CCCS Clears Singapore Clearing House Association's Bye-Laws Governing Use Of FAST

• Law Firm: Rajah & Tann
• Subject Matter: Finance and Banking, Antitrust/Competition Law, Financial Services
• Author: Ms Kala Anandarajah, Tanya Tang, Alvin Tan and Joshua Seet
• Published date: 05 January 2023

Introduction

On 8 December 2022, the Competition and Consumer Commission of Singapore ("CCCS") issued a decision pursuant to an application by the Singapore Clearing House Association ("SCHA"), holding that a proposed Rule 27.23 of SCHA's Bye-Laws and its accompanying guidelines (collectively, the "Proposed Rule") concerning the admission and use of Fast and Secure Transactions ("FAST") by nonfinancial institutions will not infringe section 34 of Singapore's Competition Act 2004 ("Competition Act"). In particular, CCCS examined the scope of exclusion under Paragraph 7 of the Third Schedule of the Competition Act ("Paragraph 7 Exclusion") and concluded that the Proposed Rule falls within the scope of Paragraph 7 Exclusion and therefore, will not infringe section 34 of the Competition Act.

This decision provides guidance on CCCS' approach to the Paragraph 7 Exclusion. We briefly discuss this decision and its significance in this Update.

Key Facts of the Application

SCHA is in charge of establishing, managing and administering clearing services and facilities for cheques and debit and credit items of its members, as well as electronic funds transfer by its members. It also develops the bye-laws, regulations and conditions in connection with these services and facilities. SCHA established the Singapore Automated Clearing House ("ACH") which administers FAST, an electronic funds transfer system that facilitates the almost instantaneous transfer of Singapore Dollar funds between participating banks in Singapore.

The Proposed Rule governs the admission and use of FAST by non-financial institutions ("NFIs") by restricting FAST Users from allowing their e-wallet users to cash out funds in their e-wallets through FAST, when the funds are sourced from unsecured credit card facilities issued in Singapore ("Restricted Funds").

The subject of the Application was whether the Proposed Rule will infringe section 34 of the Competition Act. Section 34 prohibits decisions by associations of undertakings which have as their object or effect the restriction of competition within Singapore ("Section 34 Prohibition"). However, there are exclusions to the Section 34 Prohibition, which are set out under the Third Schedule of the Competition Act.

The Section 34 Prohibition is subject to exclusions set out under the Third Schedule of the Competition Act. The Paragraph 7 Exclusion provides that the section 34 prohibition does not apply to any agreement or conduct that relates to:

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