At its 1643th Commissioners’ Meeting on March 29, 2023, Taiwan’s Fair Trade Commission (TFTC) passed the draft amendments to the CombinationTypes to Which Paragraph 1, Article 11 of the Fair Trade Act Does Not Apply and the Fair Trade Commission’s Guidelines on Handling Merger Filings. According to the TFTC’s press release dated March 31, 2023 and relevant announcements, the key amendments are as follows:

 

 

For a combination involving foreign enterprises that jointly establish or operate a joint venture outside of Taiwan, and the joint venture is not engaging in economic activities within Taiwan, there is no substantial benefit to regulate this type of combination given that the transaction has less connection with Taiwan’s domestic market and the absence of a direct, substantial and reasonably foreseeable impact on Taiwan's relevant market; thus the participating parties thereto are not required to notify the TFTC of the combination. Hence, pursuant to Subparagraph 1, Paragraph 1, Article 12 of the Taiwan Fair Trade Act (the “TFTA”), this type of combination is exempted from the merger filing obligation prescribed under Paragraph 1, Article 11 of the TFTA.

 

Nevertheless, the TFTC notes that, “[the joint venture] is not engaging in economic activities within Taiwan” means that it is not engaging in any economic activities that involve supply and demand of goods or services in Taiwan’s domestic market. For example, the products produced by the joint venture are sold only outside of Taiwan or sold exclusively to its foreign parent company, without affecting the supply and demand in the Taiwan market. The so-called ”economic activities” include the sale of goods or services, provision of quotations, bargaining and the conclusion of sales, contracts, or engagement with counterparties in connection with the sale.

 

 

In addition to the five types of combination specified under Section 7 of the Fair Trade Commission Guidelines on Handling Merger Filings, the simplified procedure also applies to the following four types of combination as they have a relatively lower impact on Taiwan’s domestic markets:

(1)     where the transaction value is below NT$2.5 billion;

(2)     in a horizontal combination, where the combined Taiwan revenues of the participating parties’ relevant products or services does not reach NT$200 million;

(3)     in a vertical combination, where none of the participating parties has generated NT$200 million or more in Taiwan for the relevant products or services; or

(4)     where the enterprise being combined generates no Taiwan revenue.

 

The TFTC announced the draft amendments to the Merger Types to Which Paragraph 1 of Article 11 of the Fair Trade Act Does Not Apply on April 7, 2023 for a 60-day public consultation. A finalized version thereof is expected to be promulgated shortly after the expiration of such 60-day period unless the TFTC considers making further amendments. To correspond with such amendments, the TFTC will concurrently amend the Guidelines on Handling Merger Filings and repeal the Guidelines on Extraterritorial Mergers. Thereafter, except for the non-notifiable types of combination, an extraterritorial combination which meets any of the filing thresholds must be notified to the TFTC in accordance with the TFTA and the waiver of jurisdiction will not apply.

 

If you have any questions on these amendments, please do not hesitate to contact us.