Understanding the Legal Advantages of a Singapore Incorporation

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There are many reasons to consider a Singapore Incorporation. One of the most important reasons is the laws against unfair competition. This keeps one business from “taking over” and forming a monopoly that could eliminate a fair business market. The Competition Act is very good for anyone that is considering incorporation in Singapore. Here are the basic parts that make it work so well.

Abuse of a Dominant Position
The Competition Act prohibits a company from abusing their position in Singapore or anywhere else in the world. This means that it may affect foreign companies that are abusing their position over a Singapore business.

Any action that a company takes to eliminate competition by abusing power is illegal. This includes “predatory behavior” towards the competition.

Price Fixing
The act also prevents companies from entering into unfair and illegal agreements that may eliminate any competition. Two companies (that are incorporated in Singapore) cannot decide to share the market. For example, two or more corporations may decide that they will get together and sell their products for a price that is too low for smaller companies to compete. They agree not to raise the prices until the smaller companies are out of business. Any kind of actions like this are deemed to be a conspiracy, and are illegal.

Mergers and Acquisitions
The act prevents one or two corporations from obtaining a monopoly on a given market. For example, one company can become large and begin “buying out” all of the competition. They offer the smaller companies a substantial profit to turn control of their company over to the larger one.

Eventually the larger company owns all of the business associated with that particular product or service. When this happens, the company can charge any amount that they wish for their product or service. The public only has two choices. They can buy the product at the high price or not buy the product. If the product is something that is essential, then the people may be at the mercy of the company.

Why the Law Was Enacted
In the year 2003 there were local laws against competition. However, there were no national laws, except those that covered communications and energy. The Economic Review Committee recommended that a law be passed to help equalize the playing field for small and large business, alike.

This helps to stimulate the formation of new business as there will be more people seeking incorporation in Singapore. This will be good for the economy. It helps consumers as well as business, and keeps prices reasonable for everyone.

Summary
Singapore incorporation is even more attractive today, than just a few years ago. The Competition Act creates a level playing field for small and large businesses. It prevents one business from getting as strangle hold on a specific market. It also prevents companies from conspiring to fix prices and run smaller concerns out of business. Under the Competition Act, one company cannot simply “buy out” all of its competition and take over a market.