Application for approval of combination through the purchase by Seagram C.I. (Canada) of 75% of the shares of PolyGram (Holland) which changes the controlling or subordinate relationships among related enterprises in Chinese Taipei

Chinese Taipei


Case:

Application for approval of combination through the purchase by Seagram C.I. (Canada) of 75% of the shares of PolyGram (Holland) which changes the controlling or subordinate relationships among related enterprises in Chinese Taipei

Key Words:

off-shore combination, approval of combination, record publishing

Reference:

Fair Trade Commission Decision of December 16, 1998 (371st Commission Meeting); Disposition Ref. (87) Kung Ch'u Tzu No. 839

Industry:

Sound Recording Publication Business (8391)

Relevant Laws:

Articles 6(1)(v), 11(1)(iii), and 12 of the Fair Trade Law

Summary:

  1. Seagram (Canada) (the applicant) purchased 75% of the shares of PolyGram (Holland) from Philips B.V. on June 21, 1998. As a result of the purchase, the applicant acquired the power over the recruitment, business operation and management of PolyGram's affiliates in Chinese Taipei including Decca Record Taiwan Ltd., PolyGram Record Ltd., PolyGram Music Publishing Ltd., What's Music International Inc., and Fater Media Ltd. Such an act meets the definition of combination under Article 6(1)(v) of the Fair Trade Law (FTL).

  2. Article 11(1)(iii) of the FTL provides: "If any of the following circumstances shall exist in respect to a combination of enterprises, an application for the approval thereof shall be filed with the central competent authority: ...(3) The amount of sales in the preceding fiscal year of an enterprise participating in the combination exceeds the amount publicly announced by the central competent authority (i.e. NT$2 billion)." The applicant has two affiliates in Chinese Taipei: Universal Music Asia Pacific Limited, Chinese Taipei Branch which is a publisher of sound records, and Seagram C.I. (H.K.) Co., Chinese Taipei Branch (Seagram C.I.) which is an importer and distributor of alcohol products. Because the sales of Seagram C.I. for last fiscal year exceeds NT$3.2 billion, application for approval of the combination is therefore required.

  3. The business of the enterprises participating in the combination overlaps only in the market of publication of sound records. Prior to the combination, Decca, PolyGram Record and What's Music (of the PolyGram group) altogether had a market share of 25% while Universal Music Asia Pacific (of the Seagram group) had a market share of only 2%. In other words, the overall increase in market share after the horizontal combination is only 2% which could not be deemed to be substantial in the local market of sound recording publication business. In markets of alcohol, music composition and performance agency where the business of the participating enterprises do not overlap, the combination will not result in any change of those markets and therefore impose no restriction on market competition. Furthermore, given the open, liberalized and highly competitive conditions in local alcohol and music recording markets, it is unlikely that the combination could have the potential of lessening the degree of competition at the relevant markets. Also, the integration of Universal Music Asia Pacific with the PolyGram group could help advance the quality of locally published music recordings.

  4. In conclusion, the benefit of the combination to the overall economy outweighs the disadvantages associated with its restriction on competition and is approved in accordance with FTL Article 12.

Summarized by Liao, Yu-Huei
Supervised by Lin, You-Ching

Appendix:
Decca Record Taiwan Ltd. Uniform Invoice No.: 86384146
PolyGram Record Ltd. Uniform Invoice No.: 12344162
PolyGram Music Publishing Ltd. Uniform Invoice No.: 86382793
What's Music International Inc. Uniform Invoice No.: 84100539
Fater Media Ltd. Uniform Invoice No.: 97292469
Universal Music Asia Pacific Limited (Taiwan) Uniform Invoice No.: 89400789
Seagram C.I. (H.K.) Co. (Taiwan Branch) Uniform Invoice No.: 23823338


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