Competition watchdog seeks public feedback on BreadTalk's S$80 million acquisition of Food Junction

Competition watchdog seeks public feedback on BreadTalk's S$80 million acquisition of Food Junction

BreadTalk International Headquarters
The BreadTalk International Headquarters. (Photo: Google Maps)

SINGAPORE: The Competition and Consumer Commission of Singapore (CCCS) has asked the public for feedback on BreadTalk Group's proposed acquisition of food court operator Food Junction Management (FJM).

BreadTalk Group announced on Sep 2 its intention to acquire FJM for S$80 million through its subsidiary Topwin Investment Holding.

In a media release on Wednesday (Sep 11), CCCS said that Topwin sought a decision on whether the proposed deal would infringe on the Competition Act, which prohibits mergers that may lead to a substantial lessening of competition within any market in Singapore.

The public is invited to leave feedback from Wednesday to Sep 24.

The competition watchdog said it is seeking public views on whether Food Junction, run by FJM, and Food Republic, which is owned by BreadTalk, are each other's closest competitor.

Topwin said that it primarily overlaps with FJM in two markets, namely the sale of food and drinks in food court premises, and the rental of stalls to food vendors in food court premises.

It said the acquisition of FJM would not result in a substantial lessening of competition.

"The parties directly operate only a very limited number of stalls (including drink stalls) within their own premise," Topwin said.

"Accordingly, the merged entity will continue to be constrained by a large number of competing food vendors within the parties’ premises, without even considering the multitude of competing food vendors located within each of the 500m radius catchment areas."

They added that consumers are highly sensitive to factors such as price, convenience, variety and quality of food offered, and will "virtually face no cost" should they switch to another food provider available to them within walking distance.

With regards to the rental of stalls, Topwin said there are "no restrictions" on tenants switching to another food court or coffee shop operator upon expiry of their contracts.

"Food vendors are generally able to switch to competing outlets easily after their contracts expire, as stalls within food court and coffee shop premises typically come fitted with basic infrastructure," it added. 

The BreadTalk Group operates food courts under the Food Republic and Food Opera brands across Singapore, Malaysia, China, Taiwan, Cambodia and Thailand.

As of Jun 30 this year, BreadTalk Group operates 14 food courts in Singapore and two in Malaysia.

In its filing to the Singapore Exchange, BreadTalk Group had said the acquisition would provide it with access to Food Junction Management's network of food courts and outlets, allowing it to obtain additional revenue streams and "benefit from the synergies" with BreadTalk Group's existing food courts and outlets, through the streamlining of costs and sharing of resources.

"Accordingly, the proposed acquisition is not considered to be a diversification of the group's business," it had said.

CCCS is seeking views from the public on the following matters:

  • Whether switching to competitors of Food Junction and/or Food Republic is easy if the prices of the merged entity were to increase by 10 per cent post-merger.
  • What the impact of the proposed transaction will be on prices and service quality for the sale of drinks, fruits, snacks, desserts and hot meals in food court premises.
  • What the impact of the proposed transaction will be on the rental of stalls to food vendors located within food court premises.

Interested members of the public can send their feedback to CCCS by email on cccs_feedback@cccs.gov.sg. More information can be found on CCCS' website.

Source: CNA/hm/nh(mi)

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