Competition watchdog seeks public feedback on Sembcorp, Veolia deal

THE Competition and Consumer Commission of Singapore (CCCS) is inviting public feedback on SembWaste's proposed acquisition of Veolia ES Singapore (VESS), it said in a media statement on Wednesday. 

SembWaste is the wholly-owned waste management arm of mainboard-listed Sembcorp Industries; while VESS is part of the Veolia group, which designs and provides water, waste and energy management solutions. 

Earlier this month, Sembcorp announced that SembWaste had entered into an agreement to purchase the entire stake in VESS and the public cleaning business of Veolia ES Singapore Industrial for about S$28 million. 

CCCS said it received an application from SembWaste on Jan 8 on the proposed transaction, and is now assessing whether the deal would infringe on the Competition Act, which prohibits mergers that may be expected to result in a substantial lessening of competition within any market in Singapore.

In its application, SembWaste said the proposed acquisition is unlikely to result in the merged entity having market power, even though the two companies overlap in the provision of public and general waste collection services in Singapore.

This is because the merged entity will remain constrained by strong competition from existing competitors and potential entrants, SembWaste said.

It added that the combined market share of both parties does not exceed CCCS's indicative thresholds, and there remains a large number of competitors in the fragmented markets along with low barriers to entry and the threat of new entrants.

SembWaste also cited "strong buyer power" in the markets. For public waste collection, the National Environment Agency will likely be able to exercise "significant countervailing buyer power" as the sole purchaser, SembWaste said. Meanwhile, for general waste collection, there is a large pool of suppliers in the market and buyers can call for tenders or requests for quotations from licence holders.

SembWaste noted that the proposed deal is also unlikely to lead to collusion, given the fragmented nature of the markets, a lack of transparency for negotiated prices and the threat of disruption by new entrants.

The public consultation ends on Jan 29.

As at 1.18pm on Wednesday, shares in Sembcorp Industries were trading at S$2.29, down two Singapore cents, or 0.9 per cent.