SINGAPORE (Feb 19): The Competition and Consumer Commission of Singapore (CCCS) has cleared Sembcorp Industries’ acquisition of Veolia ES Singapore (VESS). 

On Jan 3, SembWaste, a wholly-owned subsidiary of Sembcorp Industries, had announced that it was acquiring a 100% stake in VESS and its public cleaning business for $28 million. 

See: Sembcorp acquires Veolia's public cleaning business for $28 mil

Later on Jan 8, CCCS said that it had received an application from SembWaste which acknowledged that both parties overlap in Singapore for the supply of both public and general waste collection services. 

Both VESS and SembWaste have public waste collection and general waste collections in Singapore, resulting in an overlap. This led to CCCS commencing investigations on whether 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. 

See: Competition watchdog to assess if Sembcorp-Veolia deal could result in 'substantial lessening of competition'

In a media statement today, CCCS concluded that the merged entity would continue to face sufficient competition in the relevant markets from other suppliers in Singapore and overseas.

NEA was found to be the sole customer for the public waste collection services in Singapore, which suggests that it may possess some bargaining power to constrain any increase in market power by the merged entity. 

In addition, CCCS noted that the barriers to entry and expansion for the sector are not high and there are a number of credible competitors who are capable of expanding in this market to compete with the merged entity.

“The merged entity will continue to face competition from the potential entry of local and overseas suppliers,” says CCCS. 

Meanwhile, for the general waste collection services, CCCS notes that the combined market share of both SembWaste and VESS were below its indicative threshold, suggesting that competition concerns are unlikely to arise from the merger. 

“The incremental market share arising from the Proposed Transaction is low, which suggests that the proposed transaction is unlikely to significantly alter the market structure,” says CCCS. 

Furthermore, CCCS observes that the large number of alternative suppliers in the market allows customers to choose and switch accordingly. The merged entity will also continue to face competition from both existing and potential local and overseas suppliers. 

“Following its assessment, CCCS has concluded that the Proposed Transaction, if carried

into effect, will not infringe the section 54 prohibition of the Competition Act,” concludes CCCS. 

Shares in Sembcorp Industries closed flat at $2.04 on Wednesday.