Combination of Ruentex Industries Ltd and RT-Mark International
Case:
Combination of Ruentex Industries Ltd and RT-Mark International
Key Words:
combination, merger of enterprises, wholesaler
Reference:
Fair Trade Commission Decision of July 12, 2000 (the 453rd Commissioners' Meeting), Approval Decision (89) Kung Chieh No. 696
Industry:
Retail wholesaler (5314)
Relevant Laws:
Summary:
1. In accordance with Article 6(1)(i) of the Fair Trade Law (the Law), Ruentex Industries Ltd (Ruentex) applied to merge with RT-Mark International (RT-Mark) on 1 June 2000. According to the application, Ruentex was to be the surviving enterprise while RT-Mark would become defunct. The merger was to be effected with a one-to-one stock swap: the surviving enterprise would issue one share of stock for each share in the defunct enterprise. 2. The Fair Trade Commission (the Commission) reviewed the application and found that the combining enterprises were subsidiaries of the Run Tai Group. Ruentex filed the merger application with the Commission because Ruentex's total sales volume in the previous fiscal year met the standard set in Article 11(1)(iii) of the Law and triggered the application requirement. Ruentex provided the Commission with an application to merge and a supplementary letter that included basic company information for the combining enterprises, asset and balance sheets for the previous fiscal year, a list of the primary costs of the merger, prices, and figures for total sales and production volume. The supplementary letter also included an explanation of the benefits to the overall economy that the merger would bring. These submissions met the requirements set forth in Article 8 of the Implementing Rules to the Fair Trade Law. 3. The Commission noted that the Ruentex and RT-Mark have the same responsible person and that Run Tai Group has submitted applications for merger in the volume retail sales industry that were reviewed by the Commission at its 321st and 368th meetings on 24 December 1997 and 15 November 1998. Ruentex represented that this merger would not change the balance of competition in the domestic volume retail sales industry nor would it substantively change the competitive structure in that industry. The merger should also promote healthy competition in Chinese Taipei's wholesaler industry because it will lead to the rational allocation of resources, the effective integration of the two enterprises' organizations, and savings in labor costs. 4. The Commission investigated and found that the domestic wholesaler industry is comprised of 16 enterprises: Wan K'e Long (the Netherlands), Carrefour (France), Kao Feng, Ta Le, Wan Chia Fu, Far Eastern Hypermart, Fu Yuan, Ya T'ai, Ta Mai Chia, Ta Jun Fa, Tuntex, Hung Li To (France), Hao Shi To (US), Hao Shih Teng, Chung Hsing, and Ta Kuang. The Commission also discovered that according to "Distribution and Supply," an industry publication, there are more than 100 superstores in Chinese Taipei and that the participants in this market engage in wide-ranging competition. The Commission failed to find significant entry barriers to the opening of new stores or substantive restrictions on competition. 5. In sum, the proposed combination does not pose a threat to overall economic development and its benefits to the overall economy outweigh the negative effects of the potential restriction of competition. The Commission therefore approves this application pursuant to Article 12 of the Fair Trade Law. Appendix: Ruentex Industries Ltd's Uniform Invoice Number: 14053007 RT-Mark International Ltd's Uniform Invoice Number: 97165560 Summarized by Cheng Chia-lin; Supervised by Lin Chin-lang