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Singapore competition panel fines 4 hotels S$1.5m for exchanging commercially sensitive information

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The competition watchdog issued an infringement decision against the owners and operators of Capri by Fraser Changi City Singapore, Village Hotel Changi and Village Hotel Katong (the Village Hotels), and Crowne Plaza Changi Airport Hotel.

FOUR hotels have been fined S$1.5 million in total for exchanging commercially sensitive information related to corporate customers, the Competition and Consumer Commission of Singapore (CCCS) announced on Wednesday.

The competition watchdog issued an infringement decision against the owners and operators of Capri by Fraser Changi City Singapore, Village Hotel Changi and Village Hotel Katong (the Village Hotels), and Crowne Plaza Changi Airport Hotel. Capri's owners and operator were fined a total of S$1.01 million, while the Village Hotels received a penalty of S$286,610, and Crowne Plaza was fined S$225,293.

The sales representatives of Capri and Village Hotels exchanged commercially sensitive information from at least July 3, 2014 to June 30, 2015, and representatives of Capri and Crowne Plaza did the same from at least Jan 14, 2014 to June 30, 2015. The information was related to preferential rates offered to corporate customers through contracts that would secure the rates for a fixed term. 

WhatsApp chat logs shared by the CCCS at a media briefing showed that hotel staff shared the percentages of price reduction which customers requested and how the hotels responded during confidential price negotiations, and discussed maintaining their rates when another competitor hotel started pricing rooms more aggressively. The information was likely to have influenced the hotels' subsequent conduct in the market or placed them in a position of advantage over their corporate customers in contract negotiations, the panel said.

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The CCCS noted: "(The activities) were, by their very nature, injurious to the proper functioning of normal competition and had caused serious harm to competition in Singapore. Without them, each sales representative would have had to determine their conduct on the market independently. This is likely to have resulted in more competitive rates and/or terms offered to corporate customers."

The panel has not taken any legal action against the sales representatives involved, as the directions for the activities had come from the hotels.

This is the first such case in the hotel industry involving infringement of Section 34 of the Competition Act, the CCCS said. In 2012, ferry operators between Singapore and Batam were investigated and fined for exchanging confidential corporate customer-related information as well.

After the investigation started on June 30, 2015, the CCCS received leniency applications from OUE Airport Hotel, the owner of Crowne Plaza, and later from the owners and operator of the Village Hotels. Under CCCS's leniency programme, businesses that come forward with information on their cartel activities will receive more lenient treatment.

As the first applicant after the investigation had commenced, OUE could get its financial penalties reduced by up to 100 per cent, and the Village Hotels parties could receive penalty reductions of up to 50 per cent as a subsequent applicant. Capri's owners and operator did not apply for leniency.

Of the hotels involved, only one had its fines hit the statutory maximum of up to 10 per cent of the hotel's business turnover for each year of infringement, up to a maximum of three years. The panel declined to name the hotel.

"It's important to signal that certain types of practices and information sharing is not acceptable," said Toh Han Li, CCCS's chief executive. "It's cross-cutting and affects any industry, and is not limited to just hotels."

Ng Ee Kia, CCCS's assistant chief executive for policy, business and economics, added: "It's common practice among sales people to chitchat, and while we may think that having this chitchat is harmless, it can be an issue. From the company's perspective, in terms of compliance training, they need to be more aware that they need to educate their salespeople appropriately."