The Japanese company, Toppan Printing Co., Ltd. files an extraterritorial merger case with the Fair Trade Commission regarding the intention of acquiring 100% of the shares of the American company, DuPont Photomasks, Inc

Chinese Taipei

Case:

Keywords:

mask, extraterritorial merger

Reference:

Fair Trade Commission Decision of December 30, 2004 (the 686th Commissioners' Meeting)

Industry:

Semi-conductors Manufacturing (2710)

Relevant Laws:

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

Summary:

1. The Japanese company, Toppan Printing Co., Ltd. (hereinafter referred to as "Toppan") intends to acquire 100% of the shares of a American company, DuPont Photomasks, Inc. (hereinafter referred to as "DuPont") to develop advanced mask technology and promote the productivity, and therefore files the merger application with the Fair Trade Commission (FTC) in accordance with the laws.

2. This case falls under the merger types provided for in Article 6(1)(ii) of the Fair Trade Law that "where an enterprise holds or acquires the shares or capital contributions of another enterprise to an extent of more than one-third of the total voting shares or total capital of such other enterprise;" and (v) that "where an enterprise directly or indirectly controls the business operation or the appointment or discharge of personnel of another enterprise." Based on the relevant information of the application, both Toppan and DuPont have their reinvestment subsidiaries on the mask market of Taiwan. Toppan has 70% of the shares of Toppan Chunghwa Electronics; and DuPont has 47.2% of the shares of DuPont Photomasks Taiwan Ltd. through its subsidiary, DuPont Taiwan, whose shares are 100% held by DuPont. The last year's market shares of Toppan Chunghwa Electronics and Dupont Photomasks Taiwan Ltd. on the mask market of Taiwan were separately 9.1% and 6.7%. Therefore, this extraterritorial merger case has the influence that is direct, substantial, and can be reasonably foreseen, on the mask market of Taiwan, and already has substantial sales channels; and thus the case shall be governed by the FTC. Additionally, the sales amount of the subordinate enterprises of Toppan and DuPont was separately NT$ 15,930 million and NT$ 1,340 million, which complies with the threshold of merger cases prescribed in Article 11(1)(iii) of the Fair Trade Law. Therefore, this merger case shall be filed with and reported to the FTC.

3. The present major IC mask manufacturers in Chinese Taipei are the Mask Department of Taiwan Semiconductor Manufacturing Company Ltd., Taiwan Mask Corporation, Toppan Chunghwa Electronics, Photronics Semiconductor Mask Corp., and DuPont Photomasks Taiwan Ltd. Among all, Taiwan Semiconductor Manufacturing Company Ltd. has the largest scale with a market share of 65% last year. The merger of the enterprises in this case will result in a market share of around 15.8% in the mask market of Taiwan, which is still quite behind the market share of Taiwan Semiconductor Manufacturing Company Ltd. Also, the semiconductor business operators in Chinese Taipei can still freely import mask products. Consequently, the merger does not cause an obvious entry barrier for the domestic mask market, nor cause major changes to the supply, demand, and price of the upstream/downstream markets. Moreover, Toppan and DuPont have few production locations established in the same areas. After the merger, the products and services may be provided to global semiconductor businesses more conveniently. The merger may also integrate the present mask technology. Through the promotion of production efficiency, the R & D cost may decease and shorten the manufacture process for the domestic semiconductor manufacturing industry. It will become a great improvement for the overall economic benefits of the semiconductor market in Taiwan. Therefore, the merger can help improve the domestic overall economic benefits and shall not cause disadvantages of competition restraint. Since the overall economic benefit of the merger outweighs the disadvantages resulting from its competition restraint on the market, in accordance with Article 12(1) of the Fair Trade Law, the FTC shall not prohibit the merger.

Summarized by Chen, Shu-Hua;

Supervised by Liou, Chi-Jung

Appendix:

Toppan Printing Co., Ltd. 's Uniform Invoice Number: None

DuPOnt Photomasks, Inc. 's Uniform Invoice Number: None

! : For information of translation, click here

1.	The Japanese company, Toppan Printing Co., Ltd. (hereinafter referred to as "Toppan") intends to acquire 100% of the shares of a American company, DuPont Photomasks, Inc. (hereinafter referred to as "DuPont") to develop advanced mask technology and promote the productivity, and therefore files the merger application with the Fair Trade Commission (FTC) in accordance with the laws.
2.	This case falls under the merger types provided for in Article 6(1)(ii) of the Fair Trade Law that "where an enterprise holds or acquires the shares or capital contributions of another enterprise to an extent of more than one-third of the total voting shares or total capital of such other enterprise;" and (v) that "where an enterprise directly or indirectly controls the business operation or the appointment or discharge of personnel of another enterprise." Based on the relevant information of the application, both Toppan and DuPont have their reinvestment subsidiaries on the mask market of Taiwan. Toppan has 70% of the shares of Toppan Chunghwa Electronics; and DuPont has 47.2% of the shares of DuPont Photomasks Taiwan Ltd. through its subsidiary, DuPont Taiwan, whose shares are 100% held by DuPont. The last year's market shares of Toppan Chunghwa Electronics and Dupont Photomasks Taiwan Ltd. on the mask market of Taiwan were separately 9.1% and 6.7%. Therefore, this extraterritorial merger case has the influence that is direct, substantial, and can be reasonably foreseen, on the mask market of Taiwan, and already has substantial sales channels; and thus the case shall be governed by the FTC. Additionally, the sales amount of the subordinate enterprises of Toppan and DuPont was separately NT$ 15,930 million and NT$ 1,340 million, which complies with the threshold of merger cases prescribed in Article 11(1)(iii) of the Fair Trade Law. Therefore, this merger case shall be filed with and reported to the FTC.
3.	The present major IC mask manufacturers in Chinese Taipei are the Mask Department of Taiwan Semiconductor Manufacturing Company Ltd., Taiwan Mask Corporation, Toppan Chunghwa Electronics, Photronics Semiconductor Mask Corp., and DuPont Photomasks Taiwan Ltd. Among all, Taiwan Semiconductor Manufacturing Company Ltd. has the largest scale with a market share of 65% last year. The merger of the enterprises in this case will result in a market share of around 15.8% in the mask market of Taiwan, which is still quite behind the market share of Taiwan Semiconductor Manufacturing Company Ltd. Also, the semiconductor business operators in Chinese Taipei can still freely import mask products. Consequently, the merger does not cause an obvious entry barrier for the domestic mask market, nor cause major changes to the supply, demand, and price of the upstream/downstream markets. Moreover, Toppan and DuPont have few production locations established in the same areas. After the merger, the products and services may be provided to global semiconductor businesses more conveniently. The merger may also integrate the present mask technology. Through the promotion of production efficiency, the R & D cost may decease and shorten the manufacture process for the domestic semiconductor manufacturing industry. It will become a great improvement for the overall economic benefits of the semiconductor market in Taiwan. Therefore, the merger can help improve the domestic overall economic benefits and shall not cause disadvantages of competition restraint. Since the overall economic benefit of the merger outweighs the disadvantages resulting from its competition restraint on the market, in accordance with Article 12(1) of the Fair Trade Law, the FTC shall not prohibit the merger.