The Competition and Consumer Commission of Singapore (CCCS) has concluded that the proposed acquisition by BreadTalk Group through its subsidiary Topwin Investment Holding of Food Junction Management, will not infringe competition in Singapore. After consulting stakeholders and evaluating relevant information, the competition watchdog said in a statement that the transaction will not lead to a substantial lessening of competition within the relevant markets in Singapore.
This comes a month after the CCCS called for public feedback on BreadTalk's proposed buy of Food Junction. The competition watchdog evaluated public’s feedback on whether switching to competitors of Food Junction and/or Food Republic is “easy” if the prices of the merged entity were to increase by 10% post-merger. In addition, CCCS also assessed the impact of the acquisition on prices and service quality for the sale of food and beverage in food court premises prior to decision making.
According to its assessment, both BreadTalk and Food Junction will continue to compete with other stalls operated by third-party food vendors within their own premises as well as within other food court premises in the catchment areas after the proposed transaction. Meanwhile, besides the presence of several competing third-party food vendors, the CCCS said that shopping mall operators place emphasis on food court operators’ ability to differentiate its food court concepts, food mix and price points, particularly if there is more than one food court premises in the mall.
"The shopping mall operators also retain sufficient control over the prices, quality and choices of food available to individual consumers in their food court premises as they seek to attract more customer footfall to their malls. These concerns are therefore unlikely to materialise," the statement read.
In addition, the combined market share of the BreadTalk-Food Junction post-merger remains below 20% which is considerably lower than the larger food court operators such as NTUC Kopitiam and Koufu. The Singapore competition watchdog also noted that food vendors operating in food court premises would have some bargaining power given that they are likely, and are able, to switch to food court premises operated by competing food court operators in other locations across Singapore, if these locations offer them better business prospects.
The commission also added that collusion between food court operators is unlikely due to the number of competing operators operating food courts with different cost structures. According to the CCCS, the low degree of transparency on the rental fees charged by landlords makes it difficult for food court operators to monitor one another’s costs, and the low barriers to entry and expansion.