Application for approval of merger under Article 11 of the Fair Trade Law for the acquisition of the Life Insurance Company of Georgia (Taiwan Branch) by Aetna Life Insurance Company of America (Taiwan Branch)
Case:
Application for approval of merger under Article 11 of the Fair Trade Law for the acquisition of the Life Insurance Company of Georgia (Taiwan Branch) by Aetna Life Insurance Company of America (Taiwan Branch)
Key Words:
life insurance, business acquisition, extra-territorial merger
Reference:
Fair Trade Commission Decision of May 31, 2001 (the 499th Commissioners' Meeting); Letter (89) Kung Yi Tzu No. 9005378-001
Industry:
Life Insurance (6410)
Relevant Law:
Article 6 of the Fair Trade Law
Summary:
1. The parent company of the Life Insurance Company of Georgia, ING Groep N.V., had previously acquired the international finance department of Aetna Inc. The extra-territorial acquisition was approved by the Fair Trade Commission (FTC) on 29 November 2000 with Decision (89) Kung Chieh Tzu No. 1118. To further consolidate its operations in Chinese Taipei, ING Groep plans to have Aetna Life Insurance Company of America (Taiwan Branch) acquire all businesses and assets of the Life Insurance Company of Georgia (Taiwan Branch). Aetna Life Insurance Company of America (Taiwan Branch) and the Life Insurance Company of Georgia (Taiwan Branch) applied for approval to combine under Articles 6(1)(iii) and 11(1)(iii) of the Fair Trade Law (FTL). 2. The Fair Trade Commission (FTC) in the 499 Commissioners' Meeting made the following decision: (1) Point 2 of the FTC Guidelines for Handling Extraterritorial Merger Cases states: "An "extraterritorial merger case" as referred to in these guidelines means a merger of two or more foreign enterprises outside of the territorial domain of the Republic of China under any of the circumstances specified under Article 6(1) of the FTL, and where the merger will have a direct, substantial, and reasonably foreseeable effect on the Chinese Taipei market." Although the nationality and location of combining enterprises falls outside the territorial domain of the Republic of China, the FTC may assert jurisdiction over such a merger if the merger will have a definite impact on relevant industries of the Republic of China. (2) In 2000, ING Groep N.V. acquired control over Aetna Inc. through a merger between ANB Acquisition Corp. (a subsidiary of ING Groep N.V.) and Aetna Inc. An application was filed with the FTC for approval of the said merger. The FTC reviewed the application and determined that because the two Groups both have a considerable number of affiliated enterprises and subsidiaries in Chinese Taipei, the merger would create a direct, substantial, and reasonably foreseeable effect on the ROC market. The FTC therefore held that it should exercise jurisdiction over the merger application and conduct a substantive analysis of the effects on competition in relevant markets. In its analysis, the FTC found that the affiliates (ING Fund Services and Baring Asset Management Holding Limited) have negligible influence on the investment consulting market, and that the merger of the two groups also should not have any heavy impact on, or adversely affect competition in, the life insurance market. Thus, in determining its approval of the previous application for extra-territorial merger, the FTC had already considered the factors of respective market positions, operational scales, and potential anti-competitive effects of Aetna Life Insurance Company of America (Taiwan Branch) and Life Insurance Company of Georgia (Taiwan Branch) in life insurance market in Chinese Taipei. (3) The guideline of the FTC's assessment of extra-territorial mergers is to prevent an over-concentration of economic power through integrating the market shares of subsidiaries in Chinese Taipei that could indirectly arise through extra-territorial mergers of the parent companies. This is a primary factor on which the FTC decides whether to approve or reject applications for extra-territorial mergers or mergers involving foreign entities. Given that the earlier extra-territorial merger was granted approval by the FTC, and that the parties involved in the earlier merger have amalgamated into one economic entity, the ING Groep has effectively obtained direct or indirect control over the business operations and personnel hiring and dismissal of both Aetna Life Insurance Company of America (Taiwan Branch) and the Life Insurance Company of Georgia (Taiwan Branch). Thus, the acquisition of the Life Insurance Company of Georgia (Taiwan Branch) by Aetna Life Insurance Company of America (Taiwan Branch) shou ld be considered to be merely as an internal business integration of the said financial group. It should not cause substantial effect on life insurance market in Chinese Taipei. Based on the considerations to reduce entities' operational costs, to expedite the Commission's review process, and to ease the inconvenience imposed on applicants, the FTC determined that the applicants would not be required to file a new application for the merger of Aetna Life Insurance Company of America (Taiwan Branch) and the Life Insurance Company of Georgia (Taiwan Branch). 3. Summary of responses to the applicants: Because the FTC has previously approved the application for merger of the ING Groep and Aetna Insurance Group as per Decision (89) Kung Chieh Tzu No. 1118, all enterprises belonging to these two groups are deemed to be part of the same financial group. Therefore, the acquisition of all businesses operations and assets of the Life Insurance Company of Georgia (Taiwan Branch) by Aetna Life Insurance Company of America (Taiwan Branch) for the purpose of business integration does not require another approval from the FTC. Appendix: Aetna Life Insurance Company of America's Uniform Invoice Number: 22656728 Life Insurance Company of Georgia (Taiwan Branch)'s Uniform Invoice Number: 22958131 Summarized by Liang, Ya-Chin; Supervised by Horng, Der-Chang