Feedback sought on F&N's book venture

A customer looking at bottles of F&N's soft drinks at a supermarket in Singapore.
A customer looking at bottles of F&N's soft drinks at a supermarket in Singapore.PHOTO: BLOOMBERG

The Competition Commission of Singapore is seeking public feedback on Fraser & Neave's (F&N's) proposal to buy the Singapore and Malaysia distribution arms of global publisher Penguin Random House.

The public consultation will close on Feb 6.

F&N earlier said that its Time Publishing (TPL) unit intends to buy Penguin Random House and Penguin Random House for $8 million from British-incorporated Penguin Random House.

Under the deal, the two distribution units will enter into an exclusive agreement with Penguin Books, The Random House Group, Dorling Kindersley and Penguin Random House LLC for the Singapore and Malaysia markets.

CCS, in a statement yesterday, said TPL has applied for its decision on whether the deal will infringe the prohibition in the Competition Act against anti-competitive mergers.

In its notification to the CCS on Jan 18, TPL said the market for book distribution was "highly competitive" with a multitude of "independent distributors, online platforms and overseas wholesalers".

TPL also cited several reasons why it thinks the transaction is not anti-competitive.

In its notification to the CCS on Jan 18, TPL said the market for book distribution was highly competitive with a multitude of "independent distributors, online platforms and overseas wholesalers".

TPL noted that "publishers and retailers/dealers have strong bargaining power relative to distributors, as publishers hold publishing rights to the trade books, and for retailers and dealers, the sale of trade books typically constitutes only a part of the products sold.

"Accordingly, publishers and retailers/dealers are able to... impose downward pressure on pricing and terms."

It also cited a "credible threat" posed by online platforms that are "not bound by territorial limits".

"Apart from supplying books directly to end-customers, they can also supply to retailers and dealers located in Singapore and Malaysia as an alternative to physical distributors," TPL said.

F&N shares were flat at $2.14 yesterday.

Thai Beverage, which owns a 28.5 per cent stake in F&N, fell 0.5 cent to 85.5 cents.

A version of this article appeared in the print edition of The Straits Times on January 21, 2017, with the headline 'Feedback sought on F&N's book venture'. Print Edition | Subscribe