This article is the fourth and final in our series on merger control in Taiwan. This installment covers issues related to the primary regulatory agency and other insights into the application and approval process. 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. For the third article on procedural issues, click here.

1. What is the nature of the agency which reviews merger transactions?

Taiwan’s Fair Trade Commission (the “FTC”) is an independent commission under the executive branch of the Taiwan government. An important consequence of the FTC’s being an independent commission is that unfavorable FTC rulings may be directly appealed to the administrative courts, and need not be heard first by other bodies under the executive branch.

2. What is the typical or recommended approach in dealing with the reviewing agency?

Generally speaking it is advisable to contact the FTC to discuss matters which are likely to pose competition issues as early as practicable. Confirmation of smaller, more discrete points may often be obtained through anonymous conversations between one of the transaction participant’s Taiwan counsel and the FTC.

It is also worth noting that in global transactions involving foreign merger control authorities, the FTC will often consider interpretations and guidance from such authorities on issues that are the same or similar to those faced in Taiwan.

3. What level of confidentiality does a merger control filing enjoy?

Merger control filings are confidential until the time at which the FTC either (i) seeks public opinion in respect of the proposed transaction or (ii) approves or disapproves the transaction. If public opinion is sought, the FTC will publish the relevant participants’ names and products and services as well as a general description of the transaction on its website. Upon an unconditional approval of a transaction, the FTC will issue a news release containing basic information on the participants, a description of the transaction structure, the relevant market definition used by the FTC, and the FTC’s competition impact assessment. If the FTC’s transaction approval is conditional, the agency will issue a formal decision letter. This letter may contain additional details including portions of the merger control filing.

The FTC’s published transaction approvals usually do not contain transaction participants’ specific business data. If specific participant information needs to be disclosed, the FTC will ask for the relevant participant’s approval prior to making any such disclosure.

A transaction participant may also actively request confidential treatment of particular information in the merger control application materials. The FTC typically respects such requests.

4. If the statutory waiting period expires without a challenge, is there any possibility of a post-closing challenge?

No, there is no possibility of a post-closing challenge, provided that the information in the merger control filing remains accurate and complete and all procedural filing requirements were properly followed.

5. Are there ways to protect a transaction from post-closing challenge?

The best protection against post-closing challenges is the receipt of a formal FTC response letter either approving the proposed transaction or confirming that review is not required, each after submission of a complete merger control filing.

If the participants believe that a proposed transaction does not exceed the market impact thresholds outlined in part 1 of this FAQ, the participants may submit a request for written confirmation from the FTC that a merger control filing need not be made with respect to the transaction. This confirmation request should be accompanied by basic market share and sales revenue figures. Should the FTC concur that no merger control filing is required, it will typically issue the requested confirmation within approximately 30 business days of the submission of the confirmation request. While not legally binding on the FTC, so long as the information on which the confirmation was based was accurate at the time of the consummation of the relevant transaction, such a confirmation would be extremely persuasive evidence that filing was not required.

6. What are the consequences of failing to notify the FTC of a qualifying transaction?

Under the Fair Trade Act 2017, in cases in which the parties involved (a) fail to notify the FTC of a transaction that is in excess of the relevant market impact thresholds or (b) close a transaction without proper notification to the FTC or before the expiry of the applicable waiting period, the FTC may (a) prohibit the transaction, (b) require the enterprises involved to split or for one or more of the enterprises to divest itself partially of the shares or assets of the other or make any other necessary dispositions, or (c) require the enterprises to remove certain persons from their positions. Such violations may also carry administrative penalties of between NT$200,000 and NT$5 million.

In the event that an enterprise violates an order of disposition made by the FTC, the FTC may order dissolution of the enterprise or the suspension or termination of the enterprise’s operations in Taiwan.

For more information on mergers and acquisitions in Taiwan, please contact Gregory A. Buxton at gbuxton@winklerpartners.com.