Application by Ruentex Enterprises Group Ltd. and Trans Asia Development Ltd. for combination of enterprises
Chinese Taipei
Case:
Application by Ruentex Enterprises Group Ltd. and Trans Asia Development Ltd. for combination of enterprises
Key Words:
related enterprise, combination
Reference:
Fair Trade Commission Decision of November 25, 1998 (368th Commission Meeting). Decision (87) Kung Chieh Tzu No. 794
Industry:
Retail-style Bulk Sales Industry (5314)
Relevant Laws:
Article 6(1)(ii), Article 6(1)(iv), and Article 11(1)(iii) of the Fair Trade Law
Summary:
Ruentex Construction & Development, Ltd. (RC), Ruentex Textiles, Ltd. (RT) and RT-Mart International, Ltd. (RM) intended to acquire 63% in total of the stock of Trans Asia Development, Ltd. (TA), which would be held by the three companies at the proportion of 32%, 12%, and 19% respectively, and to jointly operate a commodities purchasing business in the bulk sales industry. According to the decision made at the 368th Commission Meeting held on November 25, 1998, the intended acquisition is qualified as a combination under Articles 6(1)(ii) and (iv) of the Fair Trade Law (FTL).
RC, RT and RM are related enterprises of Ruentex Group which had invested in setting up three bulk retail sales companies operated principally by RM. The combination between RM and Save & Safe Corporation, another bulk retail sales company, to form an alliance had also been approved at the 321st Commission Meeting on December 24, 1997. As a result, the Ruentex Group had 9.98% of the turnover of the entire bulk sales market and 0.37% of that of the entire retail sales market in the previous year (1997). TA, the other participating enterprise to the combination, had a market share of 1.48% at the bulk sales market.
According to the investigation by the Fair Trade Commission in 1997, Carre Four Ltd., Co. (Carre Four) and Makro Ltd., Co. (Makro) were the top two enterprises in the bulk sales market, with a market share of 38.19% and 26.21% respectively. Although the market share held by the Ruentex Group (Save & Safe Corporation included) and TA would be increased to 11.46% after the combination, yet apparent gap still exists between Carre Four and Makro and the participating enterprises to the combination in terms of their respective market position.
When Tung-Yi Company was experiencing financial difficulties in April, 1997, TA took over its business by purchasing its assets and assuming its rights and interests to avoid the potential social panic that might be brought about by Tung-Yi' s filing for bankruptcy protection. Given that, TA' s main business is still in land development at the industrial zones. In view of the need of specialization, the combination could enable the participating enterprises to integrate their human and financial resources and is beneficial to the overall economy.
There are Carre Four, Makro and about 10 other companies in the bulk sales market other than the participating enterprises (Save & Safe Corporation included). As Carre Four and Makro enjoyed superior operational and global purchasing capabilities, the other companies needed to improve their operational capabilities and expand the scale of their operations to meet the competition. As TA was still operating at a loss in 1997, a combination of TA and the Ruentex Group would produce efficiencies that would enhance competition in the bulk sales market.
As the combination would not hinder overall economic development and its advantages would outweigh the disadvantages of restricting competition, the combination is thereby approved pursuant to Article 12 of the FTL.
Summarized by Lin, Chin-Lang
Supervised by Hung, Te-Chang
Appendix:
Ruentex Construction & Development, Ltd.'s Uniform Invoice No.: 12139612
Ruentex Industries, Ltd.'s Uniform Invoice No.: 14053007
RT-Mart International, Ltd.'s Uniform Invoice No.: 97165560
Trans Asia Development, Ltd.'s Uniform Invoice No.: 89397736