Fair Trade Law Q&A - Merger

Do all the mergers and acquisitions between enterprises need to file a pre-merger notification to the FTC?

Not all the mergers and acquisitions between enterprises need to file a pre-merger notification to the FTC. Only the merger that falls within any of the following circumstances described in Article 11(1) of the Fair Trade Law shall be filed with the competent authority in advance:

  1. as a result of the merger the enterprise(s) will have one third of the market share
  2. one of the enterprises in the merger has one fourth of the market share or
  3. sales for the preceding fiscal year of one of the enterprises in the merger exceeds the threshold amount publicly announced by the competent authority.

The current sales calculation standards announced by the FTC:

  1. The combined worldwide sales in the preceding fiscal year of all the enterprises in the merger exceed NT$40 billion and the domestic total sales of each of at least two of the enterprises in the merger in the preceding fiscal year also surpass NT$2 billion.
  2. The enterprises in the merger are not financial institutions and the domestic total sales of one of the merging parties in the preceding fiscal year exceed NT$15 billion while the domestic total sales of one of the other merging parties in the preceding fiscal year also surpass NT$2 billion.
  3. The enterprises in the merger are financial institutions and the domestic total sales of one of the merging parties in the preceding fiscal year exceed NT$30 billion while the domestic total sales of one of the other merging parties in the preceding fiscal year also surpass NT$2 billion.

The sales of enterprises controlling and affiliated with a merging party and the sales of affiliated enterprises controlled by the same enterprise or enterprises which control the merging party shall be included in sales amount calculation.

As specified in Article 12 of the Fair Trade Act, business mergers that will not change the market structure or will have no impact on market competition need not be filed.

  1. Where any of the enterprises participating in a merger, or its 100% held subsidiary, already holds no less than 50% of the voting shares or capital contribution of another enterprise in the merger and merges such other enterprise.
  2. Where enterprises of which 50% or more of the voting shares or capital contribution are held by the same enterprise merge.
  3. Where an enterprise assigns all or a principal part of its business or assets, or all or part of any part of its business that could be separately operated, to another enterprise newly established by the former enterprise solely.
  4. Where an enterprise, pursuant to the proviso of Article 167, Paragraph 1 of the Company Act or Article 28-2 of the Securities and Exchange Act, redeems its shares held by shareholders so that its original shareholders' shareholding falls within the circumstances provided for in Article 10, Paragraph 1, Subparagraph 2 herein.
  5. Where a single enterprise reinvests to establish a subsidiary and holds 100% shares or capital contribution of such a subsidiary.
  6. Any other designated type of merger promulgated by the competent authority.
Relevant article(s) of law: Fair Trade Law, Articles 11, and 12