High Court upholds competition watchdog’s ruling against warehouse operators for sharing pricing plans
Sharing future pricing plans with business rivals can breach competition law even for smaller firms, the court said.
A view of a section of Keppel Distripark, which is a cargo distribution complex located along Kampong Bahru Road in southern Singapore. (Image: Google Street View)
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SINGAPORE: The High Court has overturned a ruling by the Competition Appeal Board, reinstating a decision by the Competition and Consumer Commission of Singapore (CCS) that two warehouse operators breached competition law by exchanging information on planned price increases.
In a judgment issued on Jun 30, the court allowed CCS’ appeal and found that the two warehouses – CNL Logistic Solutions and Gilmon Transportation & Warehousing – had infringed Section 34 of the Competition Act by sharing information about their intention to impose a surcharge.
The case stemmed from an investigation conducted by CCS into four warehouse operators at Keppel Distripark.
In November 2022, the competition watchdog issued a decision on the infringement, after finding that representatives from the companies had communicated in June 2017 about plans to introduce a Free Trade Zone (FTZ) surcharge at the same rate as the largest warehouse operator.
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CCS said the companies then used that information during negotiations with customers before all four operators eventually imposed the same surcharge.
Following its investigation, it imposed financial penalties totalling S$2.8 million on the four companies.
CNL and Gilmon appealed the decision in January 2023 and the Competition Appeal Board ruled in their favour in July last year.
The board said that CCS had not sufficiently considered the economic context of the case, including the companies’ relatively small shares of the warehousing market at Keppel Distripark.
CCS later appealed that ruling.
The High Court found that CNL and Gilmon had exchanged information about competitors’ pricing strategies and intentions, and had relied on that information to persuade customers to accept the surcharge.
It rejected the companies’ argument that their limited market power meant that their conduct could not have harmed competition.
The court also noted that the exchanges were not merely casual conversations – they enabled the companies to overcome their individual weaknesses and improve customer acceptance of the price increase.
Following the latest judgment, CCS’ chief executive officer Alvin Koh said that the ruling was a reminder that businesses must set their prices independently and should not coordinate with competitors or exchange confidential information on future prices or pricing intentions.
Even businesses with relatively small market shares may infringe the Competition Act if they engage in such conduct.
CCS will continue to take firm action against anti-competitive conduct to protect competition and consumers in Singapore, Mr Koh added.
Even though not all exchanges of information between competitors are anti-competitive, businesses should be particularly cautious when discussing confidential or strategic information, CCS cautioned.
This is especially when plans relate to future prices or price changes, because such exchanges are likelier to breach the Competition Act.
It also advised companies to ensure that employees understand what information they can and cannot share with competitors.
Businesses can be found liable for anti-competitive conduct and face significant financial penalties if employees exchange confidential or strategic information, including companies with relatively small market shares.
Source: CNA/bg(sf)
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