Lift firms under probe over restrictive spare part practices

SINGAPORE — Amid the public spotlight on lift safety and maintenance standards, it was announced yesterday that a probe is underway into companies withholding lift spare parts from maintenance firms, hobbling their ability to win new contracts or do a proper job for existing clients.

Five companies are being investigated for such “restrictive” practices, said the Competition Commission of Singapore (CCS), which started looking into the matter because of a complaint against lift contractor E M Services — a major managing agent serving nine out of 16 town councils here.

The complaint was lodged with the competition watchdog on June 12, 2014, that E M Services did not want to supply spare parts for BLT brand lifts to a third-party maintenance company. It is not known how long the problem had been going on before that but the CCS said E M Services promised on May 12 this year to open up BLT lift spare parts to third-party players.

The CCS said it uncovered evidence to suggest five other lift companies were allegedly involved in similar conduct while it was investigating E M Services. Citing its pending cases, the CCS said it was unable to name the firms. “The investigation duration depends on a number of factors, including the complexity of each case and the extent to which the companies concerned cooperate with CCS,” it added.

Within each housing estate, there are typically lifts from multiple brands installed. Town councils can appoint the original lift installers of each brand for maintenance or opt for the cheaper option of getting third-party lift maintenance contracts to do so across the lift brands.

The availability of genuine spare parts may affect lift safety and operation, and if a lift company or distributor refuses to supply these “essential” parts, it may “prevent other lift maintenance contractors from effectively competing for contracts to maintain and service lifts of that particular brand in Singapore”, said the CCS.

There are currently more than 20,000 lifts installed in HDB estates and the majority of them are maintained by the original equipment manufacturers (OEMs). 

“The inability of third-party lift maintenance contractors to source for original parts — for example, lift motherboards — poses significant operational issues for them,” said CCS’ chief executive Toh Han Li. “CCS understands that other lift maintenance companies including the OEMs may also be involved in such potentially anti-competitive practices.”

In response to TODAY’s queries, E M Services said “it was not our intention not to sell to a qualified third party”. In the case in question, it was in the midst of evaluating the standing of the third-party contractor who asked to buy the BLT spare parts when the CCS came knocking. The firm said it has supplied and installed about 2,000 lifts in various HDB estates, of which about 100 are maintained by third-party maintenance companies.

“As we hardly received any query from third-party (contractors) to buy our parts, our staff took time to ascertain whether the request was genuine, the party was qualified and trained to maintain our lifts, etc. We needed to be sure that accountability was clear and safety standards were met before we would sell the parts,” said E M Services.

CCS’ investigation comes amid public concerns about lift safety and maintenance, following several accidents involving lifts, including one in May that left a mobility scooter user dead when he fell after backing out of a lift that had stopped above ground level. Earlier this month, details of more stringent lift maintenance requirements were announced, which will kick in on July 25.

Some town council chairmen TODAY interviewed expressed concern about the repercussions of the allegedly anti-competitive practices on maintenance and operations.

Marine Parade Town Council chairman Lim Biow Chuan said it is “quite difficult” to find third-party contractors to service the lifts as they are unable to get spare parts from the OEM due to proprietary information. The maintenance of some of the older lifts in the estate could be outsourced to third-party players only because the spare parts are no longer proprietary. “Without competition, there is a limit as to how we can negotiate with the lift companies to keep the maintenance costs lower,” he said. 

Jurong-Clementi Town Council chairman Ang Wei Neng said it could cause delays in lift repair, or worse, compromise safety, if the cause of the breakdown was defective brakes that contractors cannot get replacements for.

Chua Chu Kang Town Council chairman Zaqy Mohamad said it was “unfair” for lift companies to keep spare parts from third-party providers. “This locks in business owners and doesn’t provide fair competition, and (it doesn’t) give building owners much choice to choose from when it comes to lift maintenance.”