This content is from: Local Insights

2017 Merger Control Survey: Taiwan

Margaret Huang and Victor Chang, LCS & Partners


1.1 What is the applicable legislation and who enforces it?

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).


2.1 What types of mergers and joint ventures (JVs) are caught?

Under the FTA, the following business combinations (the subject of a review by the TFTC in Taiwan) are caught: mergers; 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 thresholds for notification, how clear are they, and are there circumstances in which the authorities may investigate a merger falling outside such thresholds?

For non-financial enterprises, when one party to the contemplated transaction has sales in the preceding fiscal year in excess of NT$15 billion ($461 million) and the other party has sales in the preceding fiscal year in excess of NT$2 billion in Taiwan respectively, transactions are subject to notification. For financial enterprises, when one party to the contemplated transaction 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 Taiwan respectively, transactions are subject to notification.

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 outside the sales amount threshold and market share threshold.

2.3 Are there circumstances in which a foreign-to-foreign merger may require notification, and is a local effect required to give the authority jurisdiction?

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.


3.1 Is filing mandatory or voluntary and must closing be suspended pending clearance? Are there any sanctions for non-compliance, and are these applied in practice?

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 October 2016, there were 25 instances that the TFTC penalised parties for failing to make merger filings.

3.2 Who is responsible for filing and what, if any, filing fee applies?

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 enterprise.

The TFTC does not require a filing fee.

3.3 What are the filing requirements and how onerous are these?

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 participating enterprises.

3.4 Are pre-notification contacts available, encouraged or required? How long does this process take and what steps does it involve?

Pre-notification contacts are not required under the FTA. Thus, there is no formal process at the pre-notification stage.

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.


4.1 What is the standard timetable for clearance and is there a fast-track process? Can the authority extend or delay this process?

Under the FTA, the TFTC normally has 30 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 simplified procedure.

The TFTC may extend the review period for another 60 days on top of the ordinary 30-day period as it deems necessary.

4.2 What is the substantive test for clearance, and to what extent does the authority consider efficiencies arguments or non-competition factors such as industrial policy or the public interest in reaching its decisions?

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 alleviate competition concerns? Please comment on the authority's approach to acceptance and implementation of remedies.

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). The TFTC may ask the advice of the participating enterprises about the conditions or undertakings required before making its decisions.


5.1 Please describe the parties' ability to appeal merger control decisions – how successful have such challenges been?

Before the new amendment of the FTA becoming effective (as of February 6 2015 for most of it) the parties may file an administrative appeal with respect to merger control decisions made by the TFTC. With the new amendment, the parties may be able to file for administrative litigation directly without going through administrative appeal.

However, from 2008 until October 2016, only three cases of administrative appeals had been filed and all of them were dismissed; therefore, the challenges might have not been sufficiently effective.


6.1 Outline any merger control regulatory trends in your jurisdiction.

Based on the TFTC announcement on July 18 2016, transactions exempt from merger filing include not only those stipulated in the FTA, but also four additional types of transactions as these transactions are merely internal structural adjustments by controlling enterprises.

In addition to the current sales amount thresholds established for financial and non-financial enterprises, there may be an upcoming threshold for merger participants to note in the near future. According to the draft amendment of the thresholds and calculation of sales amount dated September 30 2016, when the enterprises involved in a contemplated transaction have total sales in excess of NT$40 billion worldwide, and at least two of such enterprises each have sales in excess of NT$2 billion in Taiwan in the preceding fiscal year, such transaction is subject to notification.

As the chances of merger participants requiring a merger application may increase pursuant to the new threshold, merger participants should be mindful of its effective date to avoid inadvertent violations and/or subsequent fines.

About the author

Margaret Huang

Taipei, Taiwan
T: +8862 2729 8000

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's mergers 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.

About the author

Victor I Chang

Taipei, Taiwan
T: +8862 2729 8000

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 Asialaw.

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