E-briefing: Competition Law and IP Rights in Singapore

Introduction

1. The use or grant of IP rights are at risk of contravening competition laws (a) where licencing agreements that may amount to anti-competitive agreements, and (b) where the grant of IP rights enable rights-holders to abuse their dominant market positions.

When Licence Agreements become Anti-Competitive

2. Agreements that have “the object or effect of preventing, restricting or distorting competition” (hereafter “anti-competitive agreements”) are prohibited under section 34 of the Singaporean Competition Act (Cap 50B, Rev Ed 2006) (“CA(SG)”).
3. Licencing agreements may be anti-competitive agreements if they

• fix purchase or selling prices, or any other trading conditions,
• limit or control production, markets, technical development or investment;
• share markets or sources of supply (see CA(SG) s 34(2)(a) to (c)).

4. The Competition and Consumer Commission of Singapore (“CCCS”) will generally not regard a licencing agreement as anti-competitive under CA(SG) s 34 if the market-share of the parties does not exceed 25% (if parties are competitors) or 35% (if parties are non-competitors).
5. Vertical licencing agreements^[1] are specifically exempted from being anti-competitive under CA(SG) s 35 read with paragraph 8 of the Third Schedule of the CA(SG).

Abuse of Dominant Position Created by the Grant of IP Rights

6. IP right-holders who enjoy a dominant position are prohibited from abusing that position under CA(SG) s 47. The CCCS will make its assessment of dominance based on the particular facts of each case.
7. Whether or not an IP right-holder is in a position of dominance will depend on whether there are substitutes for the subject matter of the IP right. Ownership of IP rights alone does not create a dominant position.
8. An example of conduct that amounts to an abuse of dominant position includes conduct that protects, enhances or perpetuates the dominant position of the IP right-holder in a manner unrelated to competitive merit.

Conclusion

9. In conclusion, IP right-holders are advised to be keenly aware of the scope of their relevant IP rights, and the extent to which their ability to licence them is circumscribed by the relevant competition law legislation applicable in Singapore.