The four, among the biggest manufacturers of fa gao and which together corner half the market here, had agreed to jointly raise the selling price of the cakes.

In this way, they would cover their increased production costs and yet not lose business to each other.

The collusion landed them in hot water with the competition watchdog.

The Competition Commission of Singapore, on confirming this as an instance of price-fixing, warned the four against the practice. They could have been fined.

Fa gao is a steamed cupcake offered during prayers at Chinese festivals or at the tombs of ancestors.

The four confectioneries - Thomson Cake & Confectionery, Lian Hup Huat Food Manufacturer, Sin Hong Huat Food Stuffs Manufacturing and Hup Yew Confectionery - issued a statement on March 21 to say that they would increase the prices of their fa gao from April 1.

The 150g cake would go for 20 cents more, and the 300g cake, 30 cents more. The four were charging 80 to 90 cents for the 150g cake, and $1.60 to $1.80 for the 300g cake before the proposed increase.

The four companies received warnings from the commission on March31.

The boss of Thomson Cake & Confectionery, who declined to be named, said: 'We didn't know we could not do something like that.'

She said they wanted to raise prices as the cost of flour, oil and utilities had 'spiralled out of control'. But as each company might lose business if it increased its prices unilaterally, the group made a 'friendly' decision to do so together.

This is not the first time small- and medium-size enterprises have fallen foul of the commission, which was set up in 2005 to stop anti-competitive practices here.

In 2006, two coffee shop associations with 700 members were investigated for acting like a cartel to raise coffee prices. They were cleared of cartel action with the help of the Consumers Association of Singapore and the Federation of Merchants' Association.

Federation head Chua Ser Keng said many small companies are unaware that price-fixing is wrong.

The Competition Commission has been holding talks and meetings to educate businesses on competition laws.

It recently made the news when it dealt six pest control companies fines totalling $260,000 for bid-rigging.

The commission's chief, MrTeo Eng Cheong, said that in the case of the confectioners, it was a far 'better outcome' to have prevented an anti-competitive agreement with just a warning.

Three of the four suppliers have since independently raised their fa gao prices.

weichean@sph.com.sg