On 6 February, the Competition Commission of Singapore (CCS) published its decision of 23 January to clear Nissan Motor’s proposed acquisition of a 34 per cent stake in Mitsubishi Motors.
The CCS agreed with the parties that the transaction qualifies as a merger in accordance with Section 54(2)(b) of the Competition Act as Nissan Motor would become the largest shareholder of Mitsubishi Motors and acquire sole control over Mitsubishi Motors.
Consistent with the approach adopted by the European Commission in recent decisions, the CCS decided that it was appropriate to conduct a competitive assessment based on a narrow basis, with separate markets for the wholesale supply in Singapore of respectively (i) minicars; (ii) small cars; (iii) medium cars; (iv) sports utility vehicles; and (v) pick-up trucks.
With respect to passenger vehicles, the CCS noted that the parties were not close competitors and that their combined market shares in the relevant market segments (i.e. minicars, small cars, medium cars and sports utility vehicles) were below the CCS’s indicative thresholds above which a transaction may give rise to competition concerns. With respect to pick-up trucks, the parties’ combined market share is much higher, ranging between 60 per cent and 70 per cent with the three largest suppliers accounting for more than 90 per cent of the market. Notwithstanding these high market shares, the CCS considered that the transaction is unlikely to create significant concerns. The CCS first noted that in respect of pick-up trucks, there is a considerable degree of market share volatility from one year to another. Current high market shares may therefore not be a reliable indicator of market power. The CCS noted that the parties would continue to face strong competition from other suppliers including Daimler, Hyundai, Isuzu, PSA and Toyota. The CCS also noted that the barriers to entry and expansion were not overly high. New brands of passenger vehicles have entered Singapore in recent years and there would be little cost for them to also supply light commercial vehicles by making use of their existing passenger vehicle distribution network. The CCS also took comfort from the fact that the parties’ customers (distributors and large corporate end-customers) have strong countervailing buyer power to rule out significant competition concerns.