2 June, 2015
On 11 March 2015, the Competition Commission of Singapore (“CCS”) announced that it would not give clearance to the proposed acquisition of RadLink-Asia Pte Ltd (“RadLink”) by Parkway Holdings Ltd (“Parkway”). CCS considered that the acquisition would result in a substantial lessening of competition in the market for the supply of radiopharmaceuticals and also in the market for the provision of radiology and imaging services, and would therefore be prohibited under section 54 of the Singapore Competition Act (Cap.50B) (“Act”).
The decision came following a “Phase 2” review by CCS. Such reviews are normally conducted for difficult or problematic cases.
Whilst CCS’s full written reasons for its decision are yet to be released, it has been announced that CCS had concerns that the merged entity would be the only commercial supplier ofradiopharmaceutical products in Singapore. Moreover, CCS did not find any potential radiopharmaceutical suppliers ready and willing to enter the market in the near future. With respect to radiology and imaging services, CCS was concerned that the acquisition would remove competition between two close competitors that service private outpatients in Singapore. CCS was also concerned that the merged entity would have a substantial market share, and that there would not be sufficient countervailing power on the part of customers post-merger. Another factor taken into consideration was that the barriers to entry into the market were assessed to be high.
In assessing whether mergers, or proposed mergers, would likely lead to a substantial lessening of competition, CCS’s focus is generally on whether the merged entity would face sufficient competitive constraint, such that it would not be in a position to increase price or decrease quality. CCS will also consider whether the merger would likely increase the risk of collusive behaviour arising in respect of the relevant markets.
CCS has the ability at any time to consider behavioural or structural commitments designed to alleviate competition concerns, however, it has been reported that the proposed merger has since been abandoned as of 13 March 2015.
The decision to block the proposed merger is only the second such decision made by CCS in respect of a merger notification. The first was made in the context of the application by Greif International Holding B.V. and GEP Asia Holdings Pte Ltd in relation to the creation of a joint venture company, Greif Eastern Packaging Pte Ltd. In that case, CCS made the provisional decision to block the arrangement, however, a subsequent increase in capacity by an existing market participant alleviated CCS’s competition concerns, and the merger was therefore ultimately approved
For further information, please contact:
Cavinder Bull, Director, Drew & Napier
cavinder.bull@drewnapier.com
Chong Kin Lim, Director, Drew & Napier
chongkin.lim@drewnapier.com
Scott Clements, Drew & Napier
scott.clements@drewnapier.com
