Singapore: The Benefits And Harms Of e-Commerce On Competition Law

Last Updated: 12 April 2017
Article by Gerald Singham and Mark Tan


Electronic commerce has gained significant popularity globally in recent years. As the internet became more familiar, and traditional biased attitude towards bricks-and-mortar retail shops fade, more businesses begin to embrace e-commerce and more consumers shop online. Competition law is also becoming increasingly widespread in the ASEAN region, with all ASEAN member countries enacting forms of competition legislation and each having a competition law regulator to ensure the enforcement of such law.

Antitrust regulators in more mature jurisdictions such as Europe, the United States and Japan have realised the importance and a few have taken further by commencing investigations, or conducting market research and/or economic studies involving this sector.

This article highlights the main competitive benefits brought about by e-commerce and related competition law risks.

Competitive benefits

  1. Lower prices: E-commerce generally increases competition within the market and has proven to lower prices. The lowering of search costs, in combination with cost savings through improvements in the supply chain, has significant pro-competitive effects. There is also direct evidence that the adoption of e-commerce has resulted in lower average prices in relation to certain products such as air tickets, books, cars, CDs and life insurance.
  2. More efficient distribution: E-commerce can streamline supply chains and significantly reduce distribution costs. For example, manufacturers and end customers may connect more easily and transact directly, obviating the need for the middleman. The resulting benefits would include: (i) improved efficiency in the supply and distribution of different types of goods; (ii) increase in variety of goods supplied; (iii) development of omni-channel business mode; and (iv) a change of the role of intermediaries, e.g. by eliminating the need for certain types of intermediaries or by enabling the emergence of new types of intermediaries.
  3. Stronger competition: E-commerce may also increase market competitiveness by potentially lowering barriers to entry. For example, establishing an online presence would be cheaper than investing in a physical brick-and-mortar retail store. In addition, with market network platforms such as Amazon and Qoo10 offering smaller retailers a low-cost route to reach to the market, it might seem that entry barriers have become much lower.
  4. Better choices: E-commerce can reduce search costs, and with buyers being better informed, sellers may need to compete harder to win and retain business. New products and services may be introduced faster, and the variety of products offered may increase. Online retailers are much less constrained than their brick-and-mortar counterparts by rack or shelf space and can typically stock a wider range of products. Reduced search costs makes it easier for consumers to locate what they want, supporting a shift of demand towards niche products.
  5. More information: E-commerce makes it easier for firms to collect detailed data about consumer purchasing behaviour and potentially use the data to the mutual benefit of the firm and the consumer, for example by personalising the shopping experience for each customer.
  6. Wider geographic market: E-commerce businesses can increase the size of their geographic markets just as long as there is access to a wide logistics network. Online shoppers nowadays have access to a far greater range of suppliers, including suppliers from other countries. This is because the cost for consumers to visit a website is independent of its geographic location. Other factors such as cheaper and faster shipping further reduce barriers associated with buying from retailers located further away. For digital goods and services that can be delivered electronically the geographic market will be limited by bandwidth rather than by distance.

Anti-competitive harms

On the flipside, there have been certain anti-competitive behaviour which have arisen (e.g. due to network effects or price transparency) or which are facilitated or intensified due to e-commerce.

  1. Price obfuscation: Some online retailers, by virtue of their business, are adversely affected by price comparison due to e-commerce, these retailers may attempt to engage in price obfuscation tactics that make it more difficult for consumers to search and compare prices online. For example, add-on pricing schemes where a retailer will advertise prices of low-quality products on a price comparison website but do not make the price of higher-quality upgrades easily observable. Customers will only be aware of the additional prices when they are at the retailer's website. In this way, the margin earned on high-quality versions might be competed away by lowering the price of the low-quality product to attract consumers. Retailers would have an incentive to maximise the proportion of customers who choose to upgrade, e.g. by taking a low-cost, high-value feature out of the low quality version and make it available in the high quality version.
  2. Better conditions for collusion: Greater price transparency may also facilitate collusion among firms as monitoring of competitors' behaviour becomes easier. The risk of co-ordinated outcomes may also increase with the growing use of intelligent software systems that use pricing algorithms in combination with market data to set prices. Such systems are more effective as they are better at detecting and punishing deviant behaviour and are less tempted than their human counterparts by short-run gains to deviate from the collusive outcome.
  3. Network effects: If retailers find it difficult to switch between one selling platform to another (due to losing of their reputation) and when platform users cannot or do not multi-home (i.e. use multiple platforms in parallel), such platforms are competitive bottlenecks, potentially capable of exercising market power and leveraging it into adjacent markets. Network effects coupled with vertical restraints, can cause foreclosure in the relevant markets.
  4. Vertical restraints are restrictions imposed by parties on different levels of the distribution chain, for example, the restrictions placed by a manufacturer and a wholesaler. Vertical restraints are often applied to protect non-price dimensions of competition (e.g. in the form of exclusive or selective distribution arrangements to prevent free riding on a distributor's provision of customer service) and may be seen as pro-competitive.

Examples of vertical restrictions in e-commerce:

  1. Price recommendations: Over two in five retailers face some form of price recommendation or price restriction from manufacturers;
  2. Restriction on selling online: Almost one in five retailers are contractually restricted from selling on online marketplaces;
  3. Most Favoured Nation clauses: Almost one in ten retailers are contractually restricted from submitting offers to price comparison web sites;
  4. Cross border market sharing clauses: Over one in ten retailers report that their suppliers impose contractual restrictions on cross-border sales.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
24 Oct 2017, Seminar, Washington, DC, United States

The Dentons Forum for Women Executives invites you to join us for a luncheon featuring guest speaker Liza Mundy, journalist and author. Ms. Mundy recently released her latest book, Code Girls, the riveting untold story of more than 10,000 spirited young American women who cracked German and Japanese codes to help win World War II.

27 Oct 2017, Seminar, New York, United States

Please join us for a milestone event, our 10th annual CLE Seminar for In-House Counsel.

1 Nov 2017, Seminar, Washington, DC, United States

Celebrate the 58th anniversary of Dentons' Government Contracts practice

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.