Taiwan established comprehensive regulation of antitrust and unfair competition activities when the Fair Trade Act was enacted in 1991 and made effective in 1992. The Fair Trade Act was most recently amended in June 2017 (2017 amendment). Under the 2017 amendment, the waiting period of a merger application has been extended in a practical manner and additional procedures have been added to merger control review.

Taiwan plays an active role in the international community with respect to competition policy and law, and in particular with respect to merger control. Since 1997, the TFTC has created and maintained the APEC Competition Policy and Law Database on behalf of the 21 member economies that comprise the Asia-Pacific Economic Cooperation Forum (APEC). The Database allows APEC's member economies to share experiences and exchange views on complex issues of competition policy and law. Additionally, the TFTC is a member of the International Competition Network (ICN), which was created in 2001 to provide competition authorities with an informal, specialised venue for maintaining regular contact with competition authorities in other jurisdictions and addressing practical competition concerns. As a member of the ICN, the TFTC hosted the annual ICN Merger Workshop in 2009, which was attended by members from around the world. Taiwan also regularly participates as an observer in discussions on competition law in the OECD as well as regional forums, where it shares information and receives input from other jurisdictions.


i Recent TFTC review of extraterritorial mergers

Google LLC and Communications Global Certification Inc

In September 2017, Google LLC (Google) intended to acquire all of the issued shares of Communications Global Certification Inc (CGC) from HTC Corporation. As the revenue of Google and CGC in the previous fiscal year exceeded the threshold amount announced by the TFTC, and one of the parties possessed one-quarter of the market share in the area in which it operates, Alphabet Inc, the parent company of Google, filed pre-merger notification with the TFTC.

Given that Google mainly provides search engine, mobile operating system and online advertisement services, and CGC focused on the mobile device verification and testing, the TFTC determined that the proposed transaction between Google and CGC was a conglomerate merger. The TFTC decided that there were no material potential competitive relationships between Google and CGC in that the proposed transaction would possibly result in the elimination of potential competition. Further, there was no incentive for Google to enlarge its market power in Android and exclusive APPs into the market of mobile device verification and testing through bundling or refusal to license after the completion of the transaction. Thus, the TFTC concluded that the proposed transaction did not pose a significant anticompetitive impact and the transaction was not prohibited.

Chang Wah and SHAP

In September 2016, Chang Wah Electromaterials Inc (CWE) and Chang Wah Technology Co, Ltd (CWT) proposed to acquire 100 per cent common shares of SH Asia Pacific Pte Ltd (SHAP) from its parent company, SH Materials Co, Ltd. As CWE and CWT intended to acquire the voting shares of more than one-third of the total voting shares of SHAP, and CWE and CWT would directly or indirectly control the business operation, the appointment or discharge of personnel of SHAP, CWE, as the ultimate parent company, filed the pre-merger notification with the TFTC in December 2016.

Since the LED lead frames manufactured by CWT and IC lead frames produced by SHT (the subsidiary of SHAP in Taiwan) have both been sold through CWE for years, the TFTC determined that the proposed transaction between CWE, CWT, SHAP and SHT is a vertical merger. The TFTC determined that the potential abuse of market position from the combination was not high owing to insignificant barriers to entry in the lead frame market and vigorous competition of the relevant worldwide market. Moreover, the lead frame market would not be impacted drastically after the transaction as the downstream enterprises in such market held strong bargaining power, and the proposed transaction only turns the existing cooperation between the participating enterprises into an intra-group cooperation. Thus, the TFTC decided that the proposed transaction did not pose a significant anticompetitive impact in the lead frame market, and did not prohibit the transaction.

ii Recent proposed mergers prohibited by the TFTC

From the time the Fair Trade Act was promulgated in 1992 until March 2018, 6,916 applications were submitted for merger approval (for filings made prior to the amendments to the Fair Trade Act in February 2002) or merger notifications (for filings made starting in February 2002 subsequent to the amendments to the Fair Trade Act). Of those filings, only 10 of the proposed transactions have been refused or prohibited by the TFTC, representing much less than 0.01 per cent of all applications. No statistics are, however, provided with respect to those mergers that are approved or cleared subject to specific conditions. Such conditions are not uncommon, particularly in cases requiring more complex analysis and a detailed balancing between overall economic benefits with restraints on competitiveness. Some conditions may be very cumbersome on the parties, and in effect prohibit the completion of the deal.

In 2016 and 2017, 69 and 44 merger notifications were filed with the TFTC respectively; none was prohibited. In 2018, 13 merger notifications were filed, and none had been prohibited as of March 2018, according to the most updated statistics dated 18 April 2018. In 2010, only one out of the 44 merger notifications filed with the TFTC was prohibited. The prohibited transaction was the proposed acquisition by Uni-President Enterprise Co Ltd (Uni-President) for more than half of the shares of Wei-Li Food Industry Co Ltd (Wei-Li Food). In 2009, only two out of the 57 merger notifications filed with the TFTC were prohibited, both of which were proposed mergers between domestic companies. The prohibited transactions were the proposed mergers between Holiday Co Ltd (Holiday) and Cashbox Co Ltd (Cashbox) and between Yieh United Steel Corp (Yieh Steel) and Tang Eng Iron Works Co Ltd (Tang Iron).

Uni-President and Wei-Li Food – instant noodles

This prohibited transaction concerned a share acquisition between two entities that are the top two market share leaders manufacturing instant noodles in Taiwan. The published decision primarily discussed whether the product market was limited to instant noodles or whether a larger definition was permissible.

The relevant market takes into consideration the product's capabilities, uses, special characteristics, pricing, high demands and whether the product is replaceable. The applicant, Uni-President, had proposed that the relevant market include each of the following:

    1. cookies and desserts (including cookies, bread, potato chips, rice crackers and chocolate);
    2. perishable food products (including sandwiches sold at 7-Eleven stores, supermarket bento boxes, Taiwanese cuisine marinated in soy sauce, deep-fried chicken, tempura, fried dumplings and rice balls);
    3. entrée noodle dishes (including noodles, instant noodles, mung bean noodles and rice, flavoured by consumers using separately purchased sauces); and
    4. sauces (satay sauce, XO sauce and others) and frozen foods (including cooked lamb, spaghetti, risotto, dumplings and fried rice).

Uni-President suggested that these are all replaceable products and should therefore comprise one product market in the view of the TFTC. Under Uni-President's proposed product market, its combined market share with Wei-Li Food would only be about 9.04 per cent.

The TFTC did not accept Uni-President's proposed product market definition. The TFTC noted that instant noodles could be used as a main entrée and stored for long periods without spoiling at room temperature (for about six months). Cookies and desserts were snacks, and were not generally used as main entrées. Perishable foods would need to be consumed on the date of purchase and could not be stored for more than a few days. Frozen foods were of a price much higher than instant noodles, and required the use of a microwave and a freezer. Non-instant noodles and sauces required significant preparation time, unlike instant noodles. Furthermore, upon interviews with other manufacturers of instant noodles and consumers, the TFTC determined that instant noodles are not replaceable with the other types of food products as suggested by Uni-President, as the pricing strategy and the demands of the consumer were very unique to instant noodles. Therefore, the TFTC determined the relevant market to be instant noodles, beverages, and the manufacture and sale of cooking oil, and determined that the parties' market share in instant noodles was in excess of 70 per cent. Under the more limited definition of the relevant market determined by the TFTC, the parties' proposed combination was prohibited, as harm to the economy was not outweighed by the benefits. Uni-President appealed to the administrative courts, and the Supreme Administrative Court ruled against Uni-President on 15 August 2013. This decision cannot be appealed.

In February 2009, the TFTC sanctioned Uni-President for indirectly controlling Wei-Li's board of directors and supervisors, and also for failure to report its acquisition of a stake in Wei-Li. Uni-President challenged the TFTC's decision in court. The Supreme Court ruled in favour of Uni-President on 28 March 2013, confirming the lower court's finding that the TFTC had not provided sufficient proof of control.

Holiday and Cashbox

The planned merger between Holiday and Cashbox has a long and drawn-out history. The parties had negotiated a merger in 2003, when the TFTC had cleared the merger subject to various post-combination restrictions, including certain broad, general prohibitions on preferential treatment to affiliated entities, but the parties ultimately did not complete the transaction at that time. However, in 2007 and again in 2008, the parties again notified the TFTC of the intended merger; in both cases, the TFTC determined that the damage to competition was likely to outweigh any benefits to the overall economy. Primarily, the TFTC focused on the fact that a merger between the two parties would eliminate competition in this market in Taipei City and Taipei County, leading to decreased incentives for market participants to innovate and improve the quality of their service and inflated prices for consumers. Additionally, upstream karaoke video distributors would only be able to negotiate with one major purchaser after the proposed merger, and this would give the merged parties the ability to extort pricing concessions or completely shut out one distributor in favour of another. Because of these reasons, the TFTC determined that the parties' proposed merger was prohibited under Article 12(1) of the Fair Trade Act. The parties were able to appeal the TFTC's decision in 2008, but when they again notified the TFTC of a proposed merger in 2009, the merger was yet again prohibited for the same reasons. The TFTC also noted that while the parties were granted conditional approval in 2003, the parties did not complete the proposed merger within the time limits prescribed at that time and the market was no longer the same in 2009 as it had been in 2003.

In March 2010, Holiday and Cashbox again drew the attention of the TFTC when the TFTC determined that Cashbox and Holiday were jointly operating their businesses, and that Cashbox controlled Holiday's board of directors and supervisors, which are both situations constituting a merger under the Fair Trade Act and requiring a filing with the TFTC. The TFTC ruled that the parties were in violation of the law for failure to make the required filing, and that the way that they were operating their businesses violated repeated prior rulings from the TFTC. Furthermore, the parties were required, within a specified period of time, to disengage their joint business activities and remove directors and officers simultaneously serving both entities, and to pay a significant fine. Cashbox challenged the TFTC's decision in court. Cashbox lost the case in the court of first instance on 19 January 2012.

Yieh Steel and Tang Iron

In May 2009, the proposed merger in which Yieh Steel intended to acquire 34 per cent of the shares of Tang Iron on the Taiwan Stock Exchange was prohibited. Both parties were in the business of manufacturing sheets of stainless steel, which are generally manufactured using either a hot-rolling or process a cold-rolling process. Tang Iron did not manufacture sheets of stainless steel using the hot-rolling process, but instead offered such sheets for sale using goods obtained from a subcontractor. After the merger, the TFTC determined that the parties' combined gross revenue would represent 57.25 per cent of the market, which is greater than 50 per cent of the market. The TFTC also considered that there are high barriers to enter the market for manufacturing sheets of stainless steel and a significant preparation period is required before another enterprise could begin to manufacture sheets of stainless steel. As such, this proposed merger would lead to decreased competition and a decrease in the quality of services for downstream purchasers of stainless steel, and the TFTC determined that the proposed merger was prohibited under Article 12(1) of the Fair Trade Act. Yieh Steel challenged the TFTC's decision in court, and the case was remanded to the lower court for further review by the Supreme Administrative Court on 12 December 2013. The lower court, upon further review, entered a judgment in favour of the TFTC on 25 December 2014. However, the lower court's decision was revoked by the Supreme Administrative Court and the case remanded to the lower court for review on 31 March 2016.


When two or more enterprises merge or combine their businesses, greater efficiency is often achieved in their operations. Along with such efficiency, however, a concentration in the market share will often occur as well. The objective of the TFTC in regulating mergers is to prevent enterprises from raising the concentration of a market to the extent that it weakens or impedes free competition in Taiwan through a proposed merger. To avoid these undesirable results, the Fair Trade Act requires parties intending to 'merge' as defined by the statute to notify the TFTC when certain market thresholds are attained. The TFTC is then given an opportunity to review and, if necessary, prohibit or impose conditions on the proposed merger.

i Covered transactions

Any transaction that is considered a 'merger'2 under Article 10 of the Fair Trade Act is subject to pre-merger notification under Taiwan law. The following transactions are covered:

    1. two enterprises merge into one;
    2. an enterprise acquires the voting shares of, or makes capital contributions to, another enterprise equal to more than one-third of the total voting shares or capital of the other enterprise;
    3. an enterprise obtains an assignment of or a lease of all or substantially all of the business or assets of another enterprise;
    4. an enterprise jointly operates a business with another enterprise on a regular basis or agrees to operate another enterprise's business under a trust agreement; or
    5. an enterprise directly or indirectly controls the business operations or the appointment or discharge of personnel of another enterprise.

Under the Fair Trade Act, when determining whether the one-third of voting shares and capital contributions threshold specified in Article 10(b) is met, all shares and capital contributions of the subordinate companies controlled by the same company (or companies) as the merger participant must be included in the calculation.

ii Filing thresholds: market share and turnover

Under Article 11 of the Fair Trade Act, two types of thresholds have been set forth to determine whether a merger notification should be filed with the TFTC. The first is based on market share and the second is based on the amount of turnover generated in the preceding fiscal year by the parties to the proposed merger.

In determining market share, the TFTC will take into account the production, sales, inventory and data relating to import and export value and volume for the applicable enterprise and the particular market in which it operates. The 'market share threshold' requires that the applicable party or parties file a merger notification with the TFTC under two circumstances:

    1. if, as a result of the merger, the enterprises will possess one-third of the market share of the area in which they operate; or
    2. if, regardless of the merger, one of the enterprises intending to merge possesses one-quarter of the market share of the area in which it operates.

Regarding the market share threshold, the TFTC is most concerned about having the chance to review mergers that will create a concentration in a particular market, which will be determined by the consideration of various factors (including sales, which is the same factor used for the second type of notification threshold). The large number of fairly broad variables included in the determination of market share ensures greater flexibility should the TFTC decide to exert its authority over notifiable mergers. In practice, the TFTC often consults statistical yearbooks published by government authorities to determine the applicable market.

Turnover is defined under the regulations to mean the total sale or operating revenue of an enterprise, which is conceptually the same as gross revenue. The 'turnover threshold' requires that the applicable parties file a merger notification with the TFTC if sales for the preceding fiscal year exceed the threshold amount publicly announced from time to time by the TFTC. According to the rule the TFTC announced in March 2015, the threshold amount is met for non-financial enterprises if one party has sales in the preceding fiscal year in excess of NT$15 billion and the other party has sales in the preceding fiscal year in excess of NT$2 billion. For financial enterprises, the threshold amount is met if one party has sales in the preceding fiscal year in excess of NT$30 billion and the other party has sales in the preceding fiscal year in excess of NT$2 billion. In addition, based on the rule the TFTC announced in December 2016, the threshold amount is also met if the aggregate 'global' sales of all enterprises in the proposed merger in the preceding fiscal year exceeds NT$40 billion and at least two of such enterprises each has sales in excess of NT$2 billion in Taiwan in the preceding fiscal year. Other than the above sales revenue threshold amount set forth for financial and non-financial enterprises and all enterprises, the Fair Trade Act provides the TFTC with the discretion to decide different sales revenue threshold amounts by issuing an administrative order for enterprises in different industries.

In addition, the sales revenue of companies with controlling and subordinate relationships with the merger participants, and the sales revenue of subordinate companies controlled by the same companies as the merger participants, should be included when calculating the total sales revenue of an enterprise.

Under the current Fair Trade Act, transactions exempt from merger filing include four additional types of transactions: (1) merger of an enterprise with another enterprise that has controlling and subordinate relationship with such enterprise; (2) merger of an enterprise with another subordinate enterprise controlled by the same companies as such enterprise; (3) transfer of all or part of an enterprise's outstanding voting shares or equity capital of a third party to another enterprise that has controlling and subordinate relation with such enterprise; and (4) transfer of all or part of an enterprise's outstanding voting shares or equity capital of a third party to another subordinate enterprise controlled by the same companies as such enterprise.

iii Standard for review: overall economic benefits in excess of competition restraints

The standard under which the TFTC must review any merger notifications is fairly expansive. Under Article 13 of the Fair Trade Act, the TFTC may not prohibit any filed merger if the overall economic benefits of the merger outweigh the disadvantages resulting from the competition restraints that it would cause. Therefore, the standard does not require an absolute bar on mergers causing competition restraints. Rather, the TFTC will balance the restraints on competition with the overall benefit to the economy prior to determining whether such a merger should be prohibited. Under regulations set forth by the TFTC, a non-exclusive list of factors to be considered are consumer interests, whether the parties to be merged had weaker positions in the market prior to the proposed merger, whether one of the merging parties is a failing enterprise and how closely related the concrete results of the proposed merger may be to the stated economic benefits.

At times, the overall economic benefits to Taiwan as a whole relative to the global market have been a factor in the TFTC's decisions. In 2000, a merger involving three of Taiwan's semiconductor foundries was proposed for review. In this transaction, Taiwan-Acer Manufacturing Corp and Worldwide Semiconductor Manufacturing Corp would both merge into and be survived by Taiwan Semiconductor Manufacturing Corp (TSMC). After the combination, TSMC's share of the domestic foundry market would rise from 53 per cent to over 60 per cent, which would give TSMC, along with only one other remaining market participant, nearly 100 per cent of the domestic market. The TFTC recognised that competition in Taiwan's domestic foundry market would be restricted or hindered, but that it was more important to 'the overall economic interests of the nation' for the combination to take place, as it would 'solidify Taiwan's leadership role in the foundry market, bring increased economies of scale to Taiwan's IC market, and give Taiwan a greater leadership role in the global IC market'. Additionally, the TFTC noted that upstream and downstream participants would also benefit from enhancement of the merged entity's global competitiveness.

iv Waiting periods and time frames

Under the 2017 amendment, enterprises must not proceed to merge within 30 working days (instead of 30 calendar days before the 2017 amendment) from the date that the TFTC accepts the filing materials as complete, which in a practical manner extends the waiting period for the merger control review. Should the TFTC in its discretion determine that the filing materials are incomplete and request that supplemental information be provided, the 30-working day waiting period will restart on the date of submission of the supplemental information if it is deemed complete. This waiting period may be shortened or extended as deemed necessary by the TFTC in writing. In our experience, the waiting period is rarely shortened unless a special request is made to the TFTC relating to the timing pressures of the proposed deal. The TFTC will, however, in its discretion and often for more complex transactions, extend the waiting period, with such extension not exceeding the statutory limit of an additional 60 working days under the 2017 amendment.

Certain proposed transactions having limited market shares or not posing any potential significant competition restraints may be eligible for shortened waiting periods (expedited notifications). Additionally, supporting information filed along with the notification form may include documents relating to production, sale and inventory for a shorter historical period.

v Third-party challenge, external opinion and judicial review

Third parties do not have the right to access merger files under the TFTC's custody; however, during the seven-day TFTC public opinion solicitation period, they may challenge the proposed merger. Persuasive challenges may prompt the TFTC to request more information from the merging parties, thereby, in some cases, delaying or breaking the deal. Under the 2017 amendment, the TFTC is also provided with the discretion to seek external opinion, and if necessary, appoint an academic research institution to conduct industrial economic analysis to supplement its review of the merger application. In addition, the TFTC shall provide necessary merger application information to the targeted enterprise in the hostile acquisition and consult with the targeted enterprise before a decision is made. Should parties be dissatisfied with the TFTC's decision, they have the right to file for an administrative litigation directly without first going through an administrative appeal within two months of the day after receiving the disposition letter.

vi Concurrent regulatory review

The National Communications Commission (NCC) has concurrent merger control authority with the TFTC over the media sector. Pursuant to the agreement between the two agencies, the TFTC must first consult the NCC before substantively reviewing a merger filing of parties in the media sector.


i Requests for waiver

In certain cases, it may be difficult to determine whether the proposed transaction is a covered transaction, or to determine whether the filing thresholds have been met for various reasons (e.g., because the relevant market is not easily defined). In such cases, a request for waiver may be made to the TFTC in the form of a letter. However, we note that the TFTC is prone not to respond to such request for a waiver recently, as the TFTC appears to be less willing to bear the risks for such preliminary judgment prior to receipt of the complete filing materials.

ii Confidentiality

Unless qualified for expedited notification as described above, the TFTC will post basic information on its website to gather public comments on the proposed transaction. Such basic information will include the names of the merging parties and their relevant markets, the type of merger to be conducted as set forth in the Fair Trade Act, the period during which comments are accepted and the forum by which comments may be made to the TFTC. Furthermore, the TFTC has entered into agreements with certain foreign authorities, which will require the exchange of information in circumstances where the notification would affect the jurisdictions with which the agreements are entered. However, in a merger case, the TFTC will maintain the confidentiality of the filing if it determines that a filing is not necessary due to a lack of jurisdiction or a failure to meet filing thresholds.

Parties to a proposed transaction still being negotiated may enquire whether a filing is necessary by submitting anonymous queries to the TFTC. However, at some point, if the parties intend to proceed with a transaction and if a filing is required, identifying details will need to be disclosed to the TFTC.

Parties will not have access to the TFTC's files during the review process in principle; however, the TFTC is required to provide necessary merger application information to the targeted enterprise in the hostile acquisition and consult with the targeted enterprise after the 2017 amendment. Also, in more complex cases and in the event that the parties have special requirements with respect to the review of their transactions, we have often been able to successfully request special meetings with the TFTC to discuss the review and any relevant facts that are to be specially communicated. Additionally, parties may request that the TFTC maintain certain portions of its information in absolute confidentiality if such portions are clearly denoted pursuant to applicable laws.


Since enactment of the Fair Trade Act, Taiwan has actively and conscientiously developed a full body of competition law to ensure that the basic principles of fair trade are followed. The merger control regime in Taiwan is robust, as demonstrated by the technical assistance that the TFTC provides to nearby jurisdictions such as Mongolia, Indonesia and Thailand.

The 2017 amendment prolonged the waiting period for merger applications to 90 working days. The enterprises in a merger transaction should be aware of the extended waiting period to better plan out the deal schedule and duly forecast the expected closing date of the deal. Such impact on merger application practice is worth monitoring.


1 Victor I Chang and Margaret Huang are partners and Rose Lin is an associate at LCS & Partners.

2 Note that the transactions covered under the definition of 'merger' are more expansive than the generally accepted legal meaning afforded to that term in many jurisdictions where a merger is generally understood to mean a legal mechanism by which one entity is absorbed into another with only one surviving entity. Under Taiwan law, and as may be seen in the English translations of the pre-merger notification forms, the concept of 'merger' also includes the concept of business combinations or the acquisition of control using varying methods as described under the statutory definition. After a proposed transaction is determined to be a statutory merger as defined by the Fair Trade Act, the filing requirement then turns on whether certain market share or turnover thresholds are met.