CCCS green lights NTUC Enterprise's proposed acquisition of Kopitiam Investment
NTUC Enterprise’s proposed acquisition of homegrown food court operator Kopitiam Investment and its subsidiaries has been cleared by Singapore’s competition watchdog.
In a media release on Thursday (20 December), the Competition and Consumer Commission of Singapore said that the proposed transaction would “not lead to a substantial lessening of competition within the relevant markets in Singapore”.
The deal will see Kopitiam’s 56 food courts, 21 coffeeshops, three hawker centres and two central kitchens come under NTUC’s portfolio by January next year. The value of the deal has not been publicly disclosed.
“Customers, employees, stall tenants and other stakeholders can be assured that business will continue as usual,” said NTUC Enterprise and Kopitiam Investment in a joint statement on 21 September regarding their proposed merger.
Few stakeholders raised concerns
As part of its assessment of the proposal, the CCCS conducted a public consultation from 1 October to 17 October. The commission also contacted key stakeholders – including landlords, competitors, customers and representatives from hawker associations – and engaged various government agencies to gather relevant information necessary for the assessment.
The CCCS said that the “majority” of stakeholders indicated that they had no concerns with the acquisition.
A few, however, raised concerns that Foodfare, which comes under NTUC Enterprise, would enjoy “stronger bargaining power over the landlords”, resulting in the possibility of food vendors and consumers facing higher rental fees and food prices.
Among points raised in its assessment of the acquisition, the CCCS noted that the merged entity would operate only four out of a total of 114 hawker centres in Singapore. The commission also noted the regulatory oversight that would be provided by the National Environment Agency.
In light of these facts, the CCCS concluded that there is “little prospect of a substantial lessening of competition occurring in the market for the rental of stalls in hawker centres”.
Possibility of collusion ‘unlikely’
The CCCS also found that there will be at least five other established competing operators remaining within a 500m to 1km radius from NTUC Enterprise and Kopitiam’s premises following the merger.
It was also noted that the two companies involved are not each other’s closest competitors. There will be “many other strong competing operators such as Koufu, Food Junction, Food Republic, Kimly and Broadway, amongst others, post-transaction”, said the CCCS.
“The CCCS also considered that collusion between operators of food courts and coffeeshops is unlikely due to the large number of competing operators, the low degree of transparency on the rental/ancillary fees charged by master lessors which makes it difficult for operators to monitor one another, and the low barriers to entry/expansion,” it added.
When contacted, NTUC Enterprise said that the acquisition will strengthen the two companies’ “ability to provide affordable cooked food, thereby furthering (their) social mission of moderating the cost of living”.
For instance, it is working towards extending existing initiatives, targeted at lower-income consumers, to other outlets.
NTUC Enterprise also added that it is looking at selling coffee and tea at reduced prices, with details to be announced in the first quarter of next year.
Separately, a Kopitiam Investment spokesperson said, “Kopitiam and NTUC Foodfare will work together to align best practices and leverage our combined strengths to make affordable and quality meals more widely accessible to all in Singapore.”
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