Taiwan Taxi Co., Ltd.

1249th Commissioners’ Meeting (2015)

Case:

Taiwan Taxis, GBG and Skynet Business violated the Fair Trade Law for failing to file pre-merger notifications

Keyword(s):

Taxi dispatch, courier service

Reference:

Fair Trade Commission Decision of October 14, 2015 (the 1249th Commissioners’ Meeting), Dispositions Kung Ch’u Tzu No. 104108 and 104109

Industry:

Taxi Transportation (4932)

Relevant Law(s):

Articles 6 and 11 of the Fair Trade Law in effect at the time of the conduct

Summary:

1. Previously when reviewing the pre-merger notifications filed by Taiwan Taxi Co., Ltd. (hereinafter referred to as Taiwan Taxis) regarding its intention to merge with Fanya Taxi Co., Ltd., Long Xing Taxi Co., Ltd., Long Dian Taxi Co., Ltd. and Huang Xing Taxi Co., Ltd., the FTC discovered that Taiwan Taxis had acquired 100% of the shares of Global Business Group (hereinafter referred to as GBG) and the total capital contributions of Skynet Business Co., Ltd. (hereinafter referred to as Skynet Business) but had never filed pre-merger notifications with the FTC as required by the Fair Trade Law.

2. Findings of the FTC after investigation:

   (1)

   Taiwan Taxis signed a share transfer agreement with the former representative of GBG Mr. Wu Zhiyuan and all the shareholders on June 17, 2014 and acquired 100% shares of GBG. Furthermore, both Taiwan Taxis and GBG acknowledged that Taiwan Taxis had gained the control of GBG’s management and the power of personnel appointment and dismissal after acquiring 100% shares of GBG. Taiwan Taxis had also appointed Mr. Wu Zhiyuan to be the general manager of GBG. Later on September 15, 2014, GBG changed its company registration while the three directors and one supervisor were all assumed by representatives from Taiwan Taxis. Hence, the condition met the merger types described in Article 6(1)(ii)(v) of the Fair Trade Law in effect at that time.

   (2)

   On June 17, 2014, Taiwan Taxis also signed a capital contribution transfer agreement with the former representative of Skynet Business Huang Kunhong and all the shareholders. Although the date of signature was not indicated in the agreement, Taiwan Taxis, when providing its statements at the FTC, confirmed that it had indeed signed the agreement on June 17, 2014 and acquired all the capital contributions of Skynet Business. Taiwan Taxis and Skynet both acknowledged that Taiwan Taxis had gained the control of Skynet Business’ management and the power of personnel appointment and dismissal after acquiring all the capital contributions. Taiwan Taxis had also appointed Mr. Wu Zhiyuan to be the general manager of Skynet Business. Later, Skynet Business changed its company registration and its only director was assumed by a representative from Taiwan Taxis. Therefore, the condition also met the merger types described in Article 6(1)(ii)(v) of the Fair Trade Law at the time.

3. Grounds of disposition:

   (1)

   Taiwan Taxis respectively acquired 100% of the shares of GBG and all the capital contributions of Skynet Business in June 2014 and gained the direct control of both company’s management and personnel appointment and dismissal power. Both conditions met the merger types described in Article 6(1)(ii)(v) of the Fair Trade Law in effect at that time. Meanwhile, Taiwan Taxis’ market share in the Taipei area taxi dispatch service in June 2014 also achieved the merger-filing threshold specified in Article 11(1)(ii) of the Fair Trade Law whereas none of the proviso regulations in the subparagraphs of Article 11-1 was applicable. Therefore, Taiwan Taxis failed to file pre-merger notifications with the FTC in advance as required by law. Its conduct was in violation of Article 11(1) of the Fair Trade Law in effect at that time.

   (2)

   After assessing the duration of the unlawful conduct, the company’s remorse shown for the act and attitude of cooperation throughout the investigation and willingness to rectify its conduct, the FTC concluded that despite that it was the second time Taiwan Taxis violated the law, its mergers with GBG and Skynet Business had been conglomerate mergers unlikely to lead to the weakening result of market competition or the increase of the level of market concentration and there would be no significant impact on the market. Therefore, citing Article 13(1) and Article 40(1), the FTC ordered Taiwan Taxis to file pre-merger notifications with the FTC and make necessary corrections within three months after receiving the disposition. In addition, the FTC imposed on the company an administrative fine of NT$500,000 in total.