Lite-On IT Corporation & Philips BenQ Digital Storage Inc.

Case:

Key Words:

economic benefit, competition restraint, merger

Reference:

Fair Trade Commission Decision of February 8, 2007 (the 796th Commissioners' Meeting)

Industry:

Other Computer Peripheral Equipment Manufacturing (2719)

Relevant Laws:

Article 6 ,11and 12 of the Fair Trade Law

Summary:

1. Lite-On IT Corporation (hereinafter called “Lite-On”) planned to acquire 49% shares of Philips BenQ Digital Storage Inc. (hereinafter called “Philips BenQ”) and filed a merger report to the FTC in accordance with the Fair Trade Law.
2. Findings of FTC after investigation: The merger type fell under the description set forth in Article 6(1)(ii) of the Fair Trade Law “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.” In addition, Lite-On and Philips BenQ both had a sales amount exceeding the threshold amount publicly announced by the FTC in 2005. Pursuant to Article 11(1)(iii) of the Fair Trade Law, this merger shall be filed with the FTC. Furthermore, in accordance with Article 7(1)(ii) of the Enforcement Rules To The Fair Trade Law, this merger shall be reported by an enterprise acquiring shares of another enterprise, which was Lite-On in this case. Therefore, the FTC accepted the merger report.
3. After the merger in question, both enterprises would still be subject to market competition. It was difficult to say that the enterprises of the merger would have the ability to unilaterally raise product prices or service remuneration. Moreover, beside ASUS, Quanta, and other small-scale companies, there are also other Japanese and Korean multinational enterprises or joint-venture enterprises participating in the competition. Thus, the market structure would not have conspicuous changes. On the other hand, there was no obvious evidence showing that the enterprises of the merger in question and their competitors would be able to mutually restrain one another’s business operations or take concerted actions to eliminate competition in the market. Additionally, no entry barriers would be created, and the trading counterparts or potential trading counterparts would still have a strong ability to bargain with the enterprises of this merger and cause them to raise the product prices or service remuneration. As a result, the FTC found that the overall economic benefits brought by the merger of Lite-On and Philips BenQ would outweigh the disadvantage resulting from the competition restraints. The FTC therefore approved the merger report in accordance with Article 12 of the Fair Trade Law.

Appendix:
Lite-On IT Corporation’s Uniform Invoice Number: 16839221
Philips BenQ Digital Storage Inc.’s Uniform Invoice Number: 80357874

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