Acquisition of Kopitiam by NTUC: Issues of ‘competition-monopoly’ and disclosure in the public interest?

It has been recently reported that food operator Kopitiam is being sold to NTUC Enterprise Co-operative Limited for an undisclosed sum.

According to reports, NTUC Enterprise is buying all of Kopitiam Investment and its subsidiaries, which span 80 outlets islandwide, in a deal expected to be completed by the end of the year.

As I understand that this acquisition may make it into the largest and dominant operator of food courts in Singapore – would it lead to such reduced competition that it approaches a monopolistic position?

In this connection, the Competition Commission of Singapore’s (CCS) web site states that

“CCCS assesses whether a merger situation is likely to substantially lessen competition in a market by comparing the likely state of competition if the merger situation proceeds (the scenario with the merger situation), with the likely state of competition if the merger situation does not proceed (the scenario without the merger situation, often referred to as the counterfactual). CCCS conducts this assessment by identifying what would happen if the merger situation does not go ahead, namely, the appropriate counterfactual. CCCS also assesses what would happen if the merger situation does go ahead and develops theories of harm that could arise.”

How similar is the subject ‘competition’ issue to the recent Grab-Uber acquisition?

As to “The acquisition is “part of NTUC Enterprise’s social mission to ensure that cooked food remains affordable and accessible”, it said on Friday(Sept 21)” – given the recent ‘affordability’ issues like those raised in the article “NTUC Foodfare imposes more than $2k ancillary charges on top of $1.6k rental on hawkers” (theonlinecitizen, Sep 6) – shouldn’t the sum paid for the subject acquisition be disclosed to the public?

Isn’t this arguably in the public interest, and in line with the online falsehoods’ committee’s recommendation that the Government (many labour movement MPs in Parliament) should give the reasons for decisions not to disclose information to the public?

To reiterate the issues raised in theonlinecitizen article mentioned above – “Last week (28 Aug), Makansutra food guru KF Seetoh published a write-up on his blog revealing the sorry state of affairs the whole Social Enterprise Hawker Centre (SEHC) initiative has turned into.

“They (social enterprises) operate the new hawker centres like a hardcore commercial Food Court management system. Hence, I am seeing some issues that raises some concerns,” Mr Seetoh said.

“These hawkers in the new hawker centres pay in total (with a laundry list of extra services and charges), an average of $4000, more than what it cost the highest bidder in Maxwell Hawker Centre – arguably the most popular hawker centre in Singapore – where it hovers between two to three thousand dollars a month in total.”

More than $2,000 of ancillary charges

In one of the contract agreements seen by Mr Seetoh, which was signed between social enterprise operator NTUC Foodfare and a hawker, it showed that NTUC Foodfare charges $1,608 per month for stall rental.

Even though this amount is only slightly more than the average successful bid of $1,514 per month for hawker stalls operated by NEA at hawker centres, NTUC Foodfare has piled on a whole bunch of ancillary charges on top of the $1,608 per month stall rentals:

1. S&CC Charges – $350 per month
2. Table Cleaning Service – $550 per month
3. Dishwashing Service – $850 per month
4. Rental of Cashless System – $150 per month
5. Food Waste Recycling Management – $40 per month
6. Concept and Marketing – $300 per month

In this connection, it was also reported in the media just two months ago – “Lastly, it will focus on helping workers cope with the cost of living through NTUC’s social enterprises”.

According to the article “HDB, NTUC ensuring affordable food options” (Sunday Times, Jul 15) – “The Housing Board and the labour movement are taking steps to tackle the rising cost of living by ensuring food choices stay affordable at hawker centres and coffee shops.

Later this year, HDB will look at other factors, including whether an operator has a variety of affordable food options, when evaluating tenders for coffee shops, in addition to the bidding price.

This price-quality method will replace the current system, which has been in place since 2004 and awards tenders to those who put in the highest bids.”

As to “He was speaking on the sidelines of the official opening of Pasir Ris Central Hawker Centre run by NTUC Foodfare, which manages more than 100 food and beverage outfits islandwide” – I visited NTUC Foodfare’s web site to try to find its profits or losses in its annual report, but it said “annual report – coming soon“.

So, how much profits or losses does NTUC Foodfare make?

With regard to “Separately, the National Trades Union Congress (NTUC) is committed to using its social enterprises to set industry price benchmarks to help keep daily necessities affordable, said its secretary-general Ng Chee Meng yesterday” – I looked at the annual report of one of its social enterprises, and found that NTUC FairPrice’s group profits before contributions to the Central Co-operative Fund and the Singapore Labour Foundation, was $379.7 million in 2017.

How much are the combined profits of the nine NTUC social enterprises?

So, if NTUC Foodfare, being a co-operative (non-profit?) makes less profits (assuming that it does since its annual report is “coming soon” according to its web site)  – will food prices be lower? – if NTUC FairPrice makes less profits – will “daily necessities” be lower? – if some or all of the NTUC social enterprises make less profits – will Singapore drop out of being the most expensive city in the world for the fifth consecutive year, according to the Economist?