SINGAPORE (Jan 16): The Competition and Consumer Commission of Singapore (CCCS) is inviting public feedback on the proposed acquisition of Veolia ES Singapore (VESS) by Sembcorp Industries’ wholly owned subsidiary SembWaste.
On Jan 3, SembWaste had announced that it was acquiring a 100% stake in VESS and its public cleaning business for $28 million.
The acquisition was noted to be in line with the group's strategy of deepening its presence as an integrated energy and urban solutions player providing green and more efficient solutions to enable sustainable development in its key markets.
See: Sembcorp acquires Veolia's public cleaning business for $28 mil
In a media statement on Wednesday, CCCS said that had received an application from SembWaste on Jan 8, and is now assessing if the proposed transaction would infringe the Competition Act, which prohibits mergers that have, or are expected to result in a substantial lessening of competition within any market in Singapore.
In its application, SembWaste had acknowledged that both parties overlap in Singapore for the supply of both public and general waste collection services.
However, it had also noted that the acquisition was unlikely to result in the merged entity having market power, as the entity will remain constrained by strong competition from existing competitors and potential entrants.
SembWaste added that the combined market share of both parties by sales value does not exceed CCCS’s indicative thresholds.
“SembWaste submits that the proposed transaction is also unlikely to lead to collusion in the relevant markets, given the fragmented nature of the relevant markets, lack of transparency in respect of negotiated prices and the threat of disruption by new entrants,” said CCCS.
SembWaste had also identified “strong buyer power” in the market with NEA as the sole purchaser being able to exercise significant countervailing buyer power for public waste collection services.
Meanwhile in the general waste collection services market, SembWaste had cited a large pool of suppliers, with buyers being in a position to call for tenders or requests for quotations from licence holders.
CCCS is inviting public feedback on the proposed transaction through a public consultation which ends on Jan 29.
As at 12.59pm, shares in Sembcorp Industries are trading two cents higher, or 0.9% up, at $2.30.
