Singapore’s competition watchdog has assessed that ANA Holdings’ proposed acquisition of Japanese cargo airline Nippon Cargo Airlines (NCA) will not result in a substantial lessening of competition within any market in Singapore.
The Competition and Consumer Commission of Singapore (CCCS) said on Friday (May 24) that it arrived at this conclusion after a six-month review, which also took into account public feedback.
The commission launched the review after ANA and NCA submitted an application on Dec 7, 2023, arguing that the proposed acquisition will not result in a substantial lessening of competition in these markets.
Background
In Singapore, ANA – Japan’s biggest airline – provides both international air passenger transport and air cargo transport to and from Singapore.
The business activity that is relevant to the proposed acquisition is its operations in international air cargo transport. ANA uses dedicated cargo planes, or freighters, as well as passenger planes to transport cargo.
NCA is a wholly owned subsidiary of Japanese logistics company Nippon Yusen Kabushiki Kaisha, and is Japan’s sole cargo-only airline company. It provides international cargo transport, including services such as air freighting and handling services for a diverse range of cargo types.
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Tokyo is the only city that both parties use for entry to and exit from Japan for their air cargo transport services between Singapore and Japan.
Both also overlap on other routes between Singapore and other territories beyond Japan. They generally operate these routes on an indirect basis via Tokyo.
The watchdog’s review focused on the relevant markets for the provision of direct and indirect cargo services. These markets relate to the services from Singapore to Tokyo and vice versa.
Review findings
The commission cited three reasons for concluding that the acquisition will not result in a substantial lessening of competition.
Firstly, there are multiple suppliers that are viable alternatives to the two companies. These include competing airlines that operate indirect flights to the relevant markets. Third-party feedback also indicated that ANA and NCA are not the closest competitors to each other.
Secondly, it is possible for competing airlines to consider adding capacity when a competitive opportunity arises. This could be done through the addition of freighter aircraft operations.
Thirdly, coordination between competitors is difficult as the prices charged to customers are not transparent. This is due to specific requirements that involve a direct negotiation process between customers and suppliers.
There are also alternative suppliers available to customers who can easily switch between them. This creates commercial incentives for suppliers to price competitively and dis-incentivises coordination.
CCCS said that it will make the grounds of its decision available on its public register in due course.
