The 2015 Mergers Control Survey by Margaret Huang and Victor Chang of LCS & Partners reviewed the merger control regime in Taiwan for IFLR. 
   
1. REGULATORY FRAMEWORK
1.1 What is the applicable legislation and who enforces it?
The Fair Trade Act (FTA), which entered into force in 1992, is the main legislation governing Taiwanese merger control. Merger control is enforced by the Taiwan Fair Trade Commission (TFTC).
               
1.2 What types of mergers and joint ventures (JVs) are caught?
Under the FTA, the following business combinations (the subject of a review by the TFTC in Taiwan) are caught: mergers; an enterprise holding or acquiring the voting shares of or making capital contributions to another enterprise to an extent of more than one-third of the total voting shares or capital of such other enterprise; an enterprise being assigned by or leasing from another enterprise the whole or the majority of the business or properties of such other enterprise; an enterprise operating jointly with another enterprise on a regular basis or being entrusted by another enterprise to operate the latter's business; or, an enterprise directly or indirectly controlling the business operation or the appointment or discharge of personnel of another enterprise.

2. FILING
2.1 What are the thresholds for notification, how clear are they, and are there circumstances in which the authorities may investigate a merger falling outside such thresholds?
For non-financial enterprises, when one party to the contemplated transaction has sales in the preceding fiscal year in excess of NT $15 billion ($477 billion) and the other party has sales in the preceding fiscal year in excess of NT $2 billion, transactions are subject to notification. For financial enterprises, when one party to the contemplated transaction has sales in the preceding fiscal year in excess of NT$30 billion and the other party has sales in the preceding fiscal year in excess of NT $2 billion, transactions are subject to notification.
The sales amount threshold is relatively clear. The market share, however, is difficult to calculate and may bring uncertainty about filing. The TFTC cannot investigate mergers falling outside the sales amount threshold and market share threshold.

2.2 Are there circumstances in which a foreign-to-foreign merger may require notification, and is a local effect required to give the authority jurisdiction?
Foreign-to-foreign mergers may be required to notify the TFTC if the transaction has a direct, actual and reasonably foreseeable impact on the Taiwan market. Factors such as the impact of the contemplated transaction on other jurisdictions as compared to Taiwan may be taken into consideration by the TFTC for determination.

2.3 Is filing mandatory or voluntary and must closing be suspended pending clearance? Are there any sanctions for non-compliance, and are these applied in practice?
If relevant thresholds are met, filing is mandatory. Closing must be suspended pending clearance.
Where any enterprises fail to comply, the TFTC may prohibit such merger, prescribe a period for the enterprises to split, to dispose of all or a part of the shares, to transfer a part of the operations, or to remove certain persons from positions, or make any other necessary dispositions. Further, an administrative fine of between NT$200,000 and NT$50 million may be imposed upon the enterprises. From 2008 until December 2014, the TFTC penalised parties for failing to make merger filings in 22 instances.

2.4 Who is responsible for filing and what, if any filing fee applies? What are the filing requirements and how onerous are these?
All participants are responsible for filing in mergers and in cases where an enterprise is assigned by or leases from another enterprise of the operations or assets of another; or, an enterprise regularly runs operations jointly with another, or is commissioned by another enterprise to run operations.
The acquirer or the controlling enterprise is responsible for filing in cases where an enterprise holds or acquires shares or capital contributions of another enterprise; an enterprise directly or indirectly controls the business operations or the appointment or discharge of personnel of another enterprise.
The TFTC does not require a filing fee. Requirements for a filing include type and substance of the merger, basic data on each participating enterprise, explanation of the benefits of the merger for the overall economy and any disadvantages due to restraints on competition, major future operating plans of the participating enterprises, production and marketing statistics along with upstream and downstream competitive enterprises of the participating enterprises.

3. CLEARANCE
3.1 What is the standard timetable for clearance and is there a fast-track process? Can the authority extend or delay this process?
Under the FTA, the TFTC normally has 30 days from the receipt of a complete set of filing information to review the contemplated transaction.
In particular, cases such as where the total market share of the enterprises in a horizontal merger does not reach 20% of the market or where the total market share of the enterprises in a vertical merger does not reach 25% of each individual market, the TFTC may review the contemplated transaction under a simplified procedure. The TFTC will notify the filing enterprise of such procedure within 14 workdays from the receipt of a complete set of filing information. The reviewing period may be shortened by half the ordinary period under the simplified procedure.
The TFTC may extend the review period for another 60 days on top of the ordinary 30-day period as it deems necessary.

3.2 What is the substantive test for clearance, and to what extent does the authority consider efficiencies arguments or non-competition factors such as industrial policy or the public interest in reaching its decisions?
The test for clearance and relevant factors taken into consideration by the TFTC may differ based on whether the type of such merger is a horizontal, vertical or conglomerate merger. The TFTC will normally look to factors such as any significant concerns about the restraints on competition and the benefits of such merger for the overall economy (including the impact on related upstream and downstream market and the impact on the market and on the participating enterprises if the combination is rejected).

3.3 Are remedies available to alleviate competition concerns? Please comment on the authority's approach to acceptance and implementation of remedies.
The TFTC, however, may attach conditions or require undertakings in any of the decisions it makes on filing cases. These are similar to remedies, and are included in order to ensure that the overall economic benefit of the merger outweighs the disadvantages resulting from competition restraint.
In practice, the TFTC may give its conditional approval with structural attachment (such as requiring the participants in a merger to dispose of its shares or properties) or behavioural attachment (such as requiring participants to give authorisation to non-participants in using their intellectual properties). The TFTC may ask the advice of the participating enterprises about the conditions or undertakings required before making its decisions.

Section 4: RIGHTS OF APPEAL
4.1 Please describe the parties' ability to appeal merger control decisions – how successful have such challenges been?
Before the new amendment of the FTA becoming effective (as of February 6 2015 for most of it) the parties may file an administrative appeal with respect to merger control decisions made by the TFTC. With the new amendment, the parties may be able to file for administrative litigation directly without going through administrative appeal.
However, from 2008 until February 2015, the administrative appeals filed in three instances were dismissed, therefore the challenges might have not been sufficiently effective.



About the Authors

Margaret Huang is a partner at LCS & Partners and has extensive experience in antitrust law. She has handled merger notifications and waiver filings with the Fair Trade Commission for all of the firm's mergers and acquisitions transactions, and has assisted several multinational clients in resolving all of their antitrust law issues in Taiwan. She has also been involved in amendments to Taiwan's Fair Trade Act. Huang is a member of the Arbitration Association of the Republic of China (Taiwan), and has published numerous articles regarding antitrust law issues in professional journals and newspapers.

Victor Chang has extensive multi-jurisdiction transactional experience in M&A, private equity fund formations and cross border transactions of all types, frequently involving parties from the US, Europe, Taiwan and China.
Before joining LCS & Partners in 2003, Chang was deputy general counsel of Trader Classified Media, and also practised for seven years in Boston, Massachusetts with the law firm Testa, Hurwitz & Thibeault.
Since 2003, Chang has represented numerous principals in the formation of Greater China private equity and hedge funds, with aggregate LP commitments in excess of $3.95 billion. During that time, Chang has represented investors and entrepreneurs in over 50 venture capital and private equity investments involving operating companies in China, and IPOs via the TWSE, GTSM, HKSE, NYSE and Nasdaq. He has been recognised as a leading attorney in the areas of private equity and venture capital by Asia Law.