Hon Hai Precision Industry Co., Ltd. and Ambit Microsystems Corporation applied for merger approval
Case:
Hon Hai Precision Industry Co., Ltd. and Ambit Microsystems Corporation applied for merger approval
Key Words:
restraint on competition, economic benefit
Reference:
Fair Trade Commission Decision of December 11, 2003(the 631st Commissioners' Meeting)
Industry:
Computer Peripheral Equipment Manufacturing (2613), Wired Communication Equipment and Apparatus Manufacturing (2621), Telecommunication Equipment and Apparatus Manufacturing (2622), Photonics Materials and Components Manufacturing (2792)
Relevant Law:
Summary:
1. Hon Hai Precision Industry Co., Ltd. (Hon Hai) planned to carry out a merger with Ambit Microsystems Corporation (Ambit), with Hon Hai being the surviving enterprise and Ambit the dissolved one. Hon Hai and Ambit filed a merger report with the Fair Trade Commission (FTC) in accordance with the Fair Trade Law.
2. The FTC investigated and found that the merger fell within the type of merger defined in Article 6(1)(i) of the Fair Trade Law: "where an enterprise and another enterprise are merged into one." In addition, the sales amount of Hon Hai and Ambit for the preceding fiscal year both exceeded the publicly announced threshold requiring filing of a merger report under Article 11, (1)(iii) of the Fair Trade Law, thus it is their legal obligation to file a merger report with the FTC. Under Article 7(1)(i) of the Law, the parties required to file the report are the merging enterprises themselves, Hon Hai and Ambit. Their merger report was therefore accepted for processing.
3. Both merging enterprises specialize in contracted manufacturing for other companies. There is very little similarity between the two enterprises' product lines, which overlap somewhat only in "Local Area Network Terminal Equipment." The merger of these two enterprises is a diversifying merger. The merger will integrate the resources of the two enterprises and improve their overall operational efficiency. Hon Hai, the surviving enterprise, will be able to expand its product line from its original 3C products into telecommunication and network communication products, which could improve the overall efficiency of the domestic electronics industry supply chain and reduce production costs of network electronics products. This could bring domestic consumers high-quality low-priced electronic products and strengthen the power and international competitiveness of Chinese Taipei's technology industry. The merger will therefore benefit the internal economic interests of the merging enterprises as well as overall economic interests. The two merging enterprises moreover have separate specialties and minimal overlap. They are not competitors in any markets for their main products. Their overlapping "Local Area Network Terminal Equipment" goods are not in competition with each other in the domestic market. Considering that Chinese Taipei's local area network terminal equipment market is fully deregulated and free of market access barriers in the form of laws or regulations, minimum capitalization, or tariff or non-tariff barriers, and that the operational costs and fixed costs of production do not comprise a large percentage of the total cost, and that the applicants do not have any power to exclude other persons from competition, and that the merger is unlikely to cause restraints on competition in relevant markets, and that the overall economic benefits of the merger outweigh any potential restraint on competition, the FTC refrained from prohibiting the merger, in accordance with Article 12 of the Fair Trade Law.
Appendix:
Hon Hai Precision Industry Co., Ltd.' s Uniform Invoice Number: 04541302
Ambit Microsystems Corporation' s Uniform Invoice Number: 22099723
Summarized by Lai, Shu-Ching; Supervised by Shih, Chin-Tsun