President Chain Store Corp. applied for approval to combine with Mech-President Corp., President Information Corp., President Musashino Corp. and President Direct Marketing Corp.
Case:
President Chain Store Corp. applied for approval to combine with Mech-President Corp., President Information Corp., President Musashino Corp. and President Direct Marketing Corp.
Key Words:
merger, chain convenience stores, petrol station market
Reference:
Fair Trade Commission Decision of August 23, 2001 (the 511th Commissioners' Meeting); Decision (90) Kung Chieh Tzu No. 774~777
Industries:
Chain Convenience Stores (4753), Petrol Stations (4721), Integration of Computer Systems Service Provision (7202), Fast Food Manufacturing (0895), Warehousing, Distribution, Transportation, and Logistical Services (5600) Relevant Law: Article 12 of the Fair Trade Law
Summary:
1. President Chain Store Corporation (President Chain Store) filed applications for approval to merge with Mech-President Corp. (Mech-President), President Information Corp. (President Info), President Musashino Corp. (President Musashino), and President Direct Marketing Corp. (President Direct) respectively under Article 11 of the Fair Trade Law. The merger falls within the type of combination defined in Article 6(1)(ii) of the Fair Trade Law ("where an enterprise holds or acquires the shares or capital contributions of another enterprise to an extent of more than one-third of the total voting shares or total capital of such other enterprise). After the merger, President Chain Store's shareholding in the other enterprises will be adjusted as follows: (1) previous holding of 19% of total voting shares in Mech-President will increase to 66.3%; (2) previous holding of 30% of total voting shares in President Info will increase to 54.17%; (3) previous holding of 30% of total voting shares in President Musashino will increase to 60%; (4) previous holding of 30% of total voting shares in President Marketing will increase to 60%. 2. Monthly statistical reports on commercial activities in Chinese Taipei categorize general commodity retailers into five major groups: department stores, supermarkets, chain convenience stores, wholesale stores and others. The market share for each group of general commodity retailers in 2000 were, respectively, 32.04% for department stores, 25.20% for wholesale stores, 18.99% for chain convenience stores, 12.32% for supermarkets and 11.45% for others. The applicant, President Chain Store had a 51.84% share of the chain convenience store market group, which amounted to 9.65% share of the overall general commodity retail market. Retail market statistics also showed that, as to the end of 2000, President Chain Store operated 2,641 convenience stores around Chinese Taipei, or 42.69% of Chinese Taipei's total number of chain convenience stores. Further, during the first half of 2001, President Chain Store opened an average of 28 new stores per month, resulting the number of convenience stores it operates to 2,813 by the end of the period. 3. President Chain Store's revenue in 2000 comprised 51.84% of the chain convenience store market for the year. The total number of chain convenience stores operated by President Chain Store comprises 42.69% of Chinese Taipei total number of chain convenience stores. However, that figure comprises merely 9.65% of the general commodity retail market. President Info is a subsidiary of President Chain Store while President Musashino and President Marketing are President Chain Store's strategic partners in supplying and providing President Chain Store with goods and logistical support. Prior to the planned merger, President Chain Store has already held 30% of the total voting shares in each of the three enterprises. Therefore, the planned merger is unlikely to cause significant impact on the market in which these enterprises are a part and the overall economic benefits outweigh the disadvantages resulted from competition restraint. With respect to the proposed merger of President Chain Store and Mech-President, as Mech-President currently has a very low share of the domestic petrol station market and with government liberalization of the domestic petroleum market, there is a need for petrol stations to provide associated services for the purpose of improving the market development. The overall economic benefits of the merger, therefore, outweigh any disadvantages resulted from competition restraint. The application is approved in accordance with Article 12 of the Fair Trade Law. Appendix: President Chain Store Corp.'s Uniform Invoice Number: 22555003 Mech-President Corp.'s Uniform Invoice Number: 86379116 President Information Corp.'s Uniform Invoice Number: 16151427 Summarized by Tai, Pei-Yi; Supervised by Chen, Yuhn-Shan