March 1, 2015
The Competition Commission of Singapore (the “CCS”) on 16 March 2015 announced its provisional decision to block the proposed acquisition of RadLink-Asia Pte Limited (“RadLink”) by Parkway Holdings Ltd (“Parkway”) (the “Proposed Transaction”).
Following careful analysis of the relevant market in Singapore and extensive consultation with industry stakeholders and members of the public, the CCS’s provisional decision noted that the Proposed Transaction would result in a substantial lessening of competition in the affected markets in Singapore. In arriving at its provisional decision, the CCS noted the following:
- Sole commercial supplier of radiopharmaceuticals: As a result of its shareholding in Positron Tracers Pte Ltd (an existing competitor in the relevant market), the acquisition of RadLink in Singapore would place Parkway as the only commercial supplier of radiopharmaceuticals, with no viable competitor likely to enter the market in the near future;
- Substantial control in provision of radiology and imaging services: At present, Parkway and RadLink are the closest competitors in the provision of radiology and imaging services for private outpatients in Singapore. Given the characteristics of the relevant market (characterized by high barriers of entry with the resultant effect of weak bargaining power of consumers), a merger between Parkway and RadLink would create a new entity which would have substantial control of the market;
- Substantial lessening of competition through vertical restraints: The merger would give rise to a dominant merged entity which would have the power to control the supply, prices and/or range of radiopharmaceuticals and threaten competition between competitors in the downstream market which consist of radiology and imaging service providers.
By notifying the CCS of the Proposed Transaction, Parkway and RadLink were able to expediently address its transactional risks (being, enforcement risks imposed by the CCS) and as noted by RadLink’s parent company Fortis Healthcare Limited (in its filing with India’s National Stock Exchange on 13 March 2015) enabled it “to explore alternative strategic opportunities related to RadLink”.
This provisional decision is another development in Singapore’s competition law jurisprudence and merger control clearances is now an important regulatory consideration for M&A transactions involving Singapore markets. This is the second time the CCS has prevented a merger or acquisition due to the competition constraints post-merger. The CCS also has the power to enforce merger control provisions by using other forms of remedy available, such as obtaining commitments from merger parties. When SEEK Asia Investments Pte. Ltd’s acquired Jobstreet Corporation Berhad, the CCS concluded that the merger would result in competition constraints post-merger but approved the merger following certain behavioural and divesture commitments made by the parties.