1.1 Please provide a brief overview of your jurisdiction's
merger control legislative and regulatory framework.
The Fair Trade Act (FTA), which entered into force in 1992,
is the main legislation governing Taiwanese merger control.
Merger control is enforced by the Taiwan Fair Trade Commission
(TFTC). The rules are moderately onerous as filing is mandatory
in the event the applicable jurisdictional thresholds are met
and closing must be suspended pending clearance.
Where any enterprises fail to comply with the rules, the
TFTC may prohibit such merger, prescribe a period for the
enterprises to split, to dispose of all or a part of the
shares, to transfer a part of the operations or to remove
certain persons from positions or make any other necessary
dispositions. Further, an administrative fine of between
NT$200,000 ($6,750) and NT$50 million may be imposed upon such
1.2 What have been the key recent trends and developments
in merger control?
On December 2 2016, the TFTC announced the introduction of a
new sales revenue notification threshold for merger control: if
the combined global turnover of the parties exceeds NT$40
billion and the Taiwan turnover of any two of the parties each
exceeds NT$2 billion separately, a notification of such
transaction will be required.
Also, a newly amendment to the FTA came into effect on June
16 2017. In the amendment, the review period of merger filings
by the TFTC may be extended to 90 working days at most, and the
TFTC is 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 filing. In addition, the TFTC shall provide
necessary merger filing information to the targeted enterprise
in a hostile acquisition and consult with the targeted
1.3 Briefly, what is your outlook for merger control over
the next 12 months, including any foreseeable legislative
Pursuant to the new sales revenue notification threshold of
merger application, the chances of merger participants
requiring a notification may increase. Further, with the
extension of the review period of merger filings by the TFTC
and the additional procedure applicable to hostile
acquisitions, participants in a merger transaction should be
aware of the new review period to avoid any delay or
postponement of the deal. The potential increase of required
information resulting from the consultations with a targeted
enterprise and the public by the TFTC for the merger filing in
a hostile acquisition is also worth monitoring in the future.
SECTION 2: Jurisdiction
2.1 What types of transactions are caught by the rules?
What constitutes a merger and how is the concept of control
Under the FTA, the following business combinations (the
subject of a review by the TFTC in Taiwan) are caught:
- an enterprise holding or acquiring the
voting shares of or making capital contributions to another
enterprise to an extent of more than one-third of the total
voting shares or capital of such other enterprise;
- an enterprise being assigned by or leasing
from another enterprise the whole or the majority of the
business or properties of such other enterprise;
- an enterprise operating jointly with
another enterprise on a regular basis or being entrusted by
another enterprise to operate the latter's business; or
- an enterprise directly or indirectly
controlling the business operation or the appointment or
discharge of personnel of another enterprise.
2.2 What are the jurisdictional thresholds for
notification? Can the authorities investigate a merger falling
below these thresholds?
A transaction may require notification if one of the
following market share thresholds and/or sales amount
thresholds is met:
- as a result of the business combination,
the enterprise(s) will have one-third of the market share;
- one of the enterprises in the business
combination has one-fourth of the market share; or
- if the Taiwan turnover of one party
exceeds NT$15 billion (NT$30 billion if the parties are
financial institutions) and the Taiwan turnover of a second
party exceeds NT$2 billion; or
- if the combined global turnover of the
parties exceeds NT$40 billion and the Taiwan turnover of any
two of the parties each exceeds NT$2 billion separately.
The sales amount threshold is relatively clear. The market
share, however, is difficult to calculate and may bring
uncertainty about filing. The TFTC cannot investigate mergers
falling below these thresholds.
2.3 Are foreign-to-foreign transactions caught by the
rules? Is a local effect required to give the authority
jurisdiction to review it?
Foreign-to-foreign mergers may be required to notify the
TFTC if the transaction has a direct, actual and reasonably
foreseeable impact on the Taiwan market. Factors such as the
impact of the contemplated transaction on other jurisdictions
as compared to Taiwan may be taken into consideration by the
TFTC for determination.
SECTION 3: Notification
3.1 When the jurisdictional thresholds are met, is a filing
mandatory or voluntary? What are the risks/sanctions for
failing to notify a transaction and closing prior to
If relevant thresholds are met, filing is mandatory. Closing
must be suspended pending clearance.
Where any enterprises fail to comply, the TFTC may prohibit
such merger, prescribe a period for the enterprises to split,
to dispose of all or a part of the shares, to transfer a part
of the operations, or to remove certain persons from positions,
or make any other necessary dispositions. Further, an
administrative fine of between NT$200,000 and NT$50 million may
be imposed upon the enterprises. Between 2008 and November
2017, there were 25 instances that the TFTC penalised parties
for failing to make merger filings.
3.2 Who is responsible for filing? Do filing fees
All participants are responsible for filing in mergers and
in cases where an enterprise is assigned by or leases from
another enterprise of the operations or assets of another; or,
an enterprise regularly runs operations jointly with another,
or is commissioned by another enterprise to run operations. The
acquirer or the controlling enterprise is responsible for
filing in cases where an enterprise holds or acquires shares or
capital contributions of another enterprise; an enterprise
directly or indirectly controls the business operations or the
appointment or discharge of personnel of another
The TFTC does not require a filing fee.
3.3 Is there a deadline for filing? What are the filing
requirements and how onerous are they?
Although there is no legal deadline for the filing, the
closing of a transaction requiring a merger filing must be
suspended pending clearance.
Requirements for a filing include: type and substance of the
merger; basic data on each participating enterprise;
explanation of the benefits of the merger for the overall
economy; and any disadvantages due to restraints on
competition, major future operating plans of the participating
enterprises, production and marketing statistics, along with
upstream and downstream competitive enterprises of the
3.4 Are pre-notification contacts available, encouraged or
required? How long does this process take and what steps does
Pre-notification contacts are not required under the FTA.
Thus, there is no formal process at the pre-notification
Pre-notification contacts are available under the current
practices in Taiwan. To confirm whether filing thresholds are
met and thus a filing required, enterprises tend to seek
opinions from the TFTC in written or
oral form prior to official filing. Upon receipt of such
inquiry, the TFTC may review the documents and descriptions
provided, discuss with merger participants, and perhaps issue a
formal written response regarding whether the filing threshold
is met. However, recently the TFTC has been more reluctant to
provide confirmation as to whether a filing is required prior
to formal filing. Instead, the TFTC is more likely to suggest
the merger participants carefully determine if the filing
thresholds are met and a formal filing is required in
accordance with the FTA.
SECTION 4: Review process and timetables
4.1 What is the standard statutory timetable for clearance
and is there a fast-track procedure? Can the authority extend
or delay this process? What are the different steps and phases
of the review process?
After the amendment of the FTA dated June 16 2017, the TFTC
has 30 working days from the receipt of a complete set of
filing information to review the contemplated transaction.
In particular cases, such as where the total market share of
the enterprises in a horizontal merger does not reach 20% of
the market or where the total market share of the enterprises
in a vertical merger does not reach 25% of each individual
market, the TFTC may review the contemplated transaction under
a simplified procedure. The TFTC will notify the filing
enterprise of such procedure within 14 working days from the
receipt of a complete set of filing information. The reviewing
period may be shortened by half the ordinary period under the
The TFTC may extend the review period for another 60 working
days on top of the ordinary 30-working day period as it deems
necessary. Although there are no specific or determined steps
or phases for the review process, any third party may challenge
the proposed merger and provide their comments during the
seven-day TFTC public opinion solicitation period generally in
the very beginning of the review period.
4.2 What is the substantive test for clearance? What are
the theories of harm the authorities will investigate? To what
extent does the authority consider efficiencies arguments?
The test for clearance and relevant factors taken into
consideration by the TFTC may differ based on whether the type
of such merger is a horizontal, vertical or conglomerate
merger. The TFTC will normally look to factors such as any
significant concerns about the restraints on competition and
the benefits of such merger for the overall economy (including
the impact on related upstream and downstream market and the
impact on the market and on the participating enterprises if
the combination is rejected).
4.3 Are remedies available to address competition concerns?
What are the conditions and timing issues applicable to
The TFTC may attach conditions or require undertakings in
any of the decisions it makes on filing cases. These are
similar to remedies, and are included in order to ensure that
the overall economic benefit of the merger outweighs the
disadvantages resulting from competition restraint.
In practice, the TFTC may give its conditional approval with
structural attachment (such as requiring the participants in a
merger to dispose of its shares or properties) or behavioural
attachment (such as requiring
participants to give authorisation to non-participants in
using their intellectual properties) upon the participating
enterprises for a specific period commencing from the effective
date of such transaction. The TFTC may ask the advice of the
participating enterprises about the conditions or undertakings
required before making its decisions.
SECTION 5: Judicial review
5.1 Please describe the parties' ability to appeal merger
control decisions and the time-limits applicable. What is the
typical time-frame for appeals.
Under the FTA, the parties may be able to file for
administrative litigation directly without going through
administrative appeal within two months upon the receipt of the
merger control decisions. The typical time-frame for a decision
in such appeals may generally take around 1.5 years in a high
Partner, LCS & Partners
T: +8862 2729 8000
F: +886 2 2722 6677
Margaret Huang is a partner at LCS & Partners
and has extensive experience in antitrust law. She has
handled merger notifications and waiver filings with
the Fair Trade Commission for all of the firm'smergers
and acquisitions transactions, and has assisted several
multinational clients in resolving all of their
antitrust law issues in Taiwan. She has also been
involved in amendments to Taiwan's Fair Trade Act.
Huang is a member of the Arbitration Association of the
Republic of China (Taiwan), and has published numerous
articles regarding antitrust law issues in professional
journals and newspapers.
Partner, LCS & Partners
T: +8862 2729 8000
F: +886 2 2722 6677
Victor Chang has extensive multi-jurisdiction
transactional experience in M&A, private equity
fund formations and cross-border transactions of all
types, frequently involving parties from the US,
Europe, Taiwan and China. Before joining LCS &
Partners in 2003, Chang was deputy general counsel of
Trader Classified Media, and also practised for seven
years in Boston, Massachusetts with the law firm Testa
Hurwitz & Thibeault. Since 2003, Chang has
represented numerous principals in the formation of
Greater China private equity and hedge funds, with
aggregate LP commitments in excess of $3.95 billion.
During that time, Chang has represented investors and
entrepreneurs in over 50 venture capital and private
equity investments involving operating companies in
China, and IPOs via the TWSE, GTSM, HKSE, NYSE and
Nasdaq. He has been recognised as a leading attorney in
the areas of private equity and venture capital by