Elitegroup Computer Systems Co., Ltd. planned to merge with Tatung Company and filed a merger application with the Fair Trade Commission

Chinese Taipei

Case:

Key Words:

Competition restraint, economic benefits

Reference:

Fair Trade Commission Decision of November 17, 2005 (the 732nd Commissioners’ Meeting)

Industry:

Computer Manufacturing (2611)

Relevant Laws:

Article 06 、Article 11 and Article 12 of the Fair Trade Law

Summary:

1. Elitegroup Computer Systems Co., Ltd. (hereinafter referred to as Elitegroup Company) shall be assigned by Tatung Co., Ltd. (hereinafter referred to as Tatung Company) its major business of desktop personal computer division; therefore, in accordance with the Fair Trade Law an application for merger is filed with the Fair Trade Commission.
2. The investigation found that the merger in this case meets the situation defined in Article 6, Paragraph 1, and Subparagraph 3 of the Fair Trade Law, “where an enterprise is assigned by or leases from another enterprise the whole or the major part of the business or properties of such other enterprise”. In addition, sales for the preceding fiscal year of Elitegroup Company and Tatung Company exceeded the threshold amount publicly announced by the Fair Trade Commission, meets the threshold amount for filing merger application stipulated in Article 11, Paragraph 1, Subparagraph 3 of the Fair Trade Law, hence this merger is filed with the Fair Trade Commission in advance. In addition, according to Article 7, Paragraph 1, Subparagraph 1 of Enforcement Rules to the Fair Trade Law, both Elitegroup Company and Tatung Company are enterprises in the merger and shall file the report of merger; the Fair Trade Commission thereupon accepts and reviews their merger application.
3. After merging, the merger of Elitegroup Company and the desktop personal computer division of Tatung Company is conducive to the resource integration of both companies. On the other hand, the output value of Chinese Taipei’s motherboard in 2004 is approximately NT$ 2,082 hundred million; Elitegroup Company’s revenue from motherboard is approximately NT$ 146 hundred million in 2004, a market share of 7.01%. The output value of Chinese Taipei’s notebook computer in 2004 is approximately NT$ 7,296 hundred million; Elitegroup Company’s revenue from notebook computer is approximately NT$ 0.4 hundred million in 2004, a market share of less than 0.01%. The output value of Chinese Taipei’s desktop computer in 2004 is approximately NT$ 3,143 hundred million; Tatung Company’s revenue from desktop computer is approximately NT$ 542 hundred million in 2004, a market share of 17.24%. The aforementioned markets have large numbers of firms and the competitions are very intense. Furthermore, this merger is a vertical integration of PC industry and does not pose significant impact on the market structure and market share of the aforementioned products (motherboard, notebook computer, desktop computer). Additionally, there is no market lockup for upstream components and parts suppliers and downstream marketing channels. Finally, the profit margin for global desktop computer market is already very low, as a result, there is a trend that the existing branded firms in order to effectively save costs, have commissioned motherboard manufacturers that have systematic fabricate capabilities to finish the computer production for direct shipping to its customers. There are several mergers, acquisition or strategic alliance cases in both Chinese Taipei and overseas. Therefore, technology networking will not arise from this merger and there is no barrier for the other counterparts to keep pace with the merged enterprises. After merging, the overall economic benefit of this merger outweighs the disadvantages resulted from competition restraint. Therefore, in accordance with the provision of Article 12 of the Fair Trade Law, the application for merger is not prohibited.

Summarized by Yeh, Su-Yen;
Supervised by Liou, Chi-Jung

Appendix:
Elitegroup Computer Systems Co., Ltd.’s Uniform Invoice Number: 22449566
Tatung Co., Ltd.’s Uniform Invoice Number: 11026506