Merger of Taiwan Securities Central Depository Co., Ltd. and Debt Instruments Depository and Clearing Co., the merger is filed with the Fair Trade Commission according to Article 11 of the Fair Trade Law

Chinese Taipei

Case:

Key Words:

central depository, merger, securities, debt instruments

Reference:

Fair Trade Commission Decision of December 1, 2005 (the 734th Commissioners’ Meeting)

Industry:

Securities central depository (6319); Short-term debt instrument central depository and clearing institution (6299)

Relevant Laws:

Article 6 、Article 11 、Article 12 of the Fair Trade Law

Summary:

1. This case originates from a merger plan between Taiwan Securities Central Depository Co., Ltd. (hereinafter referred to as TSCD) and Debt Instruments Depository and Clearing Co., Ltd., Taiwan (hereinafter referred to as DIDC); and this merger plan has met the situations defined in Article 6, Paragraph 1, Subparagraph 1 of the Fair Trade Law. In addition, due to the restriction of securities laws, both TSCD and the DIDC are enterprises that respectively have 100% market share in securities central depository market and short-term notes depository and clearing market and thus meet the threshold for filing merger application stipulated in Article 11, Paragraph 1, Subparagraph 2 of the Fair Trade Law and the circumstances of inapplicability as stipulated in the Article 11-1 of the Fair Trade Law are not found. Therefore, a report of merger is filed with the Fair Trade Commission in advance.
2. According to Article 3, Paragraph 2 of Rules Governing Centralized Securities Depository Enterprises and Article 6 of the Regulations Governing the Approval and Regulation of Enterprises Engaged in the Centralized Depository and Clearing of Short-term Notes,TSCD and DIDC are respectively the only domestic centralized securities depository enterprises and short-term notes depository institution. After the merger, the relevant market concentrations remain the same, i.e. the merged company still accounts for a 100 percent share of the relevant markets. Moreover, the major services provided by TSCD are the clearing and settlement of securities, book-entry of securities transaction and securities depository, and the major services provided by DIDC are the clearing and settlement of short-term bills, and book-entry maintenance. As there are no overlaps in the scope of their business, therefore the merger between both companies will neither significantly affect the relevant market structure nor restrain the market competition.
3. In addition, the talents, organizations, and facilities of both companies can be integrated after the merger in order to attain the goals of better service quality and more efficient information system. Furthermore, because of the unity of clearing, settlement, and custody institutions, the costs for market participants will be lowered and the market operations will become more efficient. In addition, the competent authority of the aforementioned companies, the Financial Supervisory Commission, Executive Yuan( Cabinet) expressed in a letter to the Fair Trade Commission that the surviving company should set up the Rates Review Commission after the merger to determine the service charge standard that in accordance with the law shall be approved by the competent authority. The competent authority still has power to supervise the determination of service charges and thus the interests and rights of trading counterparts are not yet affected.
4. To sum up, the investigation found the merger of TSCD and DIDC only has limited impact on market competition. Moreover, taking into consideration that the merger will efficiently utilize the integrated resources, it can be concluded that the overall economic benefit of this merger indeed outweighs the disadvantages resulted from competition restraint, and hence in accordance with the provision of Article 12, Paragraph 1 of the Fair Trade Law, this merger is not prohibited.

Summarized by Yen, Chia-Lin;
Supervised by Tai, Pei-Yi

Appendix:
Taiwan Securities Central Depository Co., Ltd.’s Uniform Invoice Number: 23474232 
Debt Instruments Depository and Clearing Co., Ltd. Taiwan’s Uniform Invoice Number: 80029417