Market competition and Chinese New Year

I wanted to write this only after the Chinese New Year season had passed. As far back as I can remember, during the run-up to the Chinese New Year, many businesses in Singapore would raise their prices. It would be common for barbers to charge a few dollars more while shops selling Chinese New Years goodies such as barbequed pork slices, would increase their prices every few days, peaking on the eve of Chinese New Year. This year, even food outlets started charging a premium during the Chinese New Year.

In the past, this practice came about because certain acts (such as getting a haircut) were advised to be carried out before the Lunar New Year. For others, it was seen as a way of collecting a bonus for businesses. The reasons given now are that costs are increased over the Chinese New Year period. Are there really competition concerns?

Under Singapore's Competition Act, agreements which prevent, restrict or distort competition in Singapore are prohibited. Therefore, the question is whether there is an agreement (written or otherwise) that fix these price increases. If such an agreement may be found (which may be difficult where the market involves thousands of small businesses), the question then is whether the price increases are fixed without justifiable reasons.

Costs may not increase over the Chinese New Year--for service-oriented businesses such as salons and spas--their rents and labor costs remain the same. Just because they have to pay their employees double-wage for working on two days of public holidays--during the first and second day of the Lunar New year--this does not justify a month-long price increase because they would otherwise have to close shop during the holidays and still provide the paid holiday to the workers. For businesses that use raw materials such as food, price fluctuations can (and probably are) be handled by hedging into long-term supply contracts.

Thankfully, some businesses have moved to take advantage of this--they have reduced their prices during the Chinese New Year period in order to gain more business. This illustrates the desired workings of competition to provide for economic efficiencies. Perhaps the day when the Chinese New Year is not synonymous with price increases will come.

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Bryan Tan

Called to the Singapore and English Bars, Bryan Tan has practised in two of Singapore’s largest law firms and an international law firm. Bryan led many industry firsts including the first mass e-mail defamation case in the world, Singapore’s first publicised telecoms competition dispute, a pan-Asian co-branded travel portal, the first privately-funded cable landing project in Singapore and the world's first registrar-level domain name dispute. His areas of practice include information technology, telecommunications, biotechnology and bioinformatics, Chinese intellectual property, entertainment law and corporate work. He is also an author of Halsbury's Laws of Malaysia: E-Commerce. He also co-wrote the Singapore chapter of 'Digital Evidence' with Prof. Daniel Seng and is writing Halsbury's Laws of Singapore: E-Commerce.