Views sought on NTUC Enterprise, Kopitiam deal

Competition watchdog looking into planned transaction and seeking public feedback

The acquisition of Kopitiam and its subsidiaries, which spans 80 outlets comprising 56 foodcourts, 21 coffee shops and three hawker centres, as well as two central kitchens, was announced on Sept 21, 2018. ST PHOTO: ALPHONSUS CHERN

The Competition and Consumer Commission of Singapore (CCCS) is looking into whether the impending sale of food centre operator Kopitiam to NTUC Enterprise would infringe competition rules, and inviting feedback from the public.

The move comes after NTUC Enterprise notified the commission yesterday of the proposed acquisition, which would bring Kopitiam, one of the largest players in the industry, under its umbrella.

The acquisition of Kopitiam Investment and its subsidiaries, which span 80 outlets comprising 56 foodcourts, 21 coffee shops and three hawker centres, as well as two central kitchens, was announced on Sept 21. The value of the transaction - which is expected to be completed by the year end, subject to regulatory approvals - has not been disclosed.

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

The firms said NTUC Foodfare and Kopitiam will continue to operate separately, while making quality cooked food affordable and accessible to all.

The CCCS said in a statement yesterday that it is assessing whether the proposed deal would infringe the Competition Act, which prohibits mergers that have resulted, or may be expected to result, in a substantial lessening of competition within any market in Singapore. It is not known how much market share the two firms have.

In its notification, NTUC Enterprise made the case that it overlaps with Kopitiam in two markets: the sale of cooked food to individual consumers in quick-service eateries, and the rental of stalls to vendors located within coffee shops, foodcourts and hawker centres.

It argued that the proposed acquisition would not give rise to anti-competitive consequences in either market, given the numerous cooked food vendors in quick-service eateries as well as strong competition from other operators.

Customers in both markets would have little issue switching to competitors, as individual consumers often have their pick of foodcourts, hawker centres and coffee shops within walking distance, while food vendors are "generally indifferent to stall location so long as the rental terms are competitive and there is sufficient consumer traffic", NTUC Enterprise said.

The proposed acquisition would allow NTUC Enterprise, via Foodfare and Kopitiam, to create a more efficient business through economies of scale, it said.

Cost savings could be used to offer tenants better rental terms, as well as to invest in new technologies and in-store practices that will benefit both vendors and consumers, NTUC Enterprise said.

Ms Esther Ho, director of Nanyang Polytechnic's School of Business Management, said NTUC Foodfare would become a "more significant competitor" if the acquisition goes through.

The cooperative would benefit from its stronger bargaining power and higher market share, which may make it easier for it to outbid competitors.

"There is also this concern that with its strong bargaining power, small suppliers that supply raw ingredients and provide services to Foodfare may find their margins thinning," she said. Still, being able to leverage more efficiencies may mean cost savings can be passed on to consumers, she added.

Members of the public can provide feedback on the matter between Oct 1 and Oct 12 through the CCCS website.

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A version of this article appeared in the print edition of The Straits Times on September 29, 2018, with the headline Views sought on NTUC Enterprise, Kopitiam deal. Subscribe