Yang Ming Shan Cable TV Co., Ltd. and New Cable Broadcasting System Co., Ltd. failed to apply to the Fair Trade Commission for merger approval when Yang Ming Shan Cable acquired subscribers from New Cable
Case:
Yang Ming Shan Cable TV Co., Ltd. and New Cable Broadcasting System Co., Ltd. failed to apply to the Fair Trade Commission for merger approval when Yang Ming Shan Cable acquired subscribers from New Cable
Key Words:
cable television, video services, full-franchise-area broadcasting, Cable Radio and Television Law
Reference:
Fair Trade Commission Decision of January 4, 2001 (the 478th Commissioners' Meeting); Letter (90) Kung Yi Tzu No. 8909808-010; Disposition (90) Kung Ch'u Tzu No. 010
Industry:
Television (8520)
Relevant Laws:
Summary:
1. A Taipei City resident filed a complaint with the Fair Trade Commission (the Commission) alleging that approximately 20,000 subscribers of New Cable Broadcasting Co., Ltd. ("New Cable") in Taipei's Peitou District had been transferred to Yang Ming Shan Cable TV Co. ("Yang Ming Shan Cable") in 1999 without an application for merger approval being filed to the Commission , in violation of the law. 2. After its investigation, the Commission found as follows: (1) A search of the website of the Radio & Television Affairs Department of the Government Information Office on 16 August 2000 found that the name of New Cable no longer appeared on the list of cable broadcasting systems on that Website. Furthermore, as of that date, Yang Ming Shan Cable was the only cable broadcasting company operating in the Peitou franchise area in Taipei, and was already broadcasting throughout that entire franchise area. This Commission, however, had no record of an application for merger approval by those two cable system operators. (2) The respondent Yang Ming Shan Cable is a cable radio and television system operator that was incorporated on 21 October 1996 and obtained its Cable Television Construction permit from the Government Information Office on the same date. It passed the inspection of phase-one construction and obtained its Partial Operations License in October 1999, and subsequently obtained its Operating Permit to broadcast throughout the entire franchise area in March 2000. It was the only system operator with full licensing for the entire Peitou franchise area. According to Article 72(2) of the Cable Radio and Television Law, "Within 15 days of the start of broadcasting by a [licensed] System Operator, other cable television program broadcast systems in that district shall cease broadcasting." Thus, New Cable was required by law to cease broadcasting in the Peitou area after Yang Ming Shan Cable commenced broadcasting in October 1999. To protect the rights and interests of subscribers with respect to uninterrupted reception of program signals, it was therefore necessary for Yang Ming Shan Cable to acquire and assume New Cable's rights and obligations to its subscribers and take over the service of furnishing cable program signals to them. Both operators acknowledged these circumstances, as documented by relevant filings on record with the Government Information Office. (3) The major part of a cable system operator's business, and the major source of its income, consists in receiving program signals furnished by programmers, relaying them to home viewers by means of its cable network, and regularly collecting fees from subscribers. These rights and obligations concerning subscribers are exactly what Yang Ming Shan Cable acquired from New Cable. This acquisition therefore conforms to the definition of a combination under Article 6(1)(iii) of the Fair Trade Law. This opinion was confirmed by a resolution passed by the 421st Commissioners' Meeting on 1 December 1999 and had been circulated in an official document to all cable system operators. This Commission furthermore dispatched personnel in the northern, southern, eastern, and western districts to assist cable operators on the application process for merger approval. As of the end of November 2000, fully 53 applications for mergers approval under Article 6(1)(iii) of the Fair Trade Law had been filed by cable system operators and so granted by the Commission. Therefore, the respondents' assertions that the transfer of subscribers did not fall under the purview of Article 6 or that it were unbeknownst to them were deemed equivocations. (4) The respondents Yang Ming Shan Cable and New Cable were competing enterprises operating in the same market - Taipei's Peitou Franchise area demarcated by the Government Information Office. Yang Ming Shan Cable, with its subsidiary/controlling affiliate Hsin Ta Tien Hsun Co., collectively had 51,008 subscribers (a 61 percent market share); New Cable had 31,953 subscribers (a 39 percent market share). The combination between these two companies thus fell under the purview of Fair Trade Law Articles 11(1)(i) and 11(1)(ii) specifying circumstances under which combining companies must file an application fro approval from the Commission. For their failure to file such an application, the Fair Trade Commission fined each of the respondents NT$200,000 under Article 40 of the Fair Trade Law and ordered them to carry out the necessary corrections within three months under Article 13(1).Appendix: Yang Ming Shan Cable TV Co., Ltd.'s Uniform Invoice No.: 97168320 New Cable Broadcasting System Co., Ltd.'s Uniform Invoice No.: 84783409 Summarized by Yeh, Su-Yen; Supervised by Hu, Kuang-Yu