Approval for Concerted Action Application by IBM Taiwan Co. (hereinafter, "IBM Taiwan") and Motorola Electronics Taiwan Ltd. (hereinafter, "Motorola") in Establishing a "Technical Center"

Chinese Taipei

Case:

Approval for Concerted Action Application by IBM Taiwan Co. (hereinafter, "IBM Taiwan") and Motorola Electronics Taiwan Ltd. (hereinafter, "Motorola") in Establishing a "Technical Center"

Key Words:

concerted action, upgrade of technology, quality improvement, joint research and development, computer chips

Reference:

Fair Trade Commission Decision of 6 July 1994 (the 143rd Commission Meeting); Decision (83) Kung Lien Tzu No. 007

Industry:

Computer Industry (3172)

Relevant Laws:

Article 14(2) of the Fair Trade Law

Summary:

1. IBM Taiwan and Motorola sought to establish a nonprofit technical organization known as the Power PC Technical Center to jointly develop the Asian-Pacific market for Power PC, which had been jointly developed and separately manufactured by their parent companies in the U.S. Such is a concerted action taken to "jointly research and develop products or markets so as to upgrade technology, improve quality, reduce costs or improve efficiency" as set forth in Article 14(2) of the Fair Trade Law. Since the provision prohibits, in principle, concerted actions with certain exceptions, enterprises seeking to engage in concerted actions are required to apply to this Commission for approval of their concerted actions. In this case, application was filed for a concerted action of jointly providing, through such technical center, Power PC product networks and software design assistance to computer companies in the Asian- Pacific region, which services include training for customers, technical seminars, general technical support, necessary assistance for assembly systems, product testing, error analysis and other necessary activities in connection with customer technical assistance.

2. The effect of the proposed concerted action on the overall economic interests is assessed as follows:

The Power PC Technical Center is in line with the current Chinese Taipei policy and objective in promoting Taipei as an Asian-Pacific Regional Operations Center, and such center will enhance the overall economic benefits as follows:

(1) It may assist the local computer companies in improving their personal computer manufacturing technology; in promoting the technological upgrade of the local information industry, both hardware and software, and the external competitiveness of such companies.

(2) In addition to Chinese Taipei, it may also provide services for other Asian countries, contributing to Chinese Taipei' s strength in computer technology in South East Asia.

(3) The increased supply of personal computer CPUs in Chinese Taipei may contribute to diversification of supply sources for domestic enterprises and to better competitiveness.

3. Assessment of negative effects of restricting competition:

Power PC, for which IBM Taiwan and Motorola sought to jointly establish a technical center for its development and promotion, is a new product, with extensive competitors. The market for this product is still very competitive; therefore, such action is not likely to undermine efficiency competition. Currently, the domestic CPU market is dominated by a certain company whose products such as 286, 386, 486 and PENTIUM have a great influence on the market. In view of the diversification of information products and computer components sourcing, market competition may be promoted. In addition, if this application is approved, the applicants may use resources such as the FAE (Field Application Engineering) and TQM (Total Quality Management) of the center to enhance their competitiveness and improve the supply of current computer chip market. Furthermore, services such as technical support and testing, error analysis, assembly systems, etc., as provided by the Power PC Technical Center, require cooperation from relevant industries. This indicates that the provision of such services in a profit-seeking manner will form and affect the competitiveness of the companies in competition. This technical center should also have positive implications for the R&D environment and capability of the domestic information industry.

4. Based on the foregoing assessment, the economic benefits that may be derived from the concerted action at issue outweigh the negative effects from the restriction of competition. Therefore, the concerted action at issue is hereby approved in accordance with the law.

Summarized by Hu, Chun-hsien
Supervised by Shih, Chin-tsun

Appendix:
IBM Taiwan (Uniform Invoice No.: 11917900)
Motorola Electronics Taiwan Ltd. (Uniform Invoice No.: 01517617)

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