BreadTalk Group's proposed acquisition of Food Junction Management will not result in the lessening of competition in Singapore's foodcourt market, the Competition and Consumer Commission of Singapore (CCCS) has found.
The competition watchdog said in a statement yesterday that the proposed transaction, which would see BreadTalk's subsidiary, Topwin Investment Holding, acquire foodcourt operator Food Junction for $80 million will not infringe the Competition Act.
As of end-June, BreadTalk ran 14 foodcourts in Singapore and two in Malaysia under the Food Republic and Food Opera brands.
CCCS held a public consultation and contacted stakeholders such as food vendors and consumers as part of its assessment of the acquisition, and found most of them had no issues with the proposed deal.
The CCCS said the parties' market share post-merger would remain below 20 per cent, lower than larger foodcourt operators such as NTUC Kopitiam and Koufu.
"The merged entity may instead be able to better compete with the other larger foodcourt operators post-merger," it noted.
The two parties may not be each other's closest competitor as there is considerable competition with other foodcourt operators as well, the CCCS added.
The commission said collusion between foodcourt operators is unlikely. It cited the number of operators running foodcourts with different cost structures, the low degree of transparency on the rental fees charged by landlords which makes it difficult for operators to monitor one another's costs, and low barriers to entry and expansion.
CCCS also found that the two operators only directly sell hot meals at a limited number of stalls located within the foodcourt premises, and they will continue to compete with stalls run by third-party vendors after the proposed transaction.
Food quality and variety offered are also unlikely to be reduced post-transaction as shopping mall operators place emphasis on differentiation of foodcourt concepts.
Mall operators also "retain sufficient control over the prices, quality and choices of food" in the foodcourt premises as they seek higher customer footfall in their malls, the watchdog said.