Competition law plays a crucial role in regulating market behaviour and ensuring a level playing field for businesses in the global marketplace. Because of the frequency with which transactions may involve mergers, acquisitions, collaborations, or anti-competitive practices that affect multiple jurisdictions simultaneously, it is particularly important to consider the similarities, and also the differences, between competition law and policy frameworks across geographies. To that end, this article provides a brief comparative overview of the competition laws regulating horizontal agreements in four jurisdictions: the European Union (including the most recent developments regarding the revised Horizontal Block Exemption Regulations on Research and Development and Specialisation agreements, accompanied by revised Horizontal Guidelines), the United Kingdom, Australia, and Singapore.
1. Legislative Overview: key provisions, what is regulated, key objectives and recent developments
Australia
Horizontal agreements in Australia are largely regulated by Part IV of the Consumer and Competition Act 2010 (Australian Competition and Consumer Act, or CCA), which addresses restrictive trade practices.
Part IV of the CCA includes prohibitions on anti-competitive agreements, the misuse of market power, exclusive dealing, and anti-competitive mergers. These prohibitions apply to both horizontal and vertical agreements and are each subject to a 'substantial lessening of competition' test.
Part IV also contains a prohibition on cartel conduct which prohibits competitors from entering into a contract, arrangement or understanding with the purpose or effect of fixing prices, sharing markets, rigging bids, or restricting outputs. Unlike the other prohibitions in Part IV of the CCA, cartel conduct is prohibited on a per se basis (that is, it is not subject to a 'substantial lessening of competition' test). In addition to civil penalties, cartel conduct is also subject to criminal prosecution. Immunity from both civil and criminal proceedings is available to parties who have engaged in cartel conduct on a 'first in' basis. Immunity applications are considered by the ACCC in accordance with its immunity and cooperation policy.
The ACCC issues guidelines to clarify concepts and its approach to enforcement of Part IV of the CCA. These include the Merger Guidelines, Exclusive Dealing Notification Guidelines, and Misuse of Market Power Guidelines.
Recent developments include an expansion of penalties for non-compliance with the CCA. Penalties for corporations are now the greatest of AUD $50 million, or three times the value of the benefit gained. Individuals may face up to 10 years in jail and/or fines of up to AUD $2.5 million per civil contravention. Block exemptions (whether horizontal or vertical) are not available, but parties can apply to the ACCC for authorisation of conduct where public benefits outweigh any substantial lessening of competition. There are also exceptions from the cartel prohibitions for joint ventures and, at least in theory, collective acquisitions.
Singapore
The Competition Act 2004 (Singapore Competition Act) is enforced by the Competition and Consumer Commission of Singapore (CCCS). This legislation primarily addresses three key areas of competition: anti-competitive agreements, abuse of a dominant position, and mergers and acquisitions which substantially lessen competition.
Section 34 of the Singapore Competition Act specifically tackles anti-competitive agreements, decisions, and practices. According to this provision, agreements between undertakings (be they current or potential competitors) that appreciably prevent, restrict, or distort competition are prohibited unless they fall under specific exclusions or exemptions. For example, the Net Economic Benefit (NEB) exclusions may apply if the agreement creates economic benefits which outweigh any potential harm to competition. Further exclusions can apply if the undertaking involves government activities or statutory bodies, albeit these are applied with a narrow interpretation.
In 2022, the CCCS issued a Guidance Note on Business Collaborations (Singapore Guidance) to help clarify its stance on common types of horizontal business collaborations and how they fit into the context of Section 34. The Singapore Guidance identifies the following types of horizontal collaborations:
- Information Sharing
- Joint Production
- Joint Commercialisation
- Joint Purchasing
- Research and Development
- Standards Development
- Standard Terms and Conditions in Contracts
- Trade Associations
The Singapore Guidance is informed by previous decisions of the CCCS, including those on the subject of the Guideline on Fees by the Singapore Medical Association, the price-fixing among Fresh Chicken Distributors, and the Poultry Hub Joint Venture. These cases exemplify how the CCCS applies the principles outlined in the Competition Act and its guidelines to relevant industries, and the Singapore Guidance provides businesses with a framework for how they can comply with Singapore's competition laws while engaging in various forms of collaboration.
United Kingdom
Chapter I of the UK Competition Act 1998 (UK Competition Act) governs relationships between competitors and prohibits agreements between undertakings that restrict competition within the UK (the Chapter I prohibition). The Enterprise Act 2002 also introduced a criminal offence for individuals who dishonestly engage in cartel agreements.
An agreement can be exempt from Chapter I of the UK Competition Act if its economic benefits outweigh any anti-competitive effects. Since Brexit, the UK has taken steps to implement its own UK-specific legislation governing certain aspects of competition law which were previously governed primarily by EU competition law. The EU Horizontal Block Exemption Regulations (EU HBER) were retained in UK law until 31 December 2022. The Specialisation Agreement Block Exemption Order (SABEO) and Research and Development Block Exemption Order (R&DBEO)(together, the HBEOs) came into force in the UK on 1 January 2023.
The Competition and Markets Authority (CMA) is also currently consulting on draft guidance (UK Draft Guidance), setting out the application of the HBEOs and guidelines for parties to horizontal agreements to determine whether they fall within the scope of these block exemptions.
The UK Draft Guidance deals with:
- The Specialisation Agreement Block Exemption Order
- The Research and Development Block Exemption Order
- Purchasing agreements
- Commercialisation agreements
- Information exchange
- Standardisation agreements
- Production agreements
- Standard terms
While the UK Draft Guidance does have similarities with the EU's guidance, there are subtle differences between the two documents. Interestingly, the CMA has also issued separate draft guidance in relation to sustainability agreements.
Additionally, the CMA has also recently published the Digital Markets, Competition and Consumer Bill, which would amend the Chapter I prohibition so that it applies to agreements, concerted practices and decisions which are implemented outside the UK but have "immediate, substantial and foreseeable" effects within the UK.
2. A closer look: Examining the similarities and differences between frameworks
Asia Pacific
Both Australia and Singapore have comprehensive legislative frameworks in place to manage competition and prevent anti-competitive behaviour, albeit with some notable differences in their approach. The Australian Competition and Consumer Act and the Singapore Competition Act focus heavily on controlling restrictive trade practices and preventing the abuse of a market position, based on substantial market power or dominance respectively.
Key provisions of both frameworks include prohibiting anti-competitive agreements, curtailing abuse of market power, and scrutinising mergers and acquisitions for potential anti-competitive effects. Both countries also have their respective authorities - the ACCC and the CCCS. Both countries provide supplementary guidelines which clarify how the laws would be enforced. Unlike Australia though, the CCCS does not have exclusive jurisdiction on competition as other sectoral regulators have the mandate over competition matters for gazetted sectors or activities. For example, the IMDA regulates acquisitions in the telecoms sector which may substantially lessen competition.
In relation to cartels, both the Australian and Singapore frameworks provide a mechanism for leniency to be granted in return for cooperation (notably, however, there is no personal liability for individuals under Singapore's laws unless trading as a sole proprietor or as an corporate officer for specified offences, while the Australian Competition and Consumer Act allows the ACCC to bring enforcement action against companies and individuals, with leniency also available to both under the ACCC's immunity and cooperation policy).
ACCC and CCCS leniency policies both provide for the granting of immunity on a 'first-in' basis, prior to the commencement of an investigation. The CCCS may also provide a reduction of up to 100% of financial penalties where the undertaking is the first to come forward but only after an investigation has commenced. There is no comparable provision under the Australian policy.
The CCS may also provider further discretionary leniency of up to 50% of the applicable financial penalty for any further undertaking which come forward. The ACCC's policy also affords more lenient treatment for subsequent cooperation, though it does not prescribe an applicable discount.
More generally, Singapore's framework places more emphasis on economic efficiencies as a defence in its infringement decisions, whereas the Australian laws place a more explicit focus on preventing conduct that substantially lessens competition, regardless of any potential economic efficiencies. Indeed, while the ACCC will weigh the likely public benefits of conduct against the likely public detriments in the context of an authorisation application prior to engaging in conduct, it is not open to parties to rely on this 'net public benefits' test as a defence to enforcement.
Another key difference lies in the penalties for non-compliance. Australia has recently increased the maximum penalties for restrictive trade practices as a means of greater deterrence. The penalties for corporations can reach up to AUD 50 million or three times the value of the benefit gained, and individuals can be sentenced up to 10 years in jail and fines of up to AUD 420,000 per criminal cartel offence and AUD 2.5million per civil contravention. In 2022, the first prison sentences for infringement of the criminal cartel provisions were imposed on individuals in CDPP v Vina Money Transfer. In contrast, Singapore's provisions do not have the same stringency as Australia: financial penalties are at most 10% of turnover per year of the infringement up to a maximum of three years and the Singapore framework does not provide for imprisonment.
Europe and UK
The UK and the EU share similar principles in their legislative approach to horizontal competition, guided by the principles of a level playing field for businesses and, like Australia and Singapore, preventing anti-competitive behaviour. Both jurisdictions have robust legislative frameworks in place - the UK Competition Act and the Treaty on the Functioning of the European Union (TFEU) in the EU.
The key tenets of these frameworks include prohibitions against anti-competitive agreements and practices, abuse of dominant market position, and the careful scrutiny of mergers and acquisitions for their potential impact on competition. Both jurisdictions also have well-established authorities overseeing these matters, namely the CMA in the UK and the European Commission in the EU.
EU competition law applies where an agreement or conduct has an 'effect on trade between Member States'; agreements and conduct with only national effects fall within the scope of the national competition law of the individual Member States. Prior to Brexit, the UK was a part of the EU competition law framework and applied EU competition law as well as UK law. Since Brexit, the UK has developed its own framework and has, for the most part, separated itself from EU competition law. However, it is important to note that UK businesses whose agreements and conduct have an effect on trade between Member States may still fall within the scope of EU competition law. Enforcement in such cases will be by the European Commission or the national competition authorities of the EU Member States. The CMA can nevertheless respond to cooperation requests from other national competition authorities.
Moreover, the EU and UK have- both enacted "block exemptions", which exempt from the respective prohibitions categories of agreement that may restrict competition, but which may also lead to efficiency gains. These are the EU HBERs and the UK HBEOs.
Both the EU and the UK impose financial penalties on undertakings that infringe the competition rules. Both the CMA and the European Commission may impose fines of up to 10% of the total worldwide turnover of each of the undertakings or associations of undertakings participating in the infringement. In the UK, dishonest participation in a cartel offence is also a criminal offence, subject to criminal penalties including fines and imprisonment for individuals. In the UK, individuals responsible for competition infringements may also be subject to disqualification as directors of companies. Both regimes provide for cartel leniency and immunity, with sophisticated frameworks for whistleblowing in place.
Generally, the EU and UK share a similar foundation in their approach to horizontal competition - pre-Brexit case-law of the European courts is still an important influence on UK competition law. The post-Brexit environment has resulted in some differences, the most obvious being the UK gaining more autonomy in the application of its competition law.
3. Final thoughts
The overarching principle across each framework is that each jurisdiction is committed to maintaining fair competition and discouraging anti-competitive behaviour. Each jurisdiction's competition legislation strictly prohibits anti-competitive agreements, abuse of a dominant market position, and closely scrutinises mergers and acquisitions.
However, the nuances in their approach are reflective of the distinct economic and legal contexts of these regions. In the EU, the enforcement of competition law in the framework of an EU single market by a coordinated network of the European Commission and the national competition authorities, has led to a particular focus on market integration. The UK, post-Brexit, and the Asia Pacific jurisdictions do not have a comparable principle, giving their national authorities more scope to focus on specifically national issues.
While the EU and the UK have a system of block exemptions allowing certain categories of agreements that restrict competition but generate efficiency gains, Singapore and Australia generally prefer a case-by-case assessment of such agreements (although the Singapore Guidance interestingly deals with similar issues to the UK draft Guidance and the EU Horizontal Guidelines). All jurisdictions recognise the need to incentivise disclosure, especially for cartel conduct, and to provide scope for leniency and immunity.
While there are shared principles of maintaining fair competition across these jurisdictions, the approach to horizontal competition in the Asia Pacific region (with Singapore and Australia as examples) and in Europe (with the EU and the UK as examples) differ in terms of the detailed application and enforcement of competition law, reflecting the unique legal, economic, and historical contexts of these regions.
Key differences between horizontal regulation in the EU, UK, Singapore and Australia
| EU | UK | Singapore | Australia | |
| Legislation on horizontals | Article 101(1) and 101(3) of the TFEU Revised Research and Development Block Exemption Regulation and Specialisation Block Exemption Regulation. |
Chapter I of the Competition Act 1998 (UK
Competition Act). The Enterprise Act 2022 Research and Development Block Exemption Order and Specialisation Block Exemption Order. |
Competition Act 2004 (2020 Rev. Ed.) (Singapore Competition Act). | Part IV of the Consumer and Competition Act 2010 (CCA) |
| Additional guidelines on horizontals | In July 2023, the European Commission published its revised Guidelines on the applicability of Article 101 to horizontal cooperation agreements (Horizontal Guidelines). | The CMA is consulting on draft guidance on the application of the Chapter I prohibition in early 2023 (UK Draft Guidance), setting out the application of the HBEOs and guidelines for parties to horizontal agreements to determine whether they fall within the scope of these block exemptions. | The CCCS has published several guidelines on horizontal competition. The 'Guidance note on Business Collaborations', published in December 2021, clarifies CCCS' position on common types of business collaboration and how they will be assessed against section 34 of the Singapore Competition Act. | The ACCC has published several non-binding guidelines on restrictive trade practices relating to mergers, exclusive dealing notifications, and misuse of market power. |
| Regulation of horizontals | Any agreements which are prohibited pursuant to
Article 101(1) of the TFEU are automatically void, unless exempt
under Article 101(3) TFEU. The Commission can investigate breaches
of Article 101(1) TFEU and enforce EU competition law. An agreement can be exempt from this prohibition if it creates sufficient benefits to outweigh its anti-competitive effects. The block exemption criteria are set in the HBERs, along with lists of 'hardcore restrictions'. Where an agreement contains one or more hardcore restriction, the entire agreement is excluded from the relevant block exemption. |
The UK Competition Act prohibits agreements
undertakings that restrict competition in the UK (unless exempt
under section 9(1) of the UK Competition Act or otherwise
excluded); this is known as the 'Chapter I
prohibition'. An agreement can be exempt from the Chapter I prohibition if it creates sufficient benefits to outweigh any anti-competitive effects. A 'block exemption' exempts whole categories of agreements on the basis that agreements within the category would be likely to be treated as exempt if they were assessed individually. If an agreement meets the conditions set out in a block exemption, it is automatically exempt. |
Agreements between two or more undertakings that
are actual or potential competitors are likely to be assessed for
potentially infringing the section 34 prohibition unless excluded
or exempt. Agreements which restrict competition 'by object' almost always infringe the section 34 prohibition but may nevertheless be excluded under the Net Economic Benefit (NEB) exclusion. To qualify for the NEB exclusion: (i) the agreement must create benefits that outweigh its anti-competitive effects; (ii) those benefits cannot be achieved without the agreement; and (iii) competition is not eliminated in a substantial part of the relevant market. There is also an express, narrow exclusion for activity or agreements entered into or carried on by or on behalf of the Government or a statutory body. |
Cartels Cartel conduct is a per se prohibition and is not subject to a substantial lessening of competition test. Cartel provisions apply where competitors or potential competitors make or give effect to a contract, arrangement or understanding that includes a provision which seeks to allocate customers between those parties. Anti-competitive conduct Section 45 of the CCA prohibits making or giving effect to a contract, arrangement or understanding if it has the purpose, or is likely to have the effect of, substantially lessening of competition. Unlike the cartel provisions, there is no requirement that parties be competitors. As a result, section 45 will capture both horizontal and vertical agreements that substantially lessen competition. |
| Recent developments | The new HBERs were adopted on 1 June 2023 and will
enter into force on 1 July 2023. The revised Horizontal Guidelines were adopted on 1 June 2023 and will enter into force once published in the Official Journal of the EU. |
The Chapter I prohibition may be amended by the
recently published Digital Markets, Competition and Consumer Bill
(the "Bill"). Section 116 of the Bill amends the prohibition so that it can apply to agreements, concerted practices and decisions which are implemented outside the UK, depending on the effects of the conduct within the UK. |
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| Focus of horizontal guidance |
The revised Horizontal Guidelines deal with:
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The Draft Guidance deals with:
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The CCCS Guidance note on Business Collaborations deals with:
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Originally published 19 July 2023
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
