27 February 2018

On 30 January 2018, the Competition Commission of Singapore (“CCS”) announced the clearance of a proposed acquisition by the wholly-owned subsidiary (“JDE Asia”) of a global coffee company (“JDE”) of the entire issued and outstanding share capital of a publicly-listed company on Bursa Malaysia (“OT”) (“Proposed Transaction”). The Proposed Transaction will result in JDE acquiring sole control over OT.

CCS concluded, following a review of the Proposed Transaction, that it would, if carried into effect, not lead to a substantial lessening of competition in the supply of instant coffee mixes and instant milk tea mixes for in-home sales in Singapore.

The parties

JDE owns various brands in over 27 countries across Europe, Latin America and Australia and also owns a company, Super Group Ltd, (“SG”) which manufactures and sells over 160 instant food and beverage products, including instant tea and coffee. JDE acquired SG in 2017.

OT is active in (i) the manufacturing of coffee and other beverages, (ii) the marketing and sales of coffee and other beverages in points of distribution globally, and (iii) the operation of retail cafes under the “OldTown White Coffee” brand.

Overlap in the supply of instant coffee mixes and instant milk tea mixes

The JDE group of companies (JDE Group) and OT (collectively, “Parties”) overlap in the supply of instant coffee mixes and instant milk tea mixes for in-home sales in Singapore. There is also a marginal overlap between the Parties in the supply of instant coffee mixes for out-of-home sales in Singapore.

Relevant markets

However, persuaded by counsel’s arguments, CCS’ assessment focused on the markets for the supply of instant coffee mixes and instant milk tea mixes for in-home sales in Singapore (collectively, “Relevant Markets”).

CCS’ conclusion

In clearing the Proposed Transaction, CCS was persuaded that:

  • The Parties face competition from a sufficiently high number of suppliers in the market for the supply of instant coffee mixes and instant milk tea mixes for in-home sales in Singapore. 
  • Barriers to entry and expansion were sufficiently low in the Relevant Markets. It was established that potential entrants do not need a quantifiably onerous lead time to enter the market, and existing suppliers do not currently face manufacturing and other capacity constraints and would be able to increase their production in response to an increase in demand.
  • On balance, the larger intermediate customers generally have sufficient negotiation power with the suppliers of instant coffee mixes and instant milk tea mixes, and may be able to exercise bargaining power over the merged entity post-Transaction.

The Grounds of Decision will be made available in due course.

Allen & Gledhill LLP was the Singapore antitrust counsel involved in securing the clearance.

Reference materials

The following materials are available on the CCS website www.ccs.gov.sg:

 

Download PDF