Application for permission to merge Fubon Commercial Bank and Chin Shan Securities Investment Advisory Co., Ltd.
Case:
Application for permission to merge Fubon Commercial Bank and Chin Shan Securities Investment Advisory Co., Ltd.
Key Word:
market share
Reference:
Fair Trade Commission Decision of September 28, 2000 (the 464th Commissioner's Meeting); Letters (89) Kung Yi Tzu No. 8910265-001, (89) Kung Chieh Tzu No. 865
Industry:
Domestic Banking Industry (6512), Securities Investment Advisory Industry (6612)
Relevant Laws:
Summary:
1. Fubon Commercial Bank's (Fubon) plan to acquire 2,999,973 shares of Chin Shan Securities Investment Advisory Co., Ltd. (Chin Shan) (under which Fubon would hold 99.99% of Chin Shan's shares) constituted a merger under Article 6(1)(ii) of the Fair Trade Law. Therefore, the company filed an application with the Fair Trade Commission for permission to engage in a merger pursuant to Article 11(1)(iii) of the Fair Trade Law. 2. The following is the Commission's assessment of the overall benefits to the economy and restrictions to market competition of merger in the application: (1) According to "Basic Bank Information Regarding the Taiwan Area in the Republic of China" published by the Bureau of Monetary Affairs under the Ministry of Finance (MOF), as of the end of 1999, in domestic banks, the balance of deposits was New Taiwan Dollars (NT$) 13,839,050,000,000 and the balance of loans was NT$ 12,787,269,000,000. At Fubon, the balance of deposits was NT$ 191,596,000,000 (a 1.38% market share) and the balance of loans was NT$140,262,000,000 (a 1.10% market share). The number of domestic bank branches was 2,576, of which Fubon had 34 (a 1.32% market share). Chin Shan's market share was less than 1.00%. Under the circumstances, the market share of the combined companies are both low. (2) The markets relevant to the merger in this application include the banking market and the securities investment advisory services market. Given the fact that securities services are not included in the service Fubon currently offers, the merger would only cause a shift in the distribution of shareholder ownership in the investment advisory services market, and would not affect market power or market competition. According to "Important Indices in the Securities and Futures Markets" published in June 2000 by the Securities & Futures Commission under the MOF, in June, the number of domestic investment advisory enterprises is 231, and there would remain a high degree of competition among them. After merger, the two companies' market shares in their respective markets would remain low, and there would not be any obvious change for the intensity of market competition in those markets. Therefore, the likelihood of restriction on market competition was very low. (3) The merger would not obviously affect market structure, nor would it create restriction on market competition. It would be helpful for Fubon to provide more comprehensive financial information and advisory services, raise the professionalism of its services, and increase the preservation for the rights and interests of its consumers, which would help domestic commercial banks better prepare for future developments and trends in international banking market. The merger would allow general commercial banks to more effectively use their existing resources to provide more comprehensive services and meet changing market demands, and prepare themselves better to satisfy customer demands in banking and investment services. On the other hand, the merger would also allow Chin Shan to obtain Fubon's resources that would help Chin Shan to focus on specialized research and comprehensive asset management services. In this way, it would maintain its market competitiveness and contribute to the overall economy. 3. In sum, with respect to Fubon's plan to acquire Chin Shan, the overall economic benefits would exceed the restrictions to market competition. Therefore, the Commission approves the application pursuant to Article 12 of the Fair Trade Law. Appendix: Fubon Commercial Bank's Uniform Invoice Number: 86520472 Chin Shan Securities Investment Advisory Co., Ltd.'s Uniform Invoice Number: 97322132 Summarized by Tseng Chiu-Chen; Supervised by Horng Der-Chang