterwards and object on record if prices or customers are discussed.
- Price each tender independently. Keep the workings that show how the bid price was reached.
- Set an escalation route. Staff should know whom to tell, and that reporting a concern will not be held against them.
- Review key contracts. Check exclusivity, most-favoured-customer and non-compete terms, especially in markets where you are a leading supplier.
Example: a contractors’ WhatsApp group
Example: Five small renovation contractors share a WhatsApp group for referrals. Before a management corporation’s tender, one member posts that everyone should quote “not below $80 per square metre this year because material costs are up”. Two members reply with thumbs-up emojis. None of them signs anything, and all are SMEs. This is still a serious risk: an exchange of future pricing intentions among competitors can be a concerted practice, and hardcore restrictions fall outside the SME safe zone. The prudent response for a member who did not agree is to post a clear objection, leave the group, keep a record and seek legal advice on whether leniency should be considered.
Frequently asked questions
Is it illegal to know my competitor’s prices?
No. Collecting prices from public sources, customers or published rate cards is normal market intelligence. The risk arises when competitors exchange current or future pricing information directly with each other.
Can I tell my reseller what price to charge?
Vertical agreements are excluded from section 34, so supplier and reseller pricing terms generally fall outside that prohibition. If your business may be dominant, section 47 still applies, and you should take advice on restrictive terms.
Can directors be fined personally?
The financial penalties under section 69 are imposed on the undertaking. Individuals can be personally exposed if they carry on business as sole proprietors, and the Act makes certain failures to comply with CCS’s investigation powers criminal offences, which can apply to individuals.
Can I ask CCS whether our agreement is lawful?
Yes. Parties can notify an existing agreement or conduct to CCS for guidance or a decision. A fee is charged, and CCS may decline to give guidance on arrangements that raise no real concern.
Our trade association wants to publish an industry fee guide. Is that safe?
In its trade association FAQ, CCS has said it is concerned with price recommendations by associations that influence members’ pricing so that members no longer set prices independently. A fee guide for members is high risk. Aggregated, historical cost data is generally safer.
Need help with a competition law concern?
If your company, or you as a director or shareholder, is dealing with a competition law concern, such as a pricing discussion with competitors, a trade association recommendation or a CCS enquiry, contact the Raffles Corporate Services team at [email protected] or on WhatsApp at +65 8501 7133 or +65 9018 0072. We will help you understand the documents and deadlines. Where your matter needs a lawyer, we will refer you to a firm on our panel of Singapore law firms that regularly handles competition law. Raffles Corporate Services is a corporate services provider, not a law firm, and this article is general information, not legal advice.
The Raffles Corporate Services Editorial Team, Raffles Corporate Services