Proposed Acquisition by Daifuku Co Ltd of 80 percent of the Shares in BCS Group Limited

Notifying Parties

Daifuku Co. Ltd. and BCS Group Limited

Notifying Date

12 December 2014

Summary of Transaction

 (i)              The names of the merger parties:

                   Purchaser : Daifuku Co. Ltd (“Daifuku”)

                   Target: BCS Group Limited (“BCS”)

(ii)              a description of the transaction:

This is a joint notification made by Daifuku and BCS, in relation to Daifuku’s proposed acquisition of 80% of the shares in BCS (“the Proposed Acquisition”).

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

Daifuku and its subsidiaries manufacture and supply a range of automated material handling systems across a range of industries in North America, Europe, Asia and Mexico. Daifuku designs, develops, installs, operates and maintains automated material handling systems across the world.

BCS and its subsidiaries design, build, operate and maintain automated material handling systems, predominantly in the areas of baggage handling systems (“BHS”) for airports, and courier sortation systems (“CSS”) for logistics companies in Asia, the Middle East, Africa, Europe, North America and Mexico.

In Singapore, Daifuku and BCS are involved in the design, development, installation, operation and maintenance of automated material handling systems. However, BCS only focuses on the provision of automated material handling systems for the BHS and CSS sectors, and Daifuku has no presence in the BHS sector in Singapore, nor the CSS sector (both in Singapore and globally).

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

Daifuku and BCS overlap in the design, development, installation, operation and maintenance of automated material handling systems.

 (v)              the applicant’s 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).

Daifuku and BCS submit that the relevant market is the provision of material automated handling systems globally.

The Parties take the view that the Proposed Acquisition, when carried into effect, will not lead to a substantial lessening of competition, whether in Singapore or globally, for the following reasons:

(a)     the absence of market power post-acquisition;

(b)     the multitude of competitors that currently exists in automated material handling systems both in Singapore and globally;

(c)     the absence of significant barriers to entry and the ease and likelihood of entry of potential competitors into the relevant market;

(d)     the inability to unilaterally affect prices in view of the strong influence of macroeconomic factors;

(e)     due to the countervailing power of customers and low barriers to entry for competitors, any coordination would be unsustainable; and

(f)     participants in the automated material handling market would not have any incentive available to them given the multiplicity of alternativesuppliers.

Decision

The proposed merger, if carried into effect, will not infringe the section 54 prohibition.

Decision Date

26 January 2015
Click here for the decision.