Sembcorp Marine’s proposed KOM acquisition gets green light from CCCS

The acquisition will not lead to a substantial lessening of competition.

The Competition and Consumer Commission of Singapore (CCCS) cleared Sembcorp Marine’s 100% acquisition of Keppel Offshore & Marine Limited (KOM) after finding that it will not result in a substantial lessening of competition within any market of Singapore if carried out as stated in the Competition Act of 2004.

In a statement, CCCS said it considered the global supply of commercial vessels and the regional supply of ship repair services, based on trade routes in the assessment of the proposed acquisition.

In relation to the commercial vessels market, CCCS said there are many other strong competitors globally such as shipbuilders in China, South Korea and Japan which customers can turn to. This is also the case for specific commercial vessel types where the parties may compete with each other closely.

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There are also regional competitors in the ship repair market such as in China, South Korea, and the Middle East that “would exert competitive constraint” on the parties.

The commission also said that the parties were unlikely to have the ability to exert their purchasing power to depress the prices of inputs below the competitive level which will lead to the reduction of the overall supply of the inputs in the market.

The parties, given their market shares, are unlikely to enjoy significant bargaining power in relation to specialised subcontractors.

Aside from these, they are also unlikely to have the ability to exert their purchasing powers that would foreclose competitors' access to specialised inputs and to foreclose competition for the supply of an adjacent or complementary service.