Synnex Technology International Corp. filed a merger report regarding its intention to acquire 50.03% interest in Teampo Technology Co., Ltd

Case:

Synnex Technology International Corp. filed a merger report regarding its intention to acquire 50.03% interest in Teampo Technology Co., Ltd

Key Words:

competition restraint, economic benefit

Reference:

Fair Trade Commission Decision of June 3, 2004 (the 656th Commissioners’ Meeting)

Industry:

Wholesale of Computer and Peripheral Equipment and Software (4544)

Relevant Laws:

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

1. Synnex Technology International Corp. (hereinafter called “Synnex”) intends to enter into strategic cooperation with Teampo Technology Co., Ltd. (hereinafter called “Teampo”) to jointly develop component marketing channels, and to share their business resources as well as their experiences and advantages in managing the channels. Synnex will conduct a share swap with Acbel Polytech Inc., a major shareholder of Teampo, through which Synnex will hold 50.03% interest in Teampo, effectively making it a subsidiary of Synnex. Synnex filed the merger application accordingly with the Fair Trade Commission (FTC).

2. As examined by the FTC, the arrangement of the said merger is classified as an arrangement specified in Article 6(1)(ii) of the Fair Trade Law (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;” as well as Article 6(1)(v) of the same law “where an enterprise directly or indirectly controls the business operation or the appointment or discharge of personnel of another enterprise.” In addition, sales amounts for the preceding fiscal year of Synnex and Teampo both exceeded the threshold amount publicly announced by the FTC, thereby satisfying the merger application threshold specified in Article 11(1)(iii) of the FTL. Therefore, a merger application shall be filed with the FTC. Also based on Article 7(1)(ii) of the “Enforcement Rules to the FTL”, the merger application is accepted for processing because the applicant Synnex is the holding or acquiring enterprise, where Synnex holds or acquires shares or capital contribution of Teampo.
3. The parties involved in the merger application are Synnex, which started off as a specialized channel for IC semiconductors but later expanded its business scope to become a specialized channel for 3C products, and Teampo, which is a specialized channel for IC semiconductors, maintaining dealership for more than 10 major producers of renowned semiconductor components, with primary applications including laptop computer products, wireless telecommunication, and photoelectric products. After the proposed merger, the influence on current market competition status is minimal, and it may help integrate the existing technical support talents of both companies, thereby providing better services to customers. Furthermore, the number of both domestic and foreign-based upstream and downstream businesses is huge within the semiconductor channels, each possessing its specialized products and techniques. The channel retailers may freely decide on which products and original manufacturers they will help distribute, and respectively develop their own client base related to electronic products. The entry barrier is relatively low with neither specific capital expenditure, legal restrictions, patent right requirements, nor customs or tax-free barriers. The merger is not likely to create a hindrance for other channel retailers entering or exiting the market, thus the overall economic benefit of the merger filed outweighs the disadvantages resulting from competition restraint. The FTC thereby rules in favor of the merger filed in accordance with Article 12(1) of the FTL.

Appendix:
Synnex Technology International Corp.’s Uniform Invoice Number: 23060541
Teampo Technology CO., Ltd.’s Uniform Invoice Number: 12875914

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