Cheng Loong Corporation and Tien Long Paper Manufacturing Co., Ltd. filed a merger report to the FTC regarding its intention to merge with each other

Case:

Cheng Loong Corporation and Tien Long Paper Manufacturing Co., Ltd. filed a merger report to the FTC regarding its intention to merge with each other

Key Words:

merger, affiliated companies, tissue paper

Reference:

Fair Trade Commission Decision of July 1, 2004 (the 660th Commissioners’ Meeting)

Industry:

Paper Manufacturing (1521), Paperboard Mills (1522), Paper Container Manufacturing (1540), Domestic and Sanitary Paper Products Manufacturing (1591)

Relevant Laws:

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

1. The merger application filed with the Fair Trade Commission (FTC) relates to the intended merger between Cheng Loong Corporation (hereinafter called “Cheng Loong”) and Tien Long Paper Manufacturing Co., Ltd. (hereinafter called “Tien Long”), with Cheng Loong being the surviving company and Tien Long being the merged company.
2. In terms of the elements of formality, the application complies with the merger type “where an enterprise and another enterprise are merged into one” as specified in Article 6(1)(i) of the Fair Trade Law (FTL), and satisfies the threshold for merger application as identified in Article 11(1)(iii) of the FTL. Moreover, while exception clauses in Article 11-(1) of the FTL cannot be applied, the merger application shall first be filed with the FTC. Since the relevant documentation filed already satisfied Article 8 of the Enforcement Rules to the FTL, the FTC therefore accepted and began to process the application.
3. The two companies filing for the subject merger are affiliated companies. As the domestic paper products manufactured by Tien Long are primarily sold to Cheng Loong to be marketed as “Andante” tissue paper, the two companies maintain an upstream-downstream relationship, and expect to achieve simplification of operational procedures as well as effective utilization and integration of resources after the merger. In terms of cultural paper and industrial paper, while the two companies vary in their product ranges, their merger will be able to offer greater product diversification and choices for the clients. The proposed merger shall reduce operational costs and improve profitability, enhance rational management and expand operational scale, and in the meantime also benefits the international competitiveness of Taiwan’s paper manufacturing industry, therefore leading to positive benefits to the overall economy of Taiwan. It has also been considered that the relevant market shares of Cheng Loong will only be marginally increased after the merger, and there are several competitors at a comparable scale also operating in the relevant markets. The subsequent disadvantages from restraint competition are considered limited. Therefore, pursuant to Article 12(1) of the FTL, the FTC didn’t prohibit to the merger.

Appendix:
Cheng Loong Corporation’s Uniform Invoice Number: 33085508
Tien Long Paper Manufacturing Co., Ltd.’s Uniform Invoice Number: 04541669

Summarized by Lin, Chia-Hua; Supervised by Wu, Bi-Ju