Competition watchdog gives nod for BreadTalk to buy Food Junction for S$80 million

Competition watchdog gives nod for BreadTalk to buy Food Junction for S$80 million

Food Junction at Great World City
File photo of the Food Junction outlet at Bugis in Singapore and a BreadTalk outlet. (Photo: Food Junction website and Facebook@BreadTalk)

SINGAPORE: The Competition and Consumer Commission of Singapore (CCCS) has cleared a proposed deal by BreadTalk Group to buy food court operator Food Junction Management (FJM) for S$80 million, saying that the transaction "will not lead to a substantial lessening of competition within the relevant markets in Singapore".

BreadTalk Group had announced on Sep 2 its intention to acquire FJM through its subsidiary Topwin Investment Holding. The public was invited to provide their feedback on the deal to CCCS between Sep 11 and 24. 

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

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

FJM and its wholly owned subsidiaries Food Junction Singapore and T&W Food Junction operate food courts and food and beverage outlets in Singapore and Malaysia.

They collectively run a network of 12 food courts in Singapore and three in Malaysia, with another one scheduled to open in Johor Bahru next year.

CCCS said on Tuesday that most stakeholders had indicated they have no concerns with the proposed transaction, with a few raising concerns the deal could lead to higher rent for food vendors post-merger, poorer food quality and options, higher prices at food courts and fewer food court operators for landlords and vendors to choose from. 

In its assessment, CCCS said that concerns over potentially poorer food quality and variety as well as higher prices are "unlikely to materialise".

"Besides the presence of many competing third-party food vendors, shopping mall operators place significant emphasis on food court operators’ ability to differentiate their food court concepts, food mix and price points, particularly if there is more than one food court premises in the mall," said CCCS.

"The shopping mall operators also retain sufficient control over the prices, quality and choices of food available to individual consumers in their food court premises as they seek to attract more customer footfall to their malls. These concerns are therefore unlikely to materialise," it added.

The competition watchdog also found that the combined market share of the parties involved in the deal would remain below 20 per cent post-merger, which is considerably lower than the larger food court operators such as NTUC Kopitiam and Koufu.

"The merged entity may instead be able to better compete with the other larger food court operators post-merger," CCCS said.

Source: CNA/aj(gs)