In March 2016, the Competition Commission of Singapore (CCS) found that IPP, together with nine other firms, had engaged in an “anti-competitive agreement to pressure their competitor, iFast Finance, the withdraw its offer of a 50% commission rebate on competing life insurance products”.
IPP appealed on various grounds, seeking a substantial reduction in the S$239,851 (£133,723, $176,716, €149,559) fine imposed by CCS.
However, after hearing the appeal and counter arguments from the CCS, the CAB dismissed IPP’s case and ordered the firm to pay the original penalty, plus interest and CCS’s legal costs.
Displeasure and outcry
CCS chief executive, Toh Han Li, said: “The disruptive entry of a new competitor with an innovative offering would inevitably cause displeasure and outcry among the existing market players. However, market players need to decide their own individual competitive response.
“In this case, colluding to collectively pressure a competitor into withdrawing its innovative offering prevents consumers from enjoying significant benefits such as greater choice, greater convenience, more competitive prices, and prevented the market from becoming more competitive.
“CCS will take the necessary enforcement measures to allow new entrants to fairly compete with the existing market players on a level playing field, such that the market becomes more efficient, innovative and responsive to consumer’s needs.”
Peer pressure
iFast launched its Fundsupermart Offer on 30 April 2013. It has been described by the CCS as “disrupting the financial advisory industry in the distribution of life insurance products in Singapore” by leveraging its established online platform.
This allowed iFast to save on distribution costs that could then be passed on to consumers through a significant commission rebate.
However, the company withdrew its offer from the market just three days later on 3 May 2013.
The CCS launched an investigation after media reports suggested that the offer had been withdrawn following industry backlash.
It found that a meeting of financial advisers, all belonging to the Association of Financial Advisers Singapore (AFA), took place on 2 May during which the offer was discussed.
One of the group, Financial Alliance, was appointed representative and tasked with contacting iFast and pressuring them into withdrawing the rebate, which it did.
Evidence showed that IPP and another firm, PIAS, were copied into communications from Financial Alliance to iFast and supported the action taken by Financial Alliance.
IPP and PIAS also contacted iFast directly, contributing to efforts to have the company remove the offer from the market.
Fines
The 10 firms were collectively fined S$909,302.
Although Financial Alliance was the nominated representative of the group and actively pressured iFast into withdrawing its product, the company was not hit with the biggest fine.
In levying the financial penalties, CCS said it took into account the nature of infringement, the circumstances under which the infringement was committed, the duration of the infringement and its effects, aggravating and mitigating factors, as well as representations made by the financial advice firms.
