Yuanta Financial Holdings & New York Life Insurance Taiwan Corporation

Case:

Yuanta Financial Holdings filed a pre-merger notification regarding its intention to acquire 100% issued shares of New York Life Insurance Taiwan Corporation

Key Word(s):

Conglomerate, personal insurance market

Reference:

Fair Trade Commission Decision of August 7, 2013 (the 1035th Commissioners' Meeting)

Industry:

Personal Insurance (6510)

Relevant Law(s):

Articles 6, 11 and 12 of the Fair Trade Law

Summary:

1. The FTC received in July, 2013, a pre-merger notification from Yuanta Financial Holding Co. Ltd. (hereinafter referred to as Yuanta Financial Holdings) regarding its intention to acquire 100% issued shares of New York Life Insurance Taiwan Corporation (hereinafter referred as New York Life). The intended merger met the description set forth in Article 6(1)(ii) of the Fair Trade Law. Before the merger, Yuanta Financial Holdings operated in securities and banking business through its subsidiaries, namely Yuanta Securities, Yuanta Commercial Bank and Yuanta Futures, but did not directly engage in personal insurance business. New York Life, on the other hand, was a personal insurance company and did not engage in securities and banking business. Hence, there was no overlap of business items between the two merging parties. The relationship between the two companies was neither horizontal nor upstream-downstream. Therefore, it was a conglomerate merger.

2. Yuanta Financial Holdings intended to enter the personal insurance market through the merger. Since there were other large personal insurance companies and New York Life did not have a significant proportion of the personal market share, Yuanta Financial Holdings and New York Life would not obtain enough market power through the merger to raise insurance premiums or impede or eliminate other competitors from contesting in the market. In other words, competition in the personal insurance market would not be weakened as a result of the merger. Meanwhile, as far as vertical restraints in the market competition are concerned, Yuanta Financial Holdings might be able to create vertical foreclosure through its subsidiaries Yuanta Life Insurance Agency and Yuanta International Insurance Brokers, yet the after-merger entity accounted only for a limited proportion of the insurance intermediary service market share. If vertical foreclosure was adopted as a strategy, Yuanta Financial Holdings would have to sacrifice the profits from other insurance products it was originally marketing and New York Life would also have to forgo its profits from the products it was selling through other channels. As both merging parties did not occupy any significant amount of the personal insurance market share, objectively speaking, it would not be easy for them to block off their competitors. Therefore, the FTC found it difficult to conclude that the merging parties would have the incentive or capacity to bring forth market foreclosure by investing in the upstream market and expanding downstream sales channels after the merger.
3. Grounds for disposition:

   The FTC believed that the potential competition restrictions from the merger between Yuanta Financial Holdings and New York Life Insurance would be limited and thus there shall no significant concern on competition restrictions at all. Therefore, acting according to Article 12(1) of the Fair Trade Law, the FTC did not prohibit the merger.

Appendix:
Yuanta Financial Holdings' Uniform Invoice Number: 70796749
New York Life Insurance Taiwan Corporation's Uniform Invoice Number: 80329815

Summarized by Tsai, Jing-Hui; Supervised by Liao, Hsien-Chou