18 October 2019

On 15 October 2019, the Competition and Consumer Commission of Singapore (“CCCS”) cleared the proposed acquisition by Bread Talk Group Limited (“BT”), through its wholly-owned subsidiary Topwin Investment Holding Pte Ltd (“Topwin”), of 100% of the issued share capital in Food Junction Management Pte Ltd (“FJM”) (collectively, “Parties”) (“Proposed Transaction”). CCCS has concluded that the Proposed Transaction, if carried into effect, will not lead to a substantial lessening of competition within the relevant markets in Singapore and, accordingly, will not infringe section 54 of the Competition Act (“Act”). Section 54 of the Act prohibits mergers that have resulted, or may be expected to result, in a substantial lessening of competition within any market in Singapore.

CCCS cleared the Proposed Transaction following a public consultation conducted between 11 and 24 September 2019 where CCCS contacted key stakeholders including landlords, competitors, food vendors and individual consumers to gather relevant information. CCCS was notified of the Proposed Transaction by Topwin on 4 September 2019.

The Allen & Gledhill Competition & Antitrust Practice was involved in securing the clearance.

Elsa Chen, Partner (Chief Economist) and Co-head of the Competition & Antitrust Practice, observed that the use by CCCS of an isochrone radius of 500 metres, in the context of Singapore’s current population density, is notable and precedent-setting.

The Parties

BT’s business of operating food courts and food court stalls in Singapore is solely operated by a wholly-owned subsidiary of Topwin. Topwin’s principal business activity is that of investment holding and provision of management services.

FJM and its subsidiaries are principally in the business of operating food court premises and food court stalls in Singapore and Malaysia.

The Parties do not operate or manage any coffee shops or hawker centres in Singapore.

CCCS’ assessments

In assessing the Proposed Transaction, CCCS considered the following relevant markets:

  • Sale of hot meals to individual consumers in food court premises, using catchment areas of 500 metres radius; and
  • Rental of stalls in food court premises to food vendors within Singapore.

CCCS cleared the Proposed Transaction for the following reasons:

  1. Sale of hot meals in a sufficiently limited number of stalls: The Parties only directly sell hot meals in a very limited number of stalls located within the food court premises they operate, and will continue to compete with a sufficient number of stalls operated by third-party food vendors within their own premises as well as within other food court premises in the catchment areas after the Proposed Transaction.
  2. Sufficient control by shopping mall operators: Shopping mall operators do retain sufficient control over the prices, quality and choices of food available to individual consumers in their food court premises.
  3. Sufficiently low combined market share post-merger: The combined market share volatility of the Parties post-merger remains below 20% which is considerably lower than the larger food court operators, and has been demonstrated to possibly enable the merged entity to better compete with the other larger food court operators.
  4. Materially low barriers to entry: The barriers to entry to set up food court operations in Singapore, as well as the barriers existing food court operators face in expanding to locations where the Parties currently operate and/or any other locations in Singapore, are low.
  5. Parties may not be each other’s closest competitor: There is considerable material competition between the Parties and with the other food court operators.
  6. Bargaining power of food vendors: Food vendors operating in food court premises would generally have some bargaining power given that they are likely, and are able, to switch to food court premises operated by competing food court operators in other locations across Singapore, if there are better business prospects. Reputable food vendors or corporate entities which tend to operate multiple stalls across the premises operated by a food court operator are likely to have higher bargaining power.
  7. Collusion between food court operators demonstrated to be unlikely: Food court operators are unlikely to collude because of factors such as the number of competing operators operating food courts with different cost structures and the low degree of transparency on the rental fees charged by landlords.

CCCS’ Grounds of Decision will be made available in due course on its public register.

Reference materials

The following materials are available on the CCCS website www.cccs.gov.sg:


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