TAIWAN Law and Practice Contributed by: Stephen Wu, Yvonne Hsieh, Wei-Han Wu and Erica Chiu, Lee and Li, Attorneys-at-Law
2.7 Businesses/Corporate Entities Relevant for the Calculation of Jurisdictional Thresholds Please see 2.5 Jurisdictional Thresholds . Specifically, Article 11, Paragraph 2 of the TFTA stipulates that the turnover should be calculated on a “group-wide/consolidated” basis – ie, by including the sales amount of an enterprise that is controlled by, controlling or affiliated with the enterprise in the combination, and of an enterprise where both itself and the enterprise in the combination are controlled by the same enterprise or enterprises. The TFTA is silent on whether any change in the busi - ness during the reference period (such as other acqui - sitions, divestments or business closures) should be factored in when calculating the turnover; however, in general, the TFTC accepts the annual turnover figures stated in the parties’ audited financial statements as the benchmark to calculate the turnover. 2.8 Foreign-to-Foreign Transactions As long as a foreign-to-foreign transaction falls under the definition of a combination as stated in 2.3 Types of Transactions , and meets any of the filing thresholds as provided in 2.5 Jurisdictional Thresholds , such transaction is subject to merger control in Taiwan. Prior to June 2023, there was a local effects test under the TFTA, according to which the TFTC may decide not to exercise its jurisdiction over a pure foreign-to- foreign transaction after weighing several factors. However, on 30 June 2023, the TFTC promulgated amendments to the Merger Guidelines, and con - currently repealed the Guidelines on Extraterritorial Mergers. Thereafter, except for non-notifiable types of combination, an extraterritorial combination that meets any of the filing thresholds must be notified to the TFTC in accordance with the TFTA, and the waiver of jurisdiction will no longer be applicable. 2.9 Market Share Jurisdictional Threshold As the TFTA does not limit the filing threshold assess - ment to only overlapping products/services, it is pos - sible for one party – either a target or an acquirer – to
meet the threshold in the absence of a substantive overlap. 2.10 Joint Ventures Joint ventures are likely to be covered by the merger control rules, as long as they meet the definition of combination under the TFTA and any filing threshold is triggered. The term “joint venture” is not defined under the TFTA. However, the TFTC ruled in 2002 that the establish - ment of a joint venture, whether it is a newly incor - porated enterprise or an existing enterprise, will be subject to merger control if it constitutes a combina - tion as defined under the TFTA. Note that the TFTA does not further categorise joint ventures into different types based on their function or corporate structure. In addition, on 28 June 2023, the TFTC promulgated amendments to the “Combination Types to Which Paragraph 1, Article 11 of the Fair Trade Act Does Not Apply” by adding an additional “non-notifiable/ exempted” type of combination of joint ventures; please see 1.1 Merger Control Legislation for details. 2.11 Power of Authorities to Investigate a Transaction The TFTC does not have the power to investigate or call in a transaction that does not meet the jurisdic - tional thresholds. However, if the TFTC has doubts, it does have the power to issue letters to the parties, requesting them to provide explanations and relevant documents to prove that the jurisdictional thresholds are not met, if deemed necessary. The statute of limitations for the TFTC to enforce merger control regulations is five years. 2.12 Requirement for Clearance Before Implementation The implementation of a transaction must be sus - pended until clearance is obtained. 2.13 Penalties for the Implementation of a Transaction Before Clearance The sanctions for implementing a transaction prior to receiving clearance are the same as those applica - ble for the failure to file a notification; please see 2.2
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