Ex Officio Investigation by the Fair Trade Commission on the Combination between the Bank of Pan Hsin and the Kaohsiung Number Five Credit Cooperative, and its failure to file an application for approval with this Commission
Chinese Taipei
Case:
Ex Officio Investigation by the Fair Trade Commission on the Combination between the Bank of Pan Hsin and the Kaohsiung Number Five Credit Cooperative, and its failure to file an application for approval with this Commission
Key Words:
transfer of business or assets, approval for combination, financial policy
Reference:
Fair Trade Commission Decision of November 26,1997 (the 318 Commission Meeting); Disposition (86) Kung Chu Tzu No. 018
Industry:
Financial Industry (6500)
Relevant Laws:
Summary:
The case was initiated by the Fair Trade Commission' s ex officio investigation against Panchiao Credit Cooperative (re-incorporated to become the Bank of Pan Hsin on September 30, 1997), which on September 29, 1997 acquired all operations and assets/liabilities of the Kaohsiung Number Five Credit Cooperative. After inquiring with the Bureau of Monetary Affairs, Ministry of Finance regarding the revenues of Bank of Pan Hsin for the previous fiscal year, this Commission found that its revenue was in excess of NT$2 billion. However, the Bank of Pan Hsin failed to file for prior approval for the combination and was allegedly in violation of the Fair Trade Law.
During the Fair Trade Commission' s investigation, the Bank of Pan Hsin claimed that Kaohsiung Number Five Credit Cooperative was experiencing bank runs before the merger. With coordination from the Ministry of Finance, the Kaohsiung Number Five Credit Cooperative merged with the Panchiao Credit Cooperative before its re-incorporation. Prior application for approval was not filed due to time constraints and negligence.
After written inquiries to the Ministry of Finance, the Commission found that the combination resulted from the bank run experienced by the Kaohsiung Number Five Credit Cooperative in June 1997. The Kaohsiung cooperative needed rescues by the credit cooperative funds and the Taiwan Cooperative Bank to maintain its operations. To help alleviate the financial difficulties of the Kaohsiung cooperative, the Panchiao Credit Cooperative agreed, after careful study, to acquire all operations and assets/liabilities of the Kaohsiung cooperative. The Ministry of Finance considered this business strategy beneficial not only to the parties involved, but also to the development of the financial market. Since the combination was in line with the Ministry' s financial management policy, the Ministry approved the combination on September 13, 1997.
This Commission' s reasons for imposing a penalty are as follows:
(1) The respondent acquired all operations and assets/liabilities of the Kaohsiung cooperative, which was an act of combination under Article 6(1)(iii) of the Fair Trade Law: transfer or lease of the whole or the major part of the business or properties of another enterprise" ).
In addition, the revenue of the defendant in the previous fiscal year amounted to NT$4,682,662,005. According to the Fair Trade Law, if the value of total sales during the previous fiscal year was more than NT$2 billion, an application should be filed with this Commission before the combination.
(2) Investigation showed that although the combination in question was consistent with financial policies, a prior application was not filed. This was in violation of Article 11(1)(iii) of the Fair Trade Law, and was therefore subject to the penalty as stipulated in Article 40.
Since combinations of financial institutions are the trend, this Commission has again forwarded correspondence to the banking association, credit and cooperative associations, as well as the various city and county governments to reiterate the provisions of the Fair Trade Law relating to combination of enterprises. This Commission has requested that the agencies concerned notify their sub-agencies and members, in order to prevent further violations of the Fair Trade Law.
Summarized by Wu, Pih-ju
Supervised by Hu, Kuang-yu
Appendix:
Bank of Pan Hsin' s Uniform Invoice Number: 16093877