1187th Commissioners’ Meeting (2014)
Case:
Hualien Cable TV Network, Tung Tai Cable TV and Tong Ya Cable TV violated the Fair Trade Law by conducting frequent joint operations without filing a pre-merger notification to the FTC as required by law
Key Word(s):
Joint management, cable TV
Reference:
Fair Trade Commission Decision of August 6, 2014 (the 1187th Commissioners’ Meeting); Disposition Kung Ch’u Tzu No. 103098
Industry:
Cable and Other Subscription Programming (6022)
Relevant Law(s):
Article 11(1) of the Fair Trade Law
Summary:
| (1) | HL Cable TV, TT Cable TV, and TY Cable TY procured domestically produced programs from Zhong Du International Co., Ltd. and acquired foreign programs in accordance with the joint procurement agreement they had entered into. At the same time, a team of personnel was in charge of the three enterprises' channel operation, business promotion and production work. Apparently, the three enterprises were under joint management in terms of channel operation and business promotion. In addition, the organizational charts of the three companies showed that their vice general managers, managers and directors had rotated among the three companies whereas certain vouchers, remittance receipts and deposit notices also showed the same with the accountants and handling personnel. These were indicated in the NCC's administrative inspection records.
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| (2) | HL Cable TV and TT Cable TV also acknowledged in their statements presented at the FTC that TY Cable TV was a smaller cable TV system and therefore HL Cable TV provided personnel and accounting support while TT Cable TV provided technical assistance. HL Cable TV also confessed that it had neglected the regulations provided by the Fair Trade Law on the filing of pre-merger notifications. This was clearly indicated in the FTC's statement records. |
| (1) | With the cable TV industry, the provisions regarding "joint operation" set forth in Article 6(1)(iv) of the Fair Trade Law include but are not limited to consolidation of program purchases, signal reception and transmission, network installation, customer service, as well as administrative, personnel and financial operations necessary for business management.
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| (2) | The FTC's investigation revealed that the administrative, personnel and financial operations of HL Cable TV, TT Cable TV and TY Cable TV were consolidated. Therefore, it was reasonable to conclude that the frequent joint operations of the three enterprises between Dec. 2011 and 2013 met the merger description specified in Article 6(1)(iv) of the Fair Trade Law. In addition, the three companies respectively accounted for over one quarter of the share of the cable TV service market in the Hualien area of Hualien County, the Taitung area of Taitung County, and the Yuli area of Hualien County, whereas none of the exemption provisions in the subparagraphs of Article 11-1 of the Fair Trade Law was applicable. Consequently, they were required to file a merger notification with the FTC. As they have never did so and thus the conduct at issue was in violation of Article 11 (1) of the Fair Trade Law. Acting according to Article 36 of the Enforcement Rules of Fair Trade Law, the FTC took into consideration the facts that HL Cable TV, TT Cable TV, and TY Cable TV had engaged in the unlawful conduct for as long as two years and they respectively had about 49,000, 23,000 and 13,000 subscribers in the Hualien area of Hualien County, the Taitung area of Taitung County, and the Yuli area of Hualien County. The sizes of these markets were smaller than those in metropolitan areas, and further decided that the offenders had made corrections and also cooperated throughout the investigation. Therefore, the FTC applied Article 40 (1) of the Fair Trade Law and imposed an administrative fine of 1 million NT dollars (the same currency applies hereinafter) on HL Cable TV, 500,000 on TT Cable TV, and 300,000 on TY Cable TV. |
Appendix:
Hualien CATV Corporation's Uniform Invoice Number: 16449841
Tung Tai Cable TV Corporation's Uniform Invoice Number: 97177762
Tong Ya Cable T.V. Co. Ltd.'s Uniform Invoice Number: 16080958
Summarized by Chen, Ching-Yi; Supervised by Kuo, An-Chi