Approval of applications filed by Yuelong Motor Co., Ltd. and Ch'un Yuan Investment Corp. for merger with Ke Shang Vehicle Rental Corp. and Hsin Ke Rental Corp.
Chinese Taipei
Case:
Approval of applications filed by Yuelong Motor Co., Ltd. and Ch'un Yuan Investment Corp. for merger with Ke Shang Vehicle Rental Corp. and Hsin Ke Rental Corp.
Key Words:
re-investment; multi-faceted merger; economies of scope
Reference:
Fair Trade Commission Decision of April 14, 1999 (the 388th Commission Meeting); Letters (88) Kung Er Tzu No. 8800989-002, (88) Kung Chie Tzu No. 222 and (88) Kung Chie Tzu No. 255
Industry:
Automobile Manufacturing (3231); Car Rental (7821)
Relevant Laws:
Articles 6(1)(ii) and 11 (1)(iii) of the Fair Trade Law
Summary:
Yuelong Motor Co., Ltd. and Ch' un Yuan Investment Corp. planned to obtain 47.118% of the shares of Ke Shang Vehicle Rental Corp. and 40% of the shares of Hsin Ke Rental Corp. respectively, which constituted acts of merger as defined in Article 6, paragraph 1, sub-paragraph 2 of Fair Trade Law (the Law). Yuelong Motor filed an application for merger with the Fair Trade Commission (this Commission) after its sales revenue during the last fiscal year was reached the threshold to make it necessary to apply for an approval for the merger. Since the principals of the two merger cases and the type of merger were similar, the Commission decided to review the two applications simultaneously.
Description of the benefits of the merger to the overall economy:
This was a case of a multi-faceted combination of an automobile manufacturer and a car rental company that would integrate the resources and increase the competitiveness of the principals and improve the quality of peripheral services in the overall automobile market. For the companies involved in the combination and the domestic car rental market, the combination would result in positive economic benefits such as lower costs, creation of economies of scope, and improvement of service quality.Merger should not restrict market competition:
The entry barriers to the car rental market are low; the market is almost a fully competitive one, with each company holding a limited market share. For instance, the market shares of the two companies in this case, Ke Shang and Hsin Ke, account for 1.4% and 1.6% respectively. Therefore, this merger would not have adverse impact on market competition.In summary, it was decided at the 388th Commission Meeting that approving the merger application filed by Yuelong Motor would not restrict competition in relevant markets and would not adversely impact the overall economy. Thus the application for merger was approved in accordance with Article 12 of the Law.
Appendix:
Yuelong Motor Co., Ltd.'s Uniform Invoice Number: 03489200
Summarized by Yen, Ting-tung
Supervised by Yu, Su-su