On 15 September 2014, the Competition Commission of Singapore (the “CCS”) announced that it has cleared the acquisition of Southeast Asian Airlines (SEAir), Inc, (“SEAir”) by Cebu Air, Inc (“Cebu Pacific”). The CCS has found that the acquisition does not infringe section 54 of the Competition Act (the “Act”). Section 54 of the Act prohibits mergers that have resulted or may be expected to result in a substantial lessening of competition in Singapore, unless excluded or exempted under the Act.

Allen & Gledhill LLP was involved as Singapore antitrust counsel to the notifying parties, Cebu Pacific and Tiger Airways Holdings Limited (“Tigerair Holdings”) (collectively the “Parties”), in securing the clearance. Advising the Parties were Partner Daren Shiau with Counsel Kirstie Nicholson.

Merger notification post-acquisition

Although the acquisition was completed on 20 March 2014, the Parties filed a joint notification (the “merger notification”) on 23 May 2014 to ask the CCS for a decision as to whether the acquisition by Cebu Pacific of 100% of the issued and outstanding shares of SEAir, from Roar Aviation II Pte, Ltd. (“Roar II”), a wholly-owned subsidiary of Tigerair Holdings, and the other shareholders of SEAir, had infringed section 54 of the Act.

Ancillary restrictions

As part of the merger notification, the Parties also informed the CCS that Cebu Pacific and Tiger Airways Singapore Pte. Ltd. (“Tigerair Singapore”), a wholly-owned subsidiary of Tigerair Holdings, have entered into a Strategic Alliance Agreement (the “SAA”). The Parties submitted that the SAA is inter-conditional on the shares acquisition from Roar II, and is an ancillary restriction directly related to and necessary to the implementation of the acquisition. The submission of ancillary restrictions is to seek exclusion (the “ancillary restriction exclusion”) from the application of section 34 (anti-competitive agreement) and section 47 (abuse of dominance) of the Act. In order to benefit from the ancillary restriction exclusion, a restriction must be directly related and necessary to the implementation of the merger.

Conclusion

At the end of the Phase 1 review, the CCS cleared the acquisition on the basis that it did not infringe section 54 of the Act. However, the CCS did not consider the SAA, among others, to qualify for the ancillary restriction exclusion, and has not made any finding on whether the SAA, among others, may otherwise infringe the Act.

Reference materials

The following materials are available from the CCS website www.ccs.gov.sg: