Nexon Co., Ltd. & Gamania Digital Entertainment Co., Ltd.

Case:

Key Words:

merger, market share, online game

Reference:

Fair Trade Commission Decision of July 4, 2012 (at the 1078th Commissioners' Meeting), Disposition Kung Ch'u Tzu No. 101083

Industry:

Design Services (6201)

Relevant Laws:

Article 6 、 11 and 12 of the Fair Trade Law

Summary:

1. The FTC was informed that Nexon Co., Ltd. (hereinafter referred to as Nexon Co.) held over one third of the voting shares of Gamania Digital Entertainment Co., Ltd. (hereinafter referred to as Gamania Co.) and as Gamania Co. accounted for one quarter of the domestic online game market share, Nexon Co. had violated the Fair Trade Law for not filing a pre-merger notification with the FTC according to the regulation set forth in Subparagraph 2, Paragraph 1 of Article 11 of the Fair Trade Law.
2. The FTC's investigation revealed that as of April 16, 2012, Nexon Co. was already in possession of 34.6% of the issued shares of Gamania Co. and thus met the description of the merger type set forth in Subparagraph 2, Paragraph 1 of Article 6 of the Fair Trade Law. According to the statistics compiled by the Industrial development Bureau of the Ministry of Economic Affairs, the total production value of the online game industry in 2011 was NT$24.7 billion, including NT$5.274 billion of revenues from overseas markets and 19.426 billion from domestic market. Meanwhile, the sales of Gamania Co. from online game business in 2011 in Chinese Taipei was NT$5.543 billion, accounting for about 28.53% of the total share of the relevant market and thus reaching the merger filing threshold set forth in Subparagraph 2, Paragraph 1 of Article 11 of the Fair Trade Law, that is, "one of the enterprises in the merger has one fourth of the market share." As the merger of Nexon Co. and Gamania Co. involved none of the exceptional circumstances described in Article 11-1 of the Fair Trade Law in which filing of pre-merger notification is not required, Nexon Co. had to file with the FTC before the merger. Therefore, by failing to file with the FTC before the merger, Nexon had violated Paragraph 1 of Article 11 of the Fair Trade Law.
3. Considering the proportion of shares of Gamania Co. held by Nexon Co. and the market share of the relevant market Gamania accounted for being only slightly higher than the filing threshold, the level of the penalty to be imposed, as well as Gamania Co. being a listed company on the open market and the likely impact on stock market transactions and investors' interests, the FTC therefore acted in accordance with Paragraph 1 of Article 13 and Paragraph 1 of Article 40 of the Fair Trade Law, ordered Nexon Co. to make necessary correction within three months after receiving the disposition, and at the same time imposed on the company an administrative fine of NT$900,000.

Summarized by Tai, Mei-Chin; Supervised by Liao, Hsien-Chou