TAIWAN Law and Practice Contributed by: Stephen Wu, Yvonne Hsieh, Wei-Han Wu and Erica Chiu, Lee and Li, Attorneys-at-Law
4. Substance of the Review 4.1 Substantive Test
• the possibility for other competitors to choose trading counterparts after the combination; • the level of difficulty for businesses not participat - ing in the combination to enter the relevant market; • the possibility for the market power to be abused by participating parties in the relevant market; • the possibility of increasing competitors’ cost; • the possibility of concerted actions occurring as a result of the combination; and • other factors likely to lead to market foreclosure. When reviewing conglomerate combinations, the following factors may be considered by the TFTC to determine whether potential competition exists between the parties to a conglomerate combination: • the possibility of a change of regulations and its impact on the participating parties’ cross-industry operations; • the possibility of technological improvement ena - bling engagement in cross-industry operations by the participating parties; • whether any of the participating parties originally has the intention to develop cross-industry opera - tions; and • other factors likely to have an impact on market competition. If significant potential competition is deemed likely in a conglomerate combination, further analysis of the fac - tors concerning anti-competition under a horizontal or While the TFTC will certainly consider economic effi - ciencies when determining whether the proposed transaction will benefit the economy overall, there is no case precedent on how the TFTC weighs this fac - tor. 4.6 Non-Competition Issues Whether the TFTC will take any non-competition issues into account as part of the review process is unclear, since no case precedent is available. The TFTA or relevant regulation is silent on whether the consideration of these non-competition issues should be permitted. vertical combination is required. 4.5 Economic Efficiencies
If there is no suspicion of obvious competition restraints after all relevant factors have been consid - ered, the TFTC will conclude that the overall economic benefits of the merger outweigh the disadvantages resulting from competition restraint and thus clear the transaction. Otherwise, the TFTC should further examine the overall economic benefits of the merger to determine whether they outweigh the disadvan - tages resulting from competition restraint. 4.2 Markets Affected by a Transaction In general, to determine the markets that may be affected by the transaction, the TFTC will examine the markets where the parties’ activities overlap and/or have a vertical relationship. In practice, the TFTC will also look into the parties’ respective major businesses in Taiwan from time to time, even if such businesses have no relevance to the proposed transaction. There is no de minimis concept under the TFTA. 4.3 Reliance on Case Law The TFTC may sometimes rely on its own case prec - edents to review the present case. Although the TFTC may take case law in other jurisdictions into consid - eration, it is less likely to rely solely on other jurisdic - Competition concerns that the TFTC will investigate vary depending on the type of combination. If the combining enterprises engage in a horizontal com - bination, the TFTC will take the following factors into consideration: • unilateral effects; • co-ordinated effects; • market entry; • countervailing power; and • other factors that may impede competition. If the combining enterprises engage in a vertical com - bination, the TFTC will take the following factors into account: tions’ views to make its decision. 4.4 Competition Concerns
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