United Microelectronics Corp. and SIS Microelectronics Corp. filed a merger report regarding its intention to merge with each other

Case:

United Microelectronics Corp. and SIS Microelectronics Corp. filed a merger report regarding its intention to merge with each other

Key Words:

competition restraint, economic benefit

Reference:

Fair Trade Commission Decision of April 8, 2004 (the 648th Commissioners’ Meeting)

Industry:

Semiconductor Manufacturing (2710)

Relevant Laws:

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

1. United Microelectronics Corp. (hereinafter called “UMC”) planned a merger with SIS Microelectronics Corp. (hereinafter called “SMC”) through a merger in which UMC was to be the surviving company and SMC the extinguished company. The two companies thus duly report to the Fair Trade Commission (FTC) for merger.
2. This case fell into the category of mergers defined as “mergers with other enterprises” as set forth in Article 6(1)(i) of the Fair Trade Law (FTL) and, as the sales volumes of UMC and SMC for the previous accounting year met the threshold at which a merger report must be filed with the FTC under Article 11(1)(iii) of the FTL, a report was required. The FTC accepted the report duly filed by UMC and SMC, the enterprises participating in the merger, under Article 7(1)(i) of the Enforcement Rules to the FTL.
3. UMC was primarily engaged in silicon wafer manufacture, providing customized silicon intellectual property services, embedded integrated circuits design, design verification, photomask production, wafer fabrication, and testing. SMC, a spin-off company from Silicon Integrated Systems Corp. (hereinafter called “SIS”), was primarily engaged in wafer foundry services. SMC was formerly a manufacturer solely contracted with SIS and did not engage in any substantive competition with other existing enterprises in the wafer foundry industry. Its merger with UMC was unlikely to lead to any substantive increase in the latter’s market share in the domestic wafer foundry industry. The relevant industry in the present case was a capital- and technology-intensive industry with inherently high entry barriers, though apart from that, no other barriers to market access existed in regulatory, tariff, and non-tariff related areas. After the merger of the two enterprises, there was unlikely to be any significant adverse effect on the acquisition of raw materials and on other enterprises along the industry supply chain, and the two enterprises were unlikely to produce any restraint of competition within the relevant markets. Given that the overall economic benefit of the merger would be greater than any disadvantages in terms of restraint of competition, the FTC, pursuant to Article 12(1) of the FTL, did not prohibit the merger.

Appendix:
United Microelectronics Corp.’s Uniform Invoice Number: 47217677
SIS Microelectronics Corp.’s Uniform Invoice Number: 12800457

Summarized by Lai, Ming-Te; Supervised by Shih, Chin-Tsun