27 February 2018
On 31 January 2018, the Competition Commission of Singapore (“CCS”) announced that it has reviewed and cleared a proposed transaction between (i) a wholly-owned Canadian subsidiary (“CAE”) of a Canadian company publicly listed on the Toronto and New York stock exchanges and (ii) a Singapore company which is listed on the Singapore stock exchange (“SIA”) (collectively, “Parties”) to create a full-function joint venture company to establish, develop and operate a commercial flight training centre in Singapore to offer type-rated, recurrent, and conversion pilot training, for B744, B777, B787 and B737MAX (“Boeing Aircraft Types”) (“Proposed JV”).
CCS was persuaded that the Proposed JV is unlikely to lead to a substantial lessening of competition within the relevant markets for the following reasons:
- Market for the provision of pilot training services for the Boeing Aircraft Types in the Asia Pacific region
- Potential competitors: As the Parties can potentially be competitors in the future, they do not have a sufficiently high combined market share in the markets for the provision of pilot training services, segmented by the Boeing Aircraft Types in the Asia Pacific region;
- Satisfactory increase in capacity and competition: The Proposed JV would likely result in a quantifiable increase in the capacity made available to third parties both within Singapore and in the Asia Pacific region and could increase competition for the provision of pilot training services for the Boeing Aircraft Types; and
- Acceptable barriers to expansion: The barriers to expansion are unlikely to be sufficiently high as existing players such as third-party training centres have been assessed to be able to expand to meet a sudden increase in demand.
- Market for the supply of training devices for the Boeing Aircraft Types worldwide (in considering vertical effects)
- Interdependent relationship with competitors: CAE has an interdependent relationship with its competitors and has a limited incentive to restrict the supply of its training devices;
- No materially additional incentives: Post-JV, CAE will not have materially additional incentives to restrict the supply of its training devices, given that CAE already operates a network of training centres
in the Asia Pacific region; and
- Limited incentives to restrict or slow down updates to simulation software: CAE has observably limited incentives to restrict or slow down the updates to the simulation software specific for the training devices that it supplies, given that it sells training devices and would ultimately want its training devices to be functional.
The Grounds of Decision will be made available in due course.
Allen & Gledhill LLP was the Singapore antitrust counsel involved in securing the clearance.
The following materials are available on the CCS website www.ccs.gov.sg:
- Media release
- Public register: Proposed Joint Venture between CAE International Holdings Limited and Singapore Airlines Limited