Sustainability issues set to occupy Singapore competition regulator in year ahead

More consolidation and collaboration among businesses, the continued growth of the digital economy’s pervasive influence, and — increasingly — sustainability issues. These are the key trends that will occupy the Singapore competition regulator in the coming year. While the impacts of the pandemic and the growth of the digital economy have occupied it for some time now, issues related to the push toward greener solutions are expected to demand more and more of its attention.

“Sustainability is yet another matter that has gripped the world’s attention as consumers and businesses are now more conscious of their actions on the environment,” the Competition and Consumer Commission of Singapore, or CCCS, told MLex in response to emailed questions.

“Already, we see that other jurisdictions such as the European Commission saw a need to frame the role of competition policy and tools in contributing to the green transition and in supporting industry’s efforts towards decarbonization, circularity and biodiversity.”

For its part, the commission in September called for research proposals on competition and consumer-protection questions related to sustainability. Researchers could, for example, try to quantify the environmental benefits of potentially anticompetitive business collaborations, or analyze the impact of misleading sustainability claims — known as greenwashing — on consumers and competition.

Potential issues

These are questions that are also being asked by lawyers in the city-state, who point out that there are currently no specific guidelines or exemptions for sustainability initiatives in Singapore’s competition framework.

The competition law could serve as a roadblock, for example, for energy companies who want to agree to close down coal power plants and shift to renewable energy, or for players in one industry to agree to stop supplying less sustainable products, according to a note from Allen & Gledhill.

“Such agreements, as they could restrict output between competitors, can be regarded as restricting competition appreciably and infringing the Section 34 Prohibition [on concerted practices],” the note said.

Sustainability initiatives by large companies, such as refusing to supply or charging higher prices to buyers who are known to be engaged in unsustainable practices like deforestation, could also be seen as an abuse of dominance.

For now, lawyers and companies may find some answers on the CCCS’ recently issued guidance for business collaborations. While the guidance does not make any specific references to sustainability issues, it does make clear that the regulator will consider context and various other factors in determining whether an agreement’s net economic benefits outweigh its negative competition effects. And the fact that sustainability issues are already on the CCCS’ mind could mean arguments for environmental benefits are not out of the question.

'Guide-dog'

The need to find answers to these questions will also be spurred by the Singapore government’s Green Plan 2030 launched early this year. The national plan to steer the country toward more sustainable solutions includes aims such as turning Singapore into a carbon-services hub and a center for green finance in Asia, and promoting investments in, and the use of, cleaner energy options, all of which will involve policies that could have competition implications.

So far, the CCCS has advised other government agencies on issues relating to sustainability such as a beverage-container take-back scheme and deployment of electric vehicle-charging infrastructure, and it expects to do more in the coming year.

On the National Environment Agency’s new beverage-container take-back scheme, the CCCS recommended putting in place safeguards to prevent the exchange of commercially sensitive information between industry players.

On electric vehicle-charging infrastructure, the commission helped the Urban Redevelopment Authority design competitive pilot tenders for deploying these in public car parks. It also provided advise on how to intensify competition for the supply of charging services in private car parks by encouraging commercial building owners to carry out competitive tendering processes, and on the implications of interoperability standards.

This increasingly important role of competition authorities in policymaking was highlighted in a recent high-level meeting of Asia-Pacific competition authorities hosted by the Organization for Economic Co-operation and Development, or OECD.

“Competition authorities can move from being market watchdogs to being also market guide-dogs, helping policymakers develop policies that foster well-functioning markets — a particularly important role for them to play in the context of economic recovery measures,” OECD Senior Competition Expert Ruben Maximiano said.

As Singapore charts its economic recovery from the impacts of the pandemic and toward a greener future, finding answers to competition questions related to sustainability issues will only become more urgent.