Amendment to the Fair Trade Law: combination of enterprises to follow “pre-combination application against objection principle”; combinations resulting in no loss in market mechanism excepted

The Economics & Energy Committee of the Legislative Yuan passed an amendment to the Fair Trade Law on December 10, 2001.  The amendment includes that combinations of enterprises resulting in no loss in the market mechanism do not have to file for application for approval, and that the on-going combinations of enterprises will have to follow “application-objection before combination”, instead of “application for approval before combination”; that is, the combination of enterprises will automatically become valid after combination application has been submitted to the FTC for thirties days without any objections raised. 

According to the amended Article 11 of the Fair Trade Law, an application for approval shall be filed with the central competent authority if the combination of enterprises falls within any of the following situations:

the market share reach 1/3 as a result of the combination;

one of the enterprises participating in the combination holds market share up to 1/4; or the sales volume in the preceding fiscal year of one of the enterprises participating in the combination exceeds the amount announced by the central competent authority. 

To lower the barrier for the combination of enterprises, the single amount referred to in the preceding paragraph is replaced by two amounts for financial institutions and non-financial institutions, respectively, as announced by the central competent authority.  The existing application procedure for approval of combination requires the FTC to make a decision of approval or disapproval within two months after receipt of an application.  However, the new rule stipulates that the combination of enterprises will automatically become valid after the application has been filed with the FTC for one month without being objected.  On the other hand, combination of enterprises resulting in no loss in competitiveness are excepted from filing an application for approval.  As a result, combination between affiliate businesses for adjustments of share rights, assets or business operations, etc. will not have to file for approval.