Fubon Insurance Co., Ltd.'s establishing Fubon Financial Holding Co., Ltd. by share conversion and, therefore, applying for approval of merger of enterprises in accordance with Article 11 of the Fair Trade Law and Article 3 of the Financial Holding Company Combination Review Regulations
Case:
Fubon Insurance Co., Ltd.'s establishing Fubon Financial Holding Co., Ltd. by share conversion and, therefore, applying for approval of merger of enterprises in accordance with Article 11 of the Fair Trade Law and Article 3 of the Financial Holding Company Combination Review Regulations
Key Words:
assignment of operations, share conversion, financial holding company combination
Reference:
Fair Trade Commission Decision of November 22, 2001 (the 524th Commissioners' Meeting); Letter (90) Kung Yi Tzu No. 9015275-001
Industry:
Financial Investment Industry (6294)
Relevant Laws:
Articles 6 and 12 of the Fair Trade Law; Article 11 of the Financial Holding Company Combination Review Regulations
Summary:
1. Fubon Insurance Co., Ltd. intended to establish Fubon Financial Holding Co., Ltd. by means of assignment of operations, under which Fubon Financial Holding Co., Ltd. would subsequently obtain 100% of the shares of Fubon Insurance Co., Ltd., Fubon Bank Co., Ltd., Fubon Securities Co., Ltd., and Fubon Life Assurance Co., Ltd. Since the sale revenues of Fubon Insurance Co., Ltd., Fubon Bank Co., Ltd., Fubon Securities Co., Ltd., and Fubon Life Assurance Co., Ltd. each exceeded NT$5 billion (the threshold for mandatory filing for merger) for the preceding fiscal year, Fubon Insurance Co., Ltd. therefore applied for approval of merger of enterprises in accordance with Article 11 of the Fair Trade Law and Article 3 of the Financial Holding Company Combination Review Regulations. 2. The merger in this case is of the type defined in Article 6(1)(ii) of the Fair Trade Law, wherein an enterprise "holds or acquires one-third or more of the voting rights or total capital represented by the shares or capital contribution of another enterprise." According to the Department of Insurance, Ministry of Finance: In the property insurance industry, as of the end of year 2000, there are 29 licensed companies currently in operation, including 17 local insurers, one local insurance cooperative, and 11 foreign insurers with branch offices in Chinese Taipei. Their combined income from insurance premium was NT$87.8 billion. In the personal insurance industry, as of the end of year 2000, there are 32 licensed companies currently in operation, including 16 local insurers and 16 foreign insurers with branch offices in Chinese Taipei. Their combined income from insurance premium was NT$626.6 billion. With respect to the information officially provided by the Securities and Futures Commission, and Ministry of Finance regarding the number of securities services operators: As of the end of August 2001, there were 1,295 securities firms in total, including 190 headquarter offices and 1,105 branch offices. According to the Financial Statistics Index of the Ministry of Finance, as of the end of September 2001, there were 53 local banks, 39 foreign banks, 324 farmers' associations and fishermen's associations, 324 credit unions, and 4,293 branch offices. Furthermore, according to the Financial Business Statistics Abstracts, as of the end of July 2001, the combined deposits and loans of all currency institutions were NT$16 trillion and NT$14 trillion respectively. Accordingly, there exists a large number of insurance, securities, and banking enterprises to keep competition in these markets robust. Moreover, with the government's adoption of an open competition policy, enterprises face no insurmountable entry barriers that could lead to the emergence of monopolists or oligopolists. Furthermore, as the merger involves cross-industry consolidation, it will have no meaningful impact on the structure or degree of concentration in the relevant local financial markets, nor will it have adverse impacts on competition or convenience in service in those markets. 3. Chinese Taipei's policy of developing the financial industry through diversification is well established. Once the merger is completed, Fubon Financial Holding Co., Ltd. will be able to consolidate group resources, make adjustments to organization scale, and increase resource allocation efficiency. This will improve the group's overall risk bearing capability, comply with current policies for the financial industry, and benefit the overall economy. 4. In sum, the merger will not significantly affect the market structure or the state of competition, nor will it lead to restriction of competition. Its overall economic advantages outweigh any disadvantages from its restraint on competition. The approval of merger was thus granted pursuant to Article 12 of the Fair Trade Law and Article 11 of the Financial Holding Company Combination Review Regulations.Appendix: Fubon Insurance Co., Ltd.'s Uniform Invoice Number: 03374805 Fubon Bank Co., Ltd.'s Uniform Invoice Number: 86520472 Fubon Securities Co., Ltd.'s Uniform Invoice Number: 22957301 Fubon Life Assurance Co., Ltd.'s Uniform Invoice Number: 84442867 Summarized by Lin, Huei-Yun; Supervised by Horng, Der-Chang