Competition watchdog investigating restrictive practices in supply of HDB lift spare parts

CCS said it was acting on a complaint alleging that "several companies" were refusing to supply lift spare parts for the maintenance and servicing of lifts in HDB estates.
CCS said it was acting on a complaint alleging that "several companies" were refusing to supply lift spare parts for the maintenance and servicing of lifts in HDB estates.PHOTO: SHIN MIN

SINGAPORE - The Competition Commission of Singapore (CCS) is investigating restrictive industry practices in the supply of lift spare parts in HDB estates.

In a statement on Thursday (July 14), CCS said it was acting on a complaint alleging that "several companies" were refusing to supply lift spare parts for the maintenance and servicing of lifts in HDB estates.

Town councils are required to carry out regular lift maintenance for lifts installed in HDB estates.

They can choose to either appoint the original lift installers of the respective brands for the maintenance, or to call for a tender to invite companies, including third-party lift maintenance contractors, to provide maintenance services for the various brands of lifts within the estate.

CCS said it understands that there could potentially be cost savings in engaging a third-party lift contractor for multiple brands as compared to having to procure maintenance services from each original lift installer.

Lift contractors that wish to tender for lift maintenance projects would require brand-specific lift spare parts.

CCS noted that town councils select their lift maintenance contractors based on several factors besides price, such as the technical competency of the contractors, response time and the availability of genuine spare parts.

It added that if the third-party lift contractor cannot obtain the spare parts for each lift brand, town councils would be reluctant to choose them as compared to the original lift installer.

In general, a supplier has the freedom to decide with whom it wants to do business, CCS said.

"However, a 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," CCS said in its statement.

"Refusal to provide proprietary but essential lift spare parts to third-party lift maintenance companies by any lift company or distributor may prevent other lift maintenance contractors from effectively competing for contracts to maintain and service lifts of that particular brand in Singapore."

The competition watchdog said that on May 12, E M Services voluntarily came forward to commit to supplying BLT lift spare parts to third-party lift maintenance contractors in Singapore.

Following feedback from a public consultation, CCS said it considers the commitments fully address the competition concerns which were raised.

CCS chief executive Toh Han Li 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).

He added that the inability of third-party contractors to source for original parts, such as lift motherboards, poses significant operational issues for them.

Mr Toh said: "CCS understands that other lift maintenance companies including the OEMs may also be involved in such potentially anti-competitive practices.

"The commitment to supply BLT lift spare parts to third-party lift maintenance contractors was provided voluntarily by E M Services.

"This will provide more options for HDB lift maintenance, as town councils can choose to call for a single tender for lift maintenance across various lift brands, in lieu of contracting with multiple parties."

CCS said 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".

It advised companies that are unsure as to whether their business conduct fully complies with the Competition Act to seek independent legal advice or to apply for guidance or a decision from CCS.

All businesses are encouraged to proactively put in place competition compliance programmes to ensure their business conduct fully complies with the Competition Act, CCS said.