Far Eastone Telecommunications Co., Ltd. & New Century InfoComm Tech. Co., Ltd.

Case:

Key Words:

telecommunications, direct control, joint operation

Reference:

Fair Trade Commission Decision of September 27, 2007 (the 829th Commissioners' Meeting)

Industry:

Telecommunications (6100)

Relevant Laws:

Article 6 , 11 and 12 of the Fair Trade Law

Summary:

1. Far Eastone Telecommunications Co., Ltd. (hereinafter referred to as "Far Eastone Telecommunications") via share exchange, acquired all of the New Century InfoComm Tech. Co., Ltd. (hereinafter referred to as "New Century InfoComm Tech.") shares held by Singaporean enterprise Information Communication Co. Ltd. (hereinafter referred to as "Singaporean Information Communication") and SingTel Taiwan Co., Ltd. (hereinafter referred to as "SingTel Taiwan"). After the stock exchange, Far Eastone Telecommunications would have 4 seats amongst the board of directors, which is more than half of the New Century InfoComm Tech. directors.　The seats of directors and supervisors controlled by Far Eastone Telecommunications would be 7 seats which is more than half of New Century InFoComm Tech. director seats (since New Century InFoComm Tech. has 7 seats of directors and 3 seats of supervisors). Consequently, Far Eastone Telecommunications would take control over business operation, appointment and discharge of personnel of New Century InfoComm Tech.　The fact that the two enterprises contemplating to enter into memorandum of understanding on joint operated business thus falls into the merger category described in Article 6(1)(iv) and 6(1)(v) of the Fair trade Law.　Far Eastone Telecommunications has more than 25% of market share in telecommunication industry in 2006 and last financial report (2006) showed that its sales revenue amount is over NT$ 10 billion.　The amount (2006) for New Century InfoComm Tech. is over NT$ 1 billion and this reaches the thresholds for merger application as required by Article 11(1)(ii) and Article 11(1)(iii) and also did not fall into the exceptions provided in Article 11-1 of the same Law. Therefore, Far Eastone Telecommunications and New Century InfoComm Tech. reported the merger to the Commission on August 23, 2007 in accordance with the Law.
2. The mobile communication and digital data service are the major services provided by Far Eastone Telecommunications.　The New Century InfoComm Tech. under the Far East Group is a fixed network provider which have already developed over 40 telecommunication products in voice, digital data, broadband and multimedia in order to provide customers integrated service of information data and telecommunication.　With the common trend of growth in the market of the mobile telecommunications and fixed network communications, and given that both of Chunghwa Telecom Co. Ltd. and Taiwan Mobile Co. Ltd. have already obtained the platform in mobile telecommunication market and fixed network communication and are competing with each other, this merge would stimulate the market competition in terms of present market cost plan combinations and service quality as a result.　Thus in the existing digital mobile and network industry, that will have effective pin down on price decision and will have no obvious difference in competition on the whole marketplace.　Furthermore, as cost details of telecommunication industry would need to be checked by agencies in charge of telecommunications regulation before it is officially carried out, there will be no harmful influence to the consumers.　In conclusion, the benefit of the merger outweighs the restrictive impact of market competition caused by the merger and is in accordance with the Article 12(1) of Fair Trade Law, this merger shall not be prohibited.

Appendix:
Far Eastone Telecommunications Co., Ltd.’s Uniform Invoice Number: 97179430
New Century InfoComm Tech. Co.,Ltd.’s Uniform Invoice Number: 70774626