Safeway Gas Co., Ltd. applied for approval to merge with Ming-Xing Enterprises Co., Ltd.
Case:
Safeway Gas Co., Ltd. applied for approval to merge with Ming-Xing Enterprises Co., Ltd.
Key Words:
merger, liquid petroleum gas (LPG)
Reference:
Fair Trade Commission Decision of September 6, 2001 (the 513rd Commissioners' Meeting); Decision (90) Kung Chieh Tzu No. 810
Industry:
Liquid Fuel Provider Industry (3400)
Relevant Law:
Article 6(1)(ii) of the Fair Trade Law
Summary:
1. Safeway Gas Co., Ltd. (Safeway Gas) and Kuang Hwa Investment (Kuang Hwa) signed a memorandum of understanding regarding share acquisition. Safeway Gas plans to purchase Kuang Hwa's holding of 84.2 % of the total voting shares in Ming-Xing Enterprises Co., Ltd. (Ming-Xing). As Safeway Gas already controls 15.785 % of the Ming-Xing voting shares, the share purchase give Safeway Gas control of 99.9 % of total Min-Hsing voting shares. 2. Since the opening of the liquid petroleum gas (LPG) market to imports in January 1999, there have been four upstream liquid gas suppliers in the market: Chinese Petroleum Corp. (CPC), Formosa Petrochemical Corporation (Formosa) and Lee Chang Yung Chemical Industry Corporation (Lee Chang Yung) and Ming-Xing. Approval of the application to merge Ming-Xing and Safeway Gas will enable Ming-Xing to increase downstream distribution channels, enhance market competitiveness and invigorate competition in the LPG market. In addition to purchasing LPG from CPC and Formosa, Safeway Gas may begin importing LPG. This could reduce the extent to which domestic LPG prices are controlled by CPC and Formosa. After the two enterprises merge, Ming-Xing may continue its operation and the waste of investment in LPG storage facilities may be avoided. 3. Safeway Gas's core business is the distribution and filling of LPG canisters whereas Ming-Xing specializes in importing LPG. Safeway Gas was Ming-Xing's only liquid gas buyer in 2000. The merger of the two enterprises is a vertical merger of upstream and downstream suppliers. The merger will not directly affect Safeway Gas's share of the domestic LPG market. Nor will this create serious or adverse effects on distributors currently in the same market position as Safeway Gas. With respect to the LPG import market, the merger may strengthen Ming-Xing's distribution channels; increase LPG import volume and stimulate competition in the LPG distribution market. The merger should not adversely impact the LPG import market. 4. In summary, the overall economic benefits of the merger outweigh potential restraints on market competition. The application is approved pursuant to Article 12 of the Fair Trade Law. Appendix: Safeway Gas Co. Ltd.'s Uniform Invoice Number: 86927084 Ming-Xing Enterprises Co., Ltd.'s Uniform Invoice Number: 84131836 Summarized by Lai, Shu-Ching; Supervised by Tso, Tien-Liang