The Competition Commission of Singapore (CCS) after receiving a complaint alleging that several companies were refusing to supply lift spare parts to third-party contractors for the maintenance of lifts, has launched an investigation into “restrictive industry practices” in the supply of lift parts in HDB estates.
CCS in a statement said that typically multiple brands of lifts installed in each HDB estate and that town councils can choose to either appoint the original lift installers of the respective brands or third-party lift maintenance contractors to provide lift maintenance services for all the lift brands of lifts within the estate.
Lift contractors that wish to tender for lift maintenance projects, however, would require brand-specific lift spare parts. And if the third-party lift maintenance contractors cannot obtain the lift spare parts for each lift brand, town councils would be reluctant to choose such contractors, CCS said.
CCS noted that third-party lift maintenance contractors may be able to provide lift maintenance services at lower cost and better service quality.
Mr. Toh Han Li, Chief Executive of CCS said, “that the majority of the over 20,000 lifts installed in HDB estates across Singapore are currently being maintained by the Original Equipment Manufacturers (“OEMs”).”
“The inability of third-party lift maintenance contractors to source for original parts, for example lift motherboards, poses significant operational issues for them,” he added.
Mr Toh noted that OEMs as well as other lift maintenance companies may also be involved in such potentially anti-competitive practices.
CCS said that refusal by a dominant or sole supplier to supply certain essential products or services, that cannot otherwise be obtained, can be illegal and in breach of the Competition Act.
In its statement the watchdog did not name any sole supplier except EM Services (EMS). EMS are the sole agent for the sale and installation of Chinese brand lifts, Shenyang Brilliant Elevators. EMS currently maintains BLT and KM Lifts.
EMS also maintains nine out of the 16 town councils in Singapore and controls 60 percent of the market share of the town council management business. EMS were also awarded the 7th, 10th and 19th term contract for the HDB Lift Upgrading Projects (LUP) comprising of 2,200 lifts.
CCS in its comment about EM Services said:
“Following a complaint received, CCS commenced investigations into the allegation that several companies were refusing to supply lift spare parts for maintenance of lifts in HDB estates. On 12 May 2016, E M Services Pte. Ltd. (“E M Services”) came forward to CCS to provide commitments to supply BLT lift spare parts in Singapore to third-party lift maintenance contractors in Singapore. Following feedback from a public consultation, CCS considers the commitments fully address the competition concerns raised by CCS.”
In its commitment to CCS EMS said that it “will sell, the lift spare parts of the Shenyang Yuanda Intellectual Industry Group Co., Ltd.1 (“BLT”) brand to a purchaser, based on terms and conditions (e.g. on pricing, quantity, delivery time, and warranty period) reasonably similar to those provided by the relevant lift spare parts manufacturer to EM Services” (link: http://bit.ly/29zcXLh)
In its statement CCS further assured that it will “continue its other investigations to ensure access to essential lift spare parts for third-party lift maintenance contractors and to effectively compete for lift maintenance of these other brands of lifts.”
CCS’s media statement is here: http://bit.ly/29xPfmj.
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