Yuanta Financial Holdings & Ta Chong Bank

1255th Commissioners’ Meeting (2015)

Case:

Yuanta Financial Holdings and Ta Chong Bank filed a pre-merger notification to the FTC

Keyword(s):

Financial industry, bank

Reference:

Fair Trade Commission Decision of November 25, 2015 (the 1255th Commissioners’ Meeting)

Industry:

Financial Holding Companies (6421)

Relevant Law(s):

Articles 10 and 13 of the Fair Trade Law

Summary:

1. The board of directors of Yuanta Financial Holding Co., Ltd. (hereinafter referred to as Yuanta Financial Holdings) made a decision on August 21, 2015 to acquire all the outstanding shares of Ta Chong Bank Co., Ltd. (hereinafter referred to as Ta Chong Bank) through share exchange. After the merger, Ta Chong Bank and its affiliates would become affiliates of Yuanta Financial Holdings. The condition met the merger pattern description of “where an enterprise holds or acquires the shares or capital contributions of another enterprise to an extent of more than one third of the total number of voting shares or total capital of such other enterprise” in Article 10(1)(ii) of the Fair Trade Law, and “where an enterprise directly or indirectly controls the business operation or the appointment or discharge of personnel of another enterprise” in Subparagraph 5 of the same article. In the meantime, the sales of both Yuanta Financial Holdings and Ta Chong Bank in 2014 had also achieved the merger filing thresholds announced by the FTC and none of the proviso regulations in Article 12 of the same law applied. Therefore, Yuanta Financial Holdings filed a merger notification with the FTC.

2. The merger was a horizontal one. The overlapped markets of the two enterprises included banking, securities business, insurance agency and leasing business. Hence, the assessment of the case had to be focused on the impacts of the merger on the overlapped markets. In banking sector, the HHI of the pre-merger deposit market, loan market and credit card market was all below 1,500 and therefore its market concentration was low. Meanwhile, the two merging parties together only accounted for 2.9%, 3.02% and 2.6% of the deposit, loan and credit card markets respectively. In securities sector, the HHI of transaction amounts, margin purchase and short sale margin trading balance was all below 1,500 and thus its market concentration was low. The merging parties together accounted for 13.08%, 1.23%, 9.21% and 21.42% of the brokered market, dealer market, underwriter market and margin trading market respectively. In insurance agency sector, the two merging parties together accounted for 6.58% and 0.46% of the personal insurance market and property insurance market respectively. In leasing, sector the two merging parties together accounted for merely 0.27% of the market. Therefore, the merger could not cause significant changes to the structures of the relevant markets or increase the level of concentration in such markets.

3. After evaluating in accordance with Point 8 of the “Fair Trade Commission Disposal Directions (Guidelines) on Merger Filings”, the FTC concluded that the above merger was unlikely to lead to any restrictions on market competition. The FTC also took into consideration the factors listed in Paragraph 5 of Point 4 of the “Fair Trade Commission Disposal Directions (Policy Statements) on the Financial Industry” to assess the merger and decided the merger would have no negative effect on the stability and solidity of the financial market or the prevalence, accessibility and convenience or innovation of financial services. Therefore, the FTC cited Article 13(1) of the Fair Trade Law and did not prohibit the merger.