Hualien cable television enterprises involved in merger in violation of the Fair Trade Law

Chinese Taipei


Case:

Hualien cable television enterprises involved in merger in violation of the Fair Trade Law

Key Words:

merger; cable television

Reference:

Fair Trade Commission Decision of October 6, 1999 (the 413th Commissioners' Meeting); Disposition (88) Kung Ch'u Tzu No. 127

Industry:

Television Industry (8520)

Relevant Laws:

Articles 6, 11, 13, and 40 of the Fair Trade Law

Summary:

  1. Hualien Cable Broadcasting Systems ("Hualien Cable") has about 2,200 subscribers; Chia Jen Television Co., Ltd., ("Chia Jen") has about 7,000 subscribers; Hui Lan Broadcasting Co., Ltd., ("Hui Lan") has about 20,000 subscribers. The three operators all belong to the same operating area in Hualien as designated by the Government Information Office (GIO), Executive Yuan, and are competitors within the same geographical market. Hualien Cable has a 7.5% share of the market; Chia Jen, 24%, and Hui Lan, 68.5%.
  2. Investigation by the Fair Trade Commission (FTC) found that the respondent operated in the following manner:

    2.1 Chia Jen, without prior application and approval, shared a common head end with Hualien Cable, and Chia Jen's Temporary Cable Transmission System Registration License had consequently been revoked by the Government Information Office. The telephone numbers of Chia Jen and Hui Lan appeared together on the companies' viewer subscription receipts. The telephone number given for Chia Jen on the receipts was found to have been relocated to Hui Lan's business address. In other words, Chia Jen and Hui Lan jointly provided telephone services to their subscribers. When Chia Jen moved to a new business address, it posted notices at its old business address instructing that mail be delivered to Hui Lan. Chia Jen received mail jointly with Hui Lan, and had Hui Lan print its viewer subscription invoices.

    2.2 On-site investigation by the FTC found that Hualien Cable administrative department manager Huang Chin-t'ung and Hualien Cable employees Wang Yi-ju and Su Yun-ch'en are currently insured under policies belonging to Hui Lan. The telephone number listed on the viewer subscription receipts of Hualien Cable had been moved to Hui Lan's business address, and Hui Lan likewise advertised Hualien Cable's telephone number as its own customer service hotline. A call placed to Huang Chin-t'ung at that number was answered by a Hui Lan employee.

    2.3 Hualien Cable, Chia Jen, and Hui Lan jointly conducted business operations at Hualien Cable's business address, as evidenced by the presence of time cards there for the employees of the three companies, along with a stack of Hui Lan programming guides, equipment removal notices, and monthly revenue and expenditure statements of the Hui Lan employee welfare committee.

    2.4 Some other telephone numbers registered to Hualien Cable and Chia Jen had also been relocated to Hui Lan's address. Some telephone numbers registered to Hui Lan had likewise been moved to Chia Jen's business address.

    2.5 Hualien Cable, Chia Jen, and Hui Lan all negotiated purchases of channel programming and paid program royalties through the services of Best News Entertainment Corp., of which Hui Lan's responsible person was an employee. This is evidenced by explanations, contracts, and photocopies of checks provided by program suppliers.

    The above evidence showed that the respondent engaged in the form of merger specified in Article 6(1)(iv) of the Fair Trade Law ("the Law"): "frequently conducting business operations jointly with another enterprise."
  3. Article 11(1) of the Law stipulates that in the following circumstances, enterprises that combine shall file an application with the central competent authority for approval: "1) as a result of the merger an enterprise will have a one-third share of the market; 2) one of the enterprises participating in the merger has a one-fourth share of the market..."

    Although the respondents' joint business operations fell into the category of a merger for which an application must be filed pursuant to Articles 11(1)(i) and 11(1)(ii) of the Law, the parties failed to file an application with the FTC. Administrative fines in the following amounts were therefore imposed on the three enterprises pursuant to Article 13(1) and Article 40 of the Law: Hui Lan, NT$1.5 million; Hualien Cable and Chia Jen, NT$800,000 each.

    Summarized by Ch'en Chun-t'ing
    Supervised by Ch'en Hui-p'ing

Appendix:
Hualien Cable Broadcasting Systems's Uniform Invoice Number: 20055468
Chia Jen Television Co., Ltd.'s Uniform Invoice Number: 96900253
Hui Lan Broadcasting Co., Ltd.'s Uniform Invoice Number: 84529955


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