NTUC Enterprise gets nod for acquisition of Kopitiam

Kopitiam has 80 outlets comprising 56 foodcourts, 21 coffee shops and three hawker centres, as well as two central kitchens.
Kopitiam has 80 outlets comprising 56 foodcourts, 21 coffee shops and three hawker centres, as well as two central kitchens. ST PHOTO: ALPHONSUS CHERN

It is set to be biggest operator of coffee shops and foodcourts here with more than 100 outlets

Singapore's competition watchdog gave the green light yesterday to NTUC Enterprise's proposed acquisition of food centre operator Kopitiam, paving the way for it to become what is believed to be the biggest operator of coffee shops and foodcourts here.

The acquisition, which is expected to be completed next month, will bring Kopitiam, one of the largest players in the industry, under the umbrella of NTUC Enterprise and raise its count of food outlets to more than 100.

In a statement yesterday, the Competition and Consumer Commission of Singapore (CCCS) said that it had studied the impact on the markets for the sale of food to consumers and rental of stalls to food vendors, and concluded that the acquisition would not lead to a substantial lessening of competition.

The acquisition of Kopitiam Investments and its subsidiaries for an undisclosed sum was announced on Sept 21, and the CCCS was notified a week later.

Kopitiam has about 80 outlets, including 56 foodcourts, 21 coffee shops and one hawker centre, as well as two central kitchens.

NTUC Foodfare, which is under the National Trades Union Congress' social enterprise arm, manages 14 foodcourts, 10 coffee shops and nine hawker centres.

NTUC Foodfare and Kopitiam will continue to operate separately, though there are plans to extend affordable meal initiatives and lower the price of coffee and tea, NTUC Enterprise said yesterday. More details will be announced next year.

 
 
 
 

The CCCS said in the grounds for its decision that the two are not each other's closest competitors, and strong competition remains from operators such as Koufu, Food Junction, Food Republic, Kimly and Broadway.

Collusion between foodcourts and coffee shops is also unlikely due to the large number of competing operators and low barriers to entry, among other factors, it added.

In assessing the market for the sale of hot meals to consumers, it looked at areas where there were Kopitiam and NTUC Foodfare establishments within 500m of each other, and found that their combined market share in each of these areas was well below 20 per cent.

The watchdog also found little prospect of lessened competition in the market for the rental of hawker centre stalls, given that the merged entity would operate only 10 out of 114 hawker centres in Singapore and be subject to regulatory oversight by the National Environment Agency.

On the rental of stalls in coffee shops and foodcourts, the CCCS said that the combined market share of the two operators within most overlapping areas ranged from 30 per cent to 40 per cent, while the combined market shares of the three largest firms made up less than 70 per cent.

This, in the commission's book, was not high enough to raise competition concerns.

The commission also concluded that the merged entity would not have the ability or incentive to shut out competitors and to mandate purchases through central kitchens and supply chain networks.

NTUC Enterprise said in a statement yesterday that it welcomed the decision.

Its executive director Kee Teck Koon said: "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."

Business will go on as usual, with Kopitiam Loyalty Card users able to continue using their Kopitiam Card, while NTUC Enterprise is looking at extending existing initiatives, such as its Rice Garden mixed rice set for lower-income consumers at various locations.

Kopitiam said it will work with NTUC Enterprise to ensure the successful completion of the deal.

 

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A version of this article appeared in the print edition of The Straits Times on December 21, 2018, with the headline 'NTUC Enterprise gets nod for acquisition of Kopitiam'. Print Edition | Subscribe