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Singapore competition panel gives nod to acquisition of Kopitiam by NTUC Enterprise

THE Competition and Consumer Commission of Singapore (CCCS) has given NTUC Enterprise the go-ahead to buy out homegrown food centre operator Kopitiam for an undisclosed sum. 

In a press statement on Thursday, CCCS said the proposed acquisition will not infringe the Competition Act, meaning it will not lead to a substantial lessening of competition within the relevant markets in Singapore.

According to NTUC Enterprise, the transaction is expected to be completed in January 2019. The deal involving Kopitiam Investment and its subsidiaries, which span 80 outlets comprising 56 food courts, 21 coffee shops, and three hawker centres, as well as two central kitchens, was previously announced on Sept 21.

NTUC Enterprise is the holding entity and single largest shareholder of NTUC Social Enterprises, which includes NTUC Foodfare. NTUC Foodfare in turn manages 14 food courts, 10 coffee shops, and nine hawker centres.

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Among other things, CCCS found that NTUC Enterprise and Kopitiam only directly sell hot meals in a very limited number of stalls located mainly within the hawker centres, coffee shops and food courts they operate. 

"In most of these premises, the parties compete with many stalls operated by third-party food vendors within their own premises. The merged entity will therefore face sufficient competition without even considering the competing stalls in other street stall premises within the catchment areas," the statutory board said. 

It added that the merged entity would only overlap in the operation of four out of 114 hawker centres in Singapore, and be regulated by the National Environment Agency (NEA) in relation to how they manage the hawker centres and the terms imposed on the food vendors. 

"Therefore, given the small number of hawker centres operated by the merged entity relative to the total number of hawker centres in Singapore and the regulatory oversight by NEA, there is little prospect of a substantial lessening of competition occurring in the market for the rental of stalls in hawker centres," CCCS said. 

With regard to the rental of stalls to food vendors (within catchment areas of 500m to 1km radius from the parties' premises), CCCS also found that the parties are not each other’s closest competitor, and there remain many other strong competing operators including Koufu, Food Junction, Food Republic, Kimly and Broadway among others, post transaction.

Separately, collusion among operators of food courts and coffee shops is unlikely due to the large number of competing operators, the low degree of transparency on the rental or ancillary fees charged by master lessors, and low barriers to entry or expansion, CCCS noted. 

Upon completion of the deal, NTUC Foodfare and Kopitiam will continue to operate separately with their respective management teams and employees will remain in place, NTUC Enterprise said. Business will also continue as usual, and Kopitiam Loyalty Card users may continue to use their Kopitiam Card at all Kopitiam outlets.

Said NTUC Enterprise's executive director Kee Teck Koon: "We welcome the decision taken by the CCCS on our proposed acquisition of Kopitiam. NTUC Enterprise will continue to work as a group to fulfill our social mission of providing quality essential services and products.

"In particular, with the combined footprint of NTUC Foodfare and Kopitiam, we will be in a better position to make quality cooked food affordable, and more widely accessible to all," added Mr Kee.