A Japanese company Sanyo Epson Imaging Devices Corporation filed a merger report regarding its intention to merge with another Japanese companies Seiko Epson Corporation and Sanyo Electric Co., Ltd.

Case:

A Japanese company Sanyo Epson Imaging Devices Corporation filed a merger report regarding its intention to merge with another Japanese companies Seiko Epson Corporation and Sanyo Electric Co., Ltd.

Key Words:

LCD monitor, extraterritorial merger

Reference:

Fair Trade Commission Decision of October 21, 2004 (the 676th Commissioners' Meeting)

Industry:

Computer Terminal Equipment Manufacturing (2612)

Relevant Laws:

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

1. This case originated from the plans of a Japanese company Seiko Epson Corporation (hereinafter called “Seiko Epson”) and another Japanese company Sanyo Electric Co., Ltd. (hereinafter called “Sanyo Electric”) to establish a joint venture company “Sanyo Epson Imaging Device Corporation” in order to effectively lower the cost of LCD monitors. The two companies planned to establish the joint venture company with funds from their respective subsidiary LCD monitor production departments, and receive 55% and 45% of the company’s shares respectively. Seiko Epson and Sanyo Electric had accordingly submitted a merger report to this Commission in accordance with the Fair Trade Law (FTL).
2. This case constituted a merger under Article 6(1)(ii) of the FTL “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 Article 6(1)(v) “where an enterprise directly or indirectly controls the business operation or the appointment or discharge of personnel of another enterprise.” The reported information indicated that Seiko Epson and Sanyo Electric had a direct, substantial, and reasonably foreseeable influence on the Taiwan market via the sales of their respective subsidiaries in Taiwan, the Taiwan Epson Tech. Co., Ltd. and Taipei Sanyo Semiconductor Co., Ltd. Seiko Epson and Sanyo Electric had respective sales in Taiwan of New Taiwan Dollars (NT$)12,484,000,000 and NT$28,590,000,000 billion during the last fiscal year. They thus met the threshold of merger report set forth under Article 11(1)(iii) of the FTL, and their merger must therefore be reported to the FTC.
3. The participating companies will enjoy a 4.5% share of the domestic LCD monitor market after their merger, and the merger will not have a significant influence on the LCD monitor market share in Taiwan of the participating companies. In addition, since most of the major LCD monitor manufacturers in Taiwan obtain their technology through in-house research and development or via licensing by Matsushita, Toshiba, Japan IBM or Sharp, this merger will by no means restrain the acquisition of the key technologies of LCD monitor production by domestic enterprises. Furthermore, there are currently numerous domestic and foreign LCD monitor manufacturers, no legal restrictions on entry, and tariffs do not constitute a major barrier. The companies participating in this merger do not possess the ability to prevent other enterprises from entering this market. This case thus will not produce unfavorable benefits of obviously unfair competition restraint in the domestic LCD monitor market, and the merger shall not be disapproved in accordance with Article 12(1) of the FTL.
   
   

Appendix:
Seiko Epson Corporation’s Uniform Invoice Number: none
Sanyo Electric Co., Ltd.’s Uniform Invoice Number: none
Sanyo Epson Imaging Devices Corporation’s Uniform Invoice Number: none

Summarized by Chen, Chia-Wen; Supervised by Shih, Chin-Tsun