OECD kpcdb

1. Scope

Article 13 provides that the FTC may not prohibit any merger filed if the overall economic benefit outweighs the adverse effect on competition.

 

Paragraph 1 of Article 10 of the FTA, defines a merger as one of the following: ( i) where an enterprise and another enterprise are merged into one; (ii) where an enterprise holds or acquires the shares or capital contributions of another enterprise to an extent of more than one third of the total number of voting shares or total capital of such other enterprise; (iii) where an enterprise is assigned by or leases from another enterprise the whole or the major part of the business or assets of such other enterprise; (iv) where an enterprise operates jointly with another enterprise on a regular basis or is entrusted by another enterprise to operate the latter’s business; or (v) where an enterprise directly or indirectly controls the business operation or the appointment or discharge of personnel of another enterprise.

2. Notification

Chinese Taipei operates a pre-merger mandatory notification regime.

 

Under Article 11, parties to a merger should notify the FTC where:

 

a)  the post-merger market share exceeds one third of the market;

b)  one of the enterprises in the merger has more than one fourth of the market share; or

c)  sales for the preceding fiscal year of one of the enterprises in the merger exceeds the threshold amount publicly announced by the FTC. The thresholds of the amount of sales referred to in the Article 11 are set as follows:

(i) for non-financial sector: an enterprise whose domestic sales in preceding fiscal year exceeds NTD 15 billion is to merge with an enterprise whose domestic sales in preceding fiscal year exceeds NTD 2 billion;

(ii)​ for financial sector: an enterprise whose domestic sales in preceding fiscal year exceeds NTD 30 billion is to merge with an enterprise whose domestic sales in preceding fiscal year exceeds NTD 2 billion;

(iii)​ The combined worldwide sales in the preceding fiscal year of the enterprises in the merger exceed NTD 40 billion and the domestic total sales of each of at least two of the enterprises in the merger in the preceding fiscal year also surpass NTD 2 billion.

3. Procedural rules

The waiting period for merger review is 30 working days starting from the date the FTC accepts the complete filing materials. The FTC may shorten or extend the period as it deems necessary and notify the party of such change. The extension period shall not exceed 60 working days.

 

The review procedures by the FTC are divided into simplified procedure and regular procedure.

 

The merger cases applying to the simplified procedure are reviewed by the designated commissioner, vice chairperson and chairperson, and then they are reported to the commission on the following month. Simplified procedure: Point 7 of the Guidelines on Handling Merger Filings specifies mergers to which a simplified procedure is applied:

 

a)  Horizontal mergers: the aggregate market share of the parties is less than 20% of the total market; or the aggregate market share of the parties is less than 25% of the total market and the market share of one of the parties to the merger is less than 5% of the total market

b)  Vertical mergers: the aggregate market share of the parties in each relevant market is less than 25% of the total market

c)  Merger between businesses that neither compete horizontally nor have an upstream-downstream relationship (“conglomerate merger”): where the FTC concludes that potential competition between the parties to a conglomerate merger is insignificant.

d)  One of the merging parties directly holds more than one third but less than half of the voting shares or capital contributions of another business and merges with the said business.

 

Exceptions where the simplified procedure does not apply:

 

Under Point 8 of the Guideline, a regular procedure shall be applied to mergers as follows: where the CR2 and CR3 (market share of the top two/three businesses) account for two thirds or three fourths of the relevant market; mergers involving a significant public interest; where one of the merging parties is a financial holding company; where the market entry level or market concentration is high or there are conditions likely to lead to disadvantages as a result of the significant competition restrictions thereof incurred; where it is difficult to determine the relevant market or calculate the market shares of the merging parties.

 

Procedural fairness: Upon request by the merging parties, the FTC provides the parties with opportunities to consult with regard to significant legal, factual or procedural issues during the course of the investigation. The FTC may also hold public hearings for the merger case or provide opportunity for merging parties to present evidence, if necessary.

4. Assessment

The Guidelines provides factors that the FTC considers when assessing the competition restricting effects of horizontal mergers: the post-merger capacity for merging parties to increase their prices (unilateral effect), the possibility post-merger of the merging parties and their competitors establishing agreements to restricting each other’s business activities or taking concerted actions to eliminate competition (co‑ordinated effects), market entry, countervailing power, etc.

 

For vertical mergers, factors considered to determine the effects on competition are as follows: the possibility for other competitors to choose trading counterparts after the merger; market entry level; the possibility for the merging parties to abuse their market power in the relevant market; the possibility of raising rivals’ cost; the possibility of concerted actions occurring as a result of the merger; and other factors likely to lead to market foreclosure.

 

According to Point 12 of the Guidelines, factors considered for conglomerate mergers include: change of regulations and its impact on cross-industry operations of the merging parties; technological improvement enabling the merging parties to engage in cross-industry operations, and whether any of the merging parties originally has the intention to develop cross-industry operations; and other factors likely to affect market competition.

5. Remedies and sanctions

Under Point 14 of the Guidelines, the FTC may attach conditions or undertakings to its decisions to not prohibit a merger. The conditions and undertakings may include behavioural or structural measures, such as disposal of shares or assets.

 

Failure to notify: Under Article 39, where enterprises that do not notify a merger, proceed with a prohibited merger or fail to perform the required conditions and undertakings, the FTC may order prohibition of the merger, division of enterprises, disposal of all or a part of the shares, transfer of a part of the operations, removal certain persons from their positions, or any other necessary dispositions.

 

The enterprises may also be subject to an administrative penalty from NTD 200,000 to NTD 50 million.

Where any enterprise violates the disposition made by the FTC for administrative penalty or remedies under Article 39, the FTC may order for dissolution, suspension or termination of business operation.

 

The FTC has reviewed a total of 6,851 merger cases between 1992 and 2016.

 

 

* This information is based on Competition Law in Asia-Pacific: A Guide to Selected Jurisdictions (2018).