Yahoo! International Branch Holdings Inc. Taiwan Branch and Yahoo! Taiwan Inc. (Kimo.com) applied for approval to combine under Article 11 of the Fair Trade Law
Case:
Yahoo! International Branch Holdings Inc. Taiwan Branch and Yahoo! Taiwan Inc. (Kimo.com) applied for approval to combine under Article 11 of the Fair Trade Law
Key Words:
Yahoo! Taiwan, portal web sites
Reference:
Industries: Information Provision Services (7503)Fair Trade Commission Decision of February 22, 2001 (the 485th Commissioners' Meeting); Decision (90) Kung Chieh Tzu No. 122
Relevant Laws:
Summary:
1. Yahoo! International Branch Holdings Inc. Taiwan Branch (hereinafter, "Yahoo! International Holdings Taiwan") planned to transfer all of its assets and business operations to Yahoo! Taiwan Inc. (Kimo.com) (hereinafter, "Yahoo! Taiwan"). The parties applied for approval to combine under Articles 6(1)(iii) and 11(1)(i) of the Fair Trade Law (FTL). 2. The said transfer of assets and business operations is the type of merger defined in Article 6(1)(iii) of the FTL. The Fair Trade Commission (FTC) approved the application for merger under Article 12 of the Fair Trade Law. 3. Reasons for granting the approval are as follows: (1) The enterprises participating in the merger are all subordinate enterprises of the extraterritorial enterprise Yahoo! Inc., the parent company of the Yahoo! Group. In order to accelerate its business integration, Yahoo! International Holdings Taiwan planned to transfer all of its assets and business operations to Yahoo! Taiwan (originally Kimo.com iMedia Inc., operator of the Kimo.com website). The operation of the two web sites by one team represents a re-deployment of existing market power within the Yahoo! Group, and does not involve a merger with the market power of any other enterprise. After the merger, Yahoo! Taiwan (Kimo.com) would have access to Yahoo! Inc. resources and technology that enjoy a global competitive edge. Combining these with the local market channels Yahoo! Taiwan's Kimo.com possessing as Chinese Taipei's largest portal would help the merging enterprises raise their operational efficiency and provide more comprehensive and multi-faceted quality of services to Chinese Taipei Internet users by pooling their economic power and integrating their respective technical and operational capacities and resources. (2) Both of the merging enterprises are major Internet portals in Chinese Taipei. Survey findings reveal an 85 % overlap between the user populations of the Taiwan's Yahoo.com and Kimo.com portals, i.e. 85 percent of visitors browsing the Taiwan Yahoo.com website also browse Kimo.com. Internet usage and the Internet advertising market in Chinese Taipei still have considerable room for development. The merger thus should not have a direct impact on centralization in the relevant markets or on portal composition in Chinese Taipei. If other conditions remaining unchanged, the merger should not significantly alter the competition in the market and is highly unlikely to restrain competition. Instead, the merger will be a catalyst in the improvement of overall quality of Internet services in Chinese Taipei, causing growth in the Internet user population and creating increased market demand. In totality, it should be conducive to the development of the Internet in Chinese Taipei by stimulating benign competi tion among Internet enterprises. (3) Barriers to market entry by Internet portals are minimal, and Internet portal services are high in substitutability and imitativeness. Any enterprise may gain access to the market and obtain the leadership based on its breakthrough in technology. To increase user alliance and stay in the race, the existing market leaders must continually expand the depth and breadth of their website links and develop new technology and provide new services. This creates a natural benign competition among the Internet portals. Besides the threat from their competitors, the Internet portals are also constantly challenged by users who disregard portals and directly access the websites of content providers. So, the merger in this case is unlikely to increase the barriers of entry to the relevant markets for other enterprises. (4) There is an urgent need for integration of operation among Internet operators in the Chinese language Internet market in order to compete with other Internet portals. This merger will highlight the importance of the Chinese language Internet market and will stimulate benign competition in Chinese Taipei's Internet portal industry by bringing in advanced international technology. This merger will also accelerate improvement of domestic portals on technology and competitiveness, strengthen the entire operational makeup of the industry, promote industrial development, and increase national competitiveness. So the merger should have an overall positive effect on Chinese Taipei's developing information and Internet industries. (5) In sum, the approved merger will have little effect on competition at the current stage and is unlikely to restrain competition in relevant markets. The merger will prove beneficial by helping local websites to improve their technology and competitiveness, by creating profit opportunities through alignment with international standards, and by enhancing the quality of services to Internet users at large. The merger was therefore approved pursuant to Article 12 of the FTL. Appendix: Yahoo! International Holdings Inc. Taiwan Branch's Uniform Invoice Number: 16842366 Kimo.com iMedia Inc. (Yahoo! Taiwan Inc.)'s Uniform Invoice Number: 70468838 Summarized by Lu, Li-Na; Supervised by Lee, Wen-Hsiu