Tung Sen Multimedia Co., Ltd., New Taipei Cable TV System, Chin Pin Tao Cable TV System, and Lien Ch'un Cable TV System in Taipei, and Chen Tao Cable TV System in Hsin Chu violated the Fair Trade Law for their failure to apply for combination approval
Chinese Taipei
Case:
Tung Sen Multimedia Co., Ltd., New Taipei Cable TV System, Chin Pin Tao Cable TV System, and Lien Ch'un Cable TV System in Taipei, and Chen Tao Cable TV System in Hsin Chu violated the Fair Trade Law for their failure to apply for combination approval.
Key words:
combination, failure to apply for approval
Reference:
Fair Trade Commission Decision of the 323rd Commission Meeting; Disposition (87) Kung Ch'u Tzu Nos. 021~024
Industry:
Broadcasting Television Industry (8050)
Relevant Laws:
Articles 6, 11, 13, 40 of the Fair Trade Law (hereinafter the “Law”)
Summary:
A complaint was filed with this Commission in April 1997 alleging that Wang Ling Lin (the responsible person of Rebar Union Media Enterprise Co., Ltd.) admitted in an interview on 12 March 1997 that Rebar Union and its affiliate, Tung Lien Hsien Chin Multimedia Co., Ltd. (Tung Lien), invested in over 20 cable TV systems around Chinese Taipei and had over one million subscribers. Enclosed in the complaint was a list of over 20 cable systems operators' names, in which Tung Lien had invested, including Ta An Wen Shan. The complaint requested investigation by this Commission on this matter.
Tung Lien was renamed Tung Sen in 1997. During this Commission's hearing on 21 November 1997, Tung Sen admitted it had invested about NT$6.6 billion in cable TV broadcasting systems since 1995. However, because the licenses of the cable TV broadcasting systems would lapse in two years, it did not emphasize its shareholding in the broadcasting system but focused on cable TV distribution systems. Tung Sen had invested in over 20 distribution system operators, and owned an over-one-third shareholding in ten of them. Tung Sen's major shareholding was as follows: 75% of New Taipei, 88% of Lien Ch'un, 58% of Chin Pin Tao in Taipei, and 76% of Chen Tao in Hsinchu; however, Article 163(2) of the Company Law provides that shares held by the promoters may not be transferred within one year after its company registration is completed. Therefore, at the initial stage, Tung Sen held its shares through trusts. Later in 1997 when the one-year period lapsed, the respondents started to transfer their shares. The respondents filed reports of the transfer to the Government Information Office (GIO) in accordance with Article 30(2) of the Cable Television Law. In addition, in compliance with Article 20(3) of the same law regarding the maximum number of shares owned by one shareholder, Tung Sen established over 30 affiliates to be the nominal shareholders of cable TV systems. Then in December 1997, representatives from New Taipei, Chin Pin Tao, Lien Ch'un, Chen Tao, Hsin Yi Huan Le, Chin Pin Tao, Ta An Wen Shan, and Chen Tao came to this Commission and stated that Tung Sen had obtained over 50% of their shares. These representatives also pointed out that Article 26 of the Cable Television Law provides that a cable TV system is not allowed to operate prior to its obtaining license. In other words, they were actually operating cable TV system businesses under the name of broadcasting systems. The numbers of subscribers for all of the four cable TV systems have already reached one fourth or more of the subscribers in their areas.
Article 6(1)(ii) of the Fair Trade Law defines that one of the types of combinations is an enterprise's act of holding one third or more of another enterprise's voting rights or paid-in capital. Article 6(2) of the same provides that the calculation of the shareholding referred to in the preceding paragraph shall include the number of shares held by or capital contribution by the enterprise's affiliates and by companies in its control. Article 11(1)(ii) of the Fair Trade Law provides that, where any of the enterprises in the combination has a market share reaching one fourth of the market, the combination must apply to this Commission for approval. Tung Sen already admitted that it held, directly and indirectly, over 50% of the shares of the four cable TV systems at issue and that it had established affiliates to be nominal shareholders of its investment. The four cable TV systems also admitted these facts relating to the combination. In addition, cable TV system operators can only operate in the area designated by the GIO, which is their market and the area where the cable TV systems compete for business. With each of the four cable TV systems holding one fourth or more of their market, Tung Sen is holding one fourth or more of the market, and should apply for approval in accordance with Articles 6(1)(ii) and 11(1)(ii) of the Fair Trade Law. For its failure to apply for approval, Tung Sen is ordered, under Article 13(1) of the Law, to correct its act within three months from the day following its receipt of this disposition. Should the illegal status of the combination remain uncorrected, Tung Sen shall apply for an approval within the same specified time period. In accordance with Article 40 of the Fair Trade Law and Article 7(2) of the Enforcement Rules of the Fair Trade Law, Tung Sen is hereby fined NT$800,000 for each of its combinations with the four cable TV systems.
Summarized by Fu, Ch'n-mao
Supervised by Hsin, Chih-chung
Tung Sen Multimedia Co., Ltd.'s Uniform Invoice No.: 89396814