CCCS consults on the proposed acquisition by Oki Electric Co., Ltd. of the aviation equipment business of Yokogawa Electric Corporation

Notifying Parties:

Oki Electric Co., Ltd. and Yokogawa Electric Corporation

Notifying Date:

7 November 2022

Summary of transaction:

(i) the names of the merger parties;

• Oki Electric Co., Ltd. (“Oki”);

• Yokogawa Electric Corporation (“YE”)

(collectively, the "Parties").

(ii) a description of the transaction;

The joint notification relates to the proposed acquisition by Oki of YE’s aviation equipment business (the “Target Business”) from YE and its subsidiaries, Yokogawa Manufacturing Corporation and Yokogawa Electric Asia Pte. Ltd. (“YEA”) (the “Proposed Transaction”).

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

Oki

Oki is active in the following business segments worldwide: (a) information and communications technology; (b) mechatronics systems; (c) printers; and (d) electronics manufacturing services and others.

Oki operates in Singapore through Oki Data (Singapore) Pte. Ltd., which was established to support distributors in Singapore and Southeast Asia for Oki’s printers and spare parts. In Singapore, Oki offers colour printers, monochrome printers, multifunction printers, DICOM – medical printers, graphic arts printers, large format printers and dot matrix printers.

YE

YE is active in the following business segments worldwide: (a) energy & sustainability business; (b) materials business; (c) life business; and (d) measuring instruments business.

In Singapore, YE’s subsidiaries, Yokogawa Engineering Asia Pte Ltd, YEA and Yokogawa Electric International Pte. Ltd. (collectively, “Yokogawa Singapore”) are the global manufacturing centre for distributed control & safety systems, measuring instrumentation & avionics, and are also YE's global engineering centre. Functioning as the regional headquarters, Yokogawa Singapore works closely with the local country offices to serve clients across Southeast Asia, Taiwan and Oceania regions.

Target Business

The Target Business includes YEA’s commercial aviation business which is involved in developing flat panel displays with Thales Avionics and manufacturing other aviation equipment (specifically, thermometers, fuel quantity indicators, control units and image generation devices).

In Singapore, the Target Business is involved in manufacturing flat panel displays for aircraft cockpit systems (the “Target Business’s Product”).

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

The Parties submit that Oki and the Target Business do not offer any overlapping goods or services.

(v) a description of substitute goods or services;

In YE’s view, flat panel displays supplied by Collins Aerospace (used for The Boeing Company’s cockpit instruments) could be a substitute to the Target Business’s Product (used for Airbus SE’s cockpit instruments). However, it may not be a close substitute due to differences in sizes of the flat panel displays. Further configuration will be required for the flat panel displays supplied by Collins Aerospace to be used for Airbus SE’s cockpit system.

(vi) The Parties' views on:

a. definition of the relevant market(s);

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

c. barriers to entry and countervailing buyer power; and

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

The Parties submit that Oki and the Target Business do not offer any overlapping goods or services. Accordingly, there are no applicable relevant markets.

Manufacturers of flat panel displays for aircraft cockpit systems compete based on price, performance, quality and supply capability.

The Parties submit that Thales, as the sole customer of the Target Business in Singapore and worldwide, is able to exercise significant bargaining power on Oki, post-Proposed Transaction, in response to price changes or any other reasons, by self-supplying or switching to another supplier.

Non-coordinated effects

The Parties submit that the Proposed Transaction will not give rise to non-coordinated effects as Oki and the Target Business do not offer any overlapping goods or services and the structure of the industry would remain unaffected by the Proposed Transaction.

Coordinated effects

The Parties submit that the Proposed Transaction will not give rise to coordinated effects. In the absence of horizontal overlaps between Oki and the Target Business, 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 Parties are minimal and will not give rise to competition concerns as Oki, post-Proposed Transaction, will have no ability or incentive to engage in anti-competitive customer or input foreclosure.

 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 April 2023

Read the Media Release.

Read the Grounds of Decision.