Hon Hai Precision Ind. Co., Ltd. and
Premier Image Technology Corporation

Case:

Key Words:

competition restraint, economic benefit

Reference:

Fair Trade Commission Decision of August 3, 2006 (the 769th Commissioners' Meeting)

Industry:

Computers Manufacturing (2711) and Cameras and Photographic Goods Manufacturing (3021)

Relevant Laws:

Article 6 , 11 and 12 of the Fair Trade Law

Summary:

1. Hon Hai Precision Ind. Co., Ltd. (hereinafter called "Hon Hai") planned on merging with Premier Image Technology Corporation (hereinafter called "Premier") with Hon Hai as the surviving company and Premier the merged entity; therefore, Hon Hai filed this merger report to the Fair Trade Commission ("FTC") pursuant to the law.

2. Findings of FTC after investigation:
   This merger fits the merger type : "where an enterprise and another enterprise are merged into one," stated in Article 6(1)(i) of the Fair Trade Law. In addition, both Hon Hai and Premier had a sales amount of more than the threshold announced by the FTC in the previous fiscal year. Thus, the merger of said two companies met the requirements of merger reporting provided in Article 11(1)(iii) of the Fair Trade Law. As a result, this merger shall be reported to the FTC. Furthermore, in accordance with Article 7(1)(i) of the Enforcement Rules of the Fair Trade Law, the applicants of a merger report shall be the participants of the merger, which in this case were Hon Hai and Premier. Therefore, the FTC admitted this merger report for further review.


3. Grounds for non-prohibited:
   To the participants, this merger will lower the commercial risks, avoid overlap investment and provide one-stop shopping service for their customers. As for the overall economic benefits, this merger will promote the international competitiveness of the domestic electronic industry, provide high quality electronic products to domestic and foreign consumers at low prices, and increase the needs for research and development workers. In case of market power, Hon Hai's market share of connectors has topped the international rankings; its shipping quantity of computer cases has been in the leading position; and its shipping quantity of 3C electronics has also been in the leading position compared with other businesses of the similar nature in the world. Premier is mainly a subcontractor for cameras. In 2005, the top four companies of camera subcontractors and their respective market shares were Premier 44%, Ability Enterprise Co., Ltd. 26%, Altek Corporation 21%, and Asia Optical Co., Inc. 9%. Hon Hai and Premier are both professional subcontractors; however, their products do not overlap. Therefore, the merger of the two companies does not have obvious impact on the market structure and market share of each company's products. The overall economic benefits should outweigh the disadvantages of competition restraints after the merger. As a result, the FTC, pursuant to Article 12 of the Fair Trade Law, determined not to prohibite the merger.

Appendix:
Hon Hai Precision Ind. Co., Ltd.'s Uniform Invoice Number: 04541302
Premier Image Technology Corporation's Uniform Invoice Number: 04834617

Summarized by Yeh, Su-Yen; Supervised by Liou, Chi-Jung