Nanlien International Corp. applied for approval to combine with eight other enterprises, including Tong Hui Co., Ltd., Tong Hsiang Co. Ltd., Tong Chin International Ltd., Tong Kuan Egg Products Corp., Ming Tong Enterprises Corp., Tung Ting Foods Co. Ltd., Tung Chu Enterprises Corp. and Union Chinese Corp.
Case:
Nanlien International Corp. applied for approval to combine with eight other enterprises, including Tong Hui Co., Ltd., Tong Hsiang Co. Ltd., Tong Chin International Ltd., Tong Kuan Egg Products Corp., Ming Tong Enterprises Corp., Tung Ting Foods Co. Ltd., Tung Chu Enterprises Corp. and Union Chinese Corp.
Key Words:
merger, distribution channel, to distribute and sell products
Reference:
Fair Trade Commission Decision of August 16, 2001 (the 510th Commissioners' Meeting); Decision (90) Kung Chieh Tzu No. 729~736
Industries:
Other foods and related goods wholesale industry (5139), forage wholesale industry (5219), wholesale of other agricultural, farming and fishery products (5129), frozen foods wholesale industry (5131), alcohol and tobacco wholesale industry (5133)
Relevant Laws:
Summary:
1. Nanlien International Corp.'s (Nanlien) proposed merger with eight other enterprises via acquisition of the voting shares in those enterprises 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"). Nanlien filed an application for approval because its revenue for the preceding fiscal year (2000) reached about NT$590 million, exceeding the threshold amount provided in Article 11(1)(iii) of the Fair Trade Law ("sales for the preceding fiscal year of one of the enterprises in the merger exceeds the threshold amount publicly announced by the central competent authority"). 2. The following is an analysis of the impact the proposed merger of Nanlien and the eight other enterprises will have on their respective markets: (1) In the miscellaneous foods wholesale market: Nanlien holds a 2.44% market share (after deducting operating revenue from imports) whereas Tong Hsiang, Ming Tong, Tung Ting, Tung Chu and Union Chinese hold a 0.5%, 0.02%, 0.02%, 0.34% and 0.12% share of the market, respectively. As each of these companies holds less than 1% of the market, Nanlien's merger with these enterprises will therefore result in a very limited increase in Nanlien's total market share. The proposed merger involves only changes in the structural make-up of their shareholders with very little impact on the business scope and operational policy of the enterprises involved. Consequently, the merger should not significantly restrict others from entering a specific market and unfavorable restraints on competition resulting from the merger should be limited. (2) In the agricultural and fishery wholesale market: Tong Kuan Egg Products Corp. (Tong Kuan) one of the participants in the proposed merger, specializes in the wholesaling of eggs. The company holds less than a 1% market share in this market sector. A merger of Tong Kuan with Nanlien (which specializes in miscellaneous food product wholesaling) would thus have very little impact on market share. The proposed merger would only involve changes in the structural make-up of their shareholders and will have very little impact on the business scope and operational policy of the enterprises involved. Given that the merger will result in very little change of their market shares and not significantly restrict others from entering the market, unfavorable restraints on competition created by the merger will be limited. (3) In other wholesale markets (including agricultural feed): The core operations of Tong Hui Co., Ltd. and Tong Chin International Ltd. are wholesaling and distribution of agricultural feed. The two companies hold less than 0.05% of the market share in other wholesale markets. A merger of the two companies with Nanlien (which specializes in miscellaneous food product wholesaling) would not have a significant impact on the market share of any of the companies in any specific market. The proposed merger would only involve changes in the structural make-up of their shareholders and would have very little impact on the business scope or operational policy of the enterprises involved. Consequently, such a merger would result in very little change in the market shares of the participants and not significantly restrict others from entering the market and thus unfavorable restraints on competition created by such a merger would be limited. 3. This proposed merger involves Nanlien's cooperation with the strategic plans of its parent company, the President Group, to develop a sub-group to integrate resource efficiency and facilitate investment management, with Nanlien becoming an investor in enterprises in the commodity selling and logistics industry such as the traditional and bulk distribution channels. The seven enterprises (excluding President Chain Store) involved in the proposed merger already market, distribute and sell products supplied by the President Group. The merger focuses on the integration of different logistical distribution channels to provide centralized resource management within the group and reduce unnecessary managerial costs. As Chinese Taipei enters WTO at the end of 2001, stiffer competition for survival among products can be expected. The merger will provide the enterprises involved with better product distribution opportunities, enhance the international position of the group and develop toward the emerging global trend of "integration and sharing of group resources," with the effect of increasing the benefits to the overall economy. The overall economic benefit of the merger of Nanlien International Corp. and the other involved enterprises outweighs any disadvantages resulting from restraint of competition. The Fair Trade Commission therefore approved the merger application under Article 12 of the Fair Trade Law. Appendix: Nanlien International Corp.'s Uniform Invoice Number: 12208321 Tong Hui Co., Ltd's Uniform Invoice Number: 89704312 Tong Hsiang Co. Ltd.'s Uniform Invoice Number: 70562691 Tong Chin International Ltd.'s Uniform Invoice Number: 70562691 Tong Kuan Egg Products Corp.'s Uniform Invoice Number: 16356028 Ming Tong Enterprises Corp.'s Uniform Invoice Number: 89509991 Tung Ting Foods Co. Ltd.'s Uniform Invoice Number: 84567182 Tung Chu Enterprises Corp.'s Uniform Invoice Number: 86685038 Union Chinese Corp.'s Uniform Invoice Number: 21259665 Summarized by Taur, Rong; Supervised by Chen, Yuhn-Shan