Proposed Acquisition by SATS International SAS of Promontoria Holding 243 B.V.

Reference:

CCCS 400-140-2022-008

Notifying Parties:

SATS International SAS and Promontoria 52 Coöperatie U.A.

Notifying Date:

27 October 2022

Summary of transaction:

(i) the names of the merger parties;

• SATS International SAS (“SATS International”);

• Promontoria 52 Coöperatie U.A. (“Promontoria”)

(collectively, the "Parties").

(ii) a description of the transaction;

The transaction relates to the proposed acquisition by SATS Ltd. (“SATS”) through its indirectly wholly-owned subsidiary SATS International of Promontoria Holding 243 B.V. (“the “Target”), a holding company which in turn indirectly owns 100 per cent of the shares in WFS Global Holdings S.A.S. (“WFS”) (the “Proposed Transaction”).

(iii) a description of the business activities of the merger parties worldwide and in Singapore;

SATS is a Singapore-based company which provides ground handling, cargo handling, and food solution services. Its cargo and ground handling services encompass airfreight handling, passenger services, ramp handling, baggage handling, aviation security, aircraft interior cleaning, and premium lounge services. SATS’ food solutions business comprises airline catering, food distribution and logistics, industrial catering as well as chilled and frozen food manufacturing. SATS has been listed on the Singapore Stock Exchange since 2000.

Promontoria is a cooperative with excluded liability (coöperatie met uitsluiting van aansprakelijkheid) incorporated under the laws of the Netherlands. Promontoria is an affiliate of Cerberus Capital Management, L.P., a private investment firm headquartered in the United States that is engaged in investment in real property and personal property of all kinds.

WFS is based in Paris, France, and is an indirect, wholly-owned subsidiary of the Target. It operates primarily in the provision of cargo handling services (including warehousing and storage of cargo, global logistics for air cargo shipping and cargo facilities management). In addition, WFS provides ground handling services (including in ramp, baggage, passenger and premium lounge services), and other freight related services (namely, offline services and truck services). WFS provides services at 164 locations across 18 countries primarily in Europe and the Americas.

(iv) a description of the overlapping goods or services, including brand names;

The Parties submit that there is no horizontal overlap of any material significance (if at all) between SATS and WFS in Singapore, due to the following reasons:

1. while both SATS and WFS provide ground handling services as part of their respective business activities worldwide, there is no overlap in respect of the provision of ground handling services in Singapore, as WFS does not have a presence in the provision of ground handling services in Singapore; and

2. while both SATS and WFS provide premium passenger services in Singapore, the Parties submit that there is no competitive overlap as the premium passenger services operated in different airports are not substitutable, and there is a distinction between the full suite of premium bespoke passenger services (provided by WFS at the JetQuay CIP^[1] Terminal) and premium lounge services (provided by SATS at Changi Airport), such that these should be viewed as separate markets.

(v) a description of substitute goods or services;

In respect of premium passenger services, the Parties submit that there is a distinction between the full suite of premium bespoke passenger services (provided by WFS at the JetQuay CIP Terminal) and premium lounge services (provided by SATS at Changi Airport), such that these should be viewed as separate markets.

For the full suite of premium bespoke passenger services (offered by WFS at the JetQuay CIP Terminal at Changi Airport), the Parties submit that there are no close substitutes from both a demand- and supply-side perspective as there are no other service providers which provide a similar suite of services at Changi Airport.

For the provision of premium lounge services by SATS at Changi Airport, the lounges operated by dnata and independent third-party lounge operators would be considered close substitutes from both a demand- and supply-side perspective.

(vi) The applicant's views on:

        a. definition of the relevant market(s);

The Parties submit that there is no horizontal overlap of any material significance (if at all) between SATS and WFS in Singapore. However, the Parties provide their responses in the notification in respect of the provision of premium passenger services at Changi Airport (i.e. which includes the provision of a suite of bespoke premium passenger services at the JetQuay CIP Terminal, as well as premium lounge services at the Changi Airport Terminals), as this would appear to be the only overlapping service potentially affected by the Proposed Transaction, if at all.

        b. the way in which competition functions in this market;

Suppliers providing the full suite of premium bespoke passenger services and suppliers of premium lounge services compete based on price and quality of services provided.

        c. barriers to entry and countervailing buyer power

The Parties submit that barriers to entry for the provision of premium passenger services are not insurmountable.

In addition, for premium lounge services, airlines and corporate customers can, and do, easily switch between providers of premium lounge services with ease and at low or no cost. Customers such as airlines and corporate companies are also able to, and do, self-supply, by obtaining the relevant concession and rental space from the Changi Airport Group to provide premium lounge services at Changi Airport.

        d. the competitive effects of the merger (non-coordinated, coordinated and/or vertical effects, as relevant).

Non-coordinated effects

The Parties submit that the Proposed Transaction will not give rise to non-coordinated effects. There is no horizontal overlap of any material significance (if at all) between SATS and WFS in Singapore, and they do not compete with each other in the supply of any goods or services. Accordingly, the structure of the industry would remain unaffected by the Proposed Transaction, and the Proposed Transaction will not give rise to non-coordinated effects.

Coordinated effects

The Parties submit that the Proposed Transaction will not give rise to coordinated effects. There is no horizontal overlap of any material significance (if at all) between SATS and WFS in Singapore. In the absence of any material horizontal overlaps, the structure of the industry would remain unaffected by the Proposed Transaction, such that there will not be any change in the markets to incentivise coordination of behaviour by other market players.

Vertical effects

The Parties submit that the vertical links between the SATS and WFS are minimal and will not give rise to competition concerns as the combined entity will have no ability or incentive to foreclose competitors on the upstream or downstream markets.

Decision:

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 2004.

 Decision Date:

27 January 2023.

Read the Media Release.

Read the Grounds of Decision.