28 March 2019
The Competition and Consumer Commission of Singapore (“CCCS”) has recently cleared the proposed acquisition (“Proposed Transaction”) by DKSH Holding (S) Pte Ltd (“Buyer”) of Auric Pacific Marketing Pte Ltd (“APM”) and Centurion Marketing Pte Ltd (“CM”) (collectively, “Targets”), pursuant to a share purchase agreement entered into by the Buyer and Auric Pacific Group Limited (“Seller”) on 21 December 2018. CCCS assessed that the Proposed Transaction, if carried into effect, is unlikely to lead to a substantial lessening of competition within the relevant market in Singapore and, accordingly, will not infringe section 54 of the Competition Act (“Act”) which prohibits anti-competitive mergers.
CCCS issued the clearance decision on 22 February 2019 following the Buyer’s notification for a decision on whether the Proposed Transaction, if carried into effect, would infringe section 54 of the Act. The Proposed Transaction is part of a wider acquisition which also includes the acquisition of Auric Pacific (M) Sdn Bhd by the DKSH Group in Malaysia.
The Allen & Gledhill Competition & Antitrust Practice acted for the Seller and the Targets in securing clearance from CCCS. This is the second of two clearances by CCCS in 2019 secured by the Practice. Since the inception of the merger control regime in 2007, the Practice has acted in approximately three quarters of all merger filings.
In assessing the Proposed Transaction, CCCS considered the relevant market for the provision of distribution services for packaged food and beverage products such as milk powder and boxed cereals, among others, in Singapore. Distribution services include physical distribution, warehousing, invoicing and other value-added services to manufacturers and/or suppliers of packaged food and beverage products. Such services ensure that the manufacturers and suppliers’ products reach various channels including wholesalers, supermarkets, retailers with a shopfront or e-commerce presence, and food service businesses such as hotels, restaurants and cafes.
CCCS cleared the Proposed Transaction for the following reasons:
- The Buyer and Targets are not sufficiently close competitors: The Buyer and Targets are not sufficiently close competitors since the types of food distribution service offered by each of them differ;
- Market shares sufficiently below CCCS’ indicative thresholds: The combined market shares of the Buyer and Targets, and incremental market shares arising from the Proposed Transaction, are not large and are sufficiently below CCCS’ indicative thresholds;
- Availability of substitutes: Manufacturers and suppliers can obtain distribution services from a number of other observable alternative distributors, with demonstrable instances of actual switching by manufacturers and suppliers to other distributors over the last five years; and
- Barriers to entry and expansion: Barriers to entry, such as costs of entry and reputation of distributors, are not insurmountable. For existing players who have the necessary industry knowledge and infrastructure, the barriers to expansion do not exceed the tolerance threshold.
The following materials are available on the CCCS website www.cccs.gov.sg:
- Media release
- Public register: Proposed acquisition by DKSH Holding (S) of Auric Pacific Marketing and Centurion Marketing
- Grounds of decision