This article is the third in our series on merger control in Taiwan. This installment focuses on procedural questions related to merger control filings, including timing and content of the filings. For the first article on basic questions related to covered transactions and market share filing thresholds, click here. For the second article on relevant market definition, click here. The fourth and final installment in the series wraps up with some thoughts on the reviewing agency and other insights into the application and approval process, here.
1. Is there an expedited filing procedure for merger control filings in Taiwan? If so, what are the relevant qualifications?
Yes. Regulated transaction participants may apply to the Fair Trade Commission (the “FTC”) for expedited review of their transaction provided the following conditions are met in respect of the specified type of transaction:
- horizontal mergers – (i) the combined market share of the participants is less than 20% or (ii) the combined market share of the participants is less than 25% and the market share of one of the participants is less than 5%; provided that, such rules do not apply or are modified under certain circumstances related to high levels of market concentration;
- vertical mergers – the aggregate market share of the participants in each relevant market is less than 25%;
- conglomerate mergers – there is no significant potential competition between the participants; or
- related party mergers/acquisitions – one of the participants directly owns at least 1/3, but less than 1/2, of the voting rights or equity capital of the other participant.
It is important to note that expedited review is not available for transactions involving a financial holding company. The FTC may also decide not to grant expedited review if it determines that: (i) a transaction involves significant public interest, (ii) the relevant market is difficult to identify, (iii) the participants’ market shares are difficult to assess, or (iv) there are other significant concerns related to possible competition-limiting effects such as high market concentration or market entry barriers.
If the FTC rejects an application for expedited review, the transaction participants must resubmit a full, general review application.
2. What information is required in a merger control filing, and how long does it typically take to compile such information?
Transaction participants should expect to spend at least three to four weeks preparing a merger control application due to the volume of information required by the FTC and the fact that all information provided must be in Chinese.
An expedited review application requires financial information for the last two fiscal years and information regarding each participant’s three main products or services and its three primary competitors. A general review application requires financial information for the last three fiscal years and information regarding each participant’s five main products or services and its five primary competitors. Each of the expedited and general review filings, require among other things: (i) information on the type of merger (horizontal, vertical, or conglomerate) and whether it is extraterritorial, (ii) a description of the business of each participant, (iii) an overview of the relevant market(s), (iv) a description of market entry barriers, and (v) an explanation of the overall positive and negative economic impacts of the proposed transaction.
3. When is the earliest time a filing may be made?
A filing may be made before there is a binding transaction. However, the application must establish that there is a high likelihood that the transaction will proceed. Otherwise, there is a risk that the FTC may not commence its review.
4. How long does it typically take to “clear” a transaction?
The FTC’s default review period under the general application process is 30 business days. Transaction participants may not close the relevant transaction during this review period.
The review period commences only upon receipt of written notification from the FTC that the relevant application is complete (i.e., no further requests for information will be made by the FTC). It typically takes a minimum of four to six weeks from the time of initial submission of an application to get the application in form acceptable to the FTC such that the review period can commence.
The FTC may adjust the duration of the review period as it deems necessary provided that the total review period does not extend longer than 90 business days. Should the FTC alter the duration of the default 30 business day review period, it will notify the transaction participants in writing. Larger, more complex transactions typically have review periods of 60 business days or more.
5. Who makes the filing?
As a general rule, each transaction participant must be party to the filing. In certain related party transactions, the ultimate controlling entities are required to file. A financial holding company must also file if it or any of its subsidiaries participate in the transaction.
6. Are there fees with respect to merger control filings?
For more information on mergers and acquisitions in Taiwan, please contact Gregory A. Buxton at email@example.com.Written March 7, 2018 By Gregory A. Buxton.