High-profile mergers under scrutiny

The Competition Commission of Singapore wants public feedback on the acquisition of Malaysian coffee firm OldTown by Dutch tea and coffee giant Jacobs Douwe Egberts.
The Competition Commission of Singapore wants public feedback on the acquisition of Malaysian coffee firm OldTown by Dutch tea and coffee giant Jacobs Douwe Egberts.LIANHE ZAOBAO FILE PHOTO

Two high-profile mergers, including one involving ride-hailing giant Uber, are coming under the scrutiny of the competition watchdog.

Most public attention is on transport firm ComfortDelGro's proposed purchase of a stake in Lion City Holdings from Uber.

The Competition Commission of Singapore (CCS) will examine issues surrounding the deal, but it also wants public feedback.

ComfortDelGro said it intends to buy a 51 per cent stake in Lion, an Uber-owned rental car operation. Uber will retain 49 per cent.

ComfortDelGro, Lion and Uber say they overlap in the rental and leasing of private cars and the provision of taxi and chauffeur private-hire car services.

The CCS said yesterday that the rental car market is "extremely competitive" given the large number of firms in the market of varying sizes and business models.

Under the proposed acquisition, Lion will be under the effective joint control of ComfortDelGro and Uber, and will operate as a joint venture. Uber and ComfortDelGro taxi's smartphone mobile apps will integrate to form "uberFLASH".

The CCS said that while the proposed tie-up will cover booking services for meter-fared taxi services, it will generally not cover ComfortDelGro's core taxi-hailing business. But it will involve combining the fleets of both ComfortDelGro and Uber to cater to transport demand.

Lion City Holdings operates Lion City Rentals, which has a fleet of about 14,000 vehicles.

The other deal is the acquisition of Malaysian coffee firm OldTown by Dutch tea and coffee giant Jacobs Douwe Egberts (JDE).

OldTown White Coffee has 232 outlets, including 189 in Malaysia and nine in Singapore.

The deal involves a JDE unit acquiring the entire share capital of Malaysia-listed OldTown. It is offering RM3.18 per share. After the sale, JDE plans to delist OldTown.

A statement from both firms said 51.45 per cent of OldTown investors had taken the offer.

JDE asked the CCS if the deal would contravene the Competition Act, which "prohibits mergers that have resulted, or may be expected to result, in a substantial lessening of competition" here.

JDE said the merger "will not result in a substantially lessening of competition in any market" here.

It said JDE group and OldTown overlap in the sale of instant coffee mixes and other instant beverages in Singapore, which is highly competitive "given that existing and potential... manufacturers are able to, and do" operate here.

It added that rival makers and sellers of instant coffee and tea products would still be constrained by large intermediate customers even after the acquisition.

The public can comment on both deals - until Jan 5 for the JDE merger and Jan 8 for the Uber one.

A version of this article appeared in the print edition of The Straits Times on December 22, 2017, with the headline 'High-profile mergers under scrutiny'. Print Edition | Subscribe