含羞草社区

The restrictive competition and unfair competition practices in Taiwan are primarily regulated by the Taiwan Fair Trade Act (TFTA) and its relevant laws and rulings. The TFTA aims to balance the principles of a free market economy with the promotion of commercial activities, the maintenance of transaction order, and the protection of consumer rights.

The types of acts that are governed by the TFTA and the Taiwan com-petent authority – which is the Taiwan Fair Trade Commission (TFTC) – include, among others, concerted actions (i.e. collusion), mergers, and other common forms of unfair competition.

Since 2022, Taiwan legislators and the TFTC have been continually amending the TFTA and its relevant laws, which has involved changes to the thresholds and procedures for merger filings, as well as the scope of regulation concerning concerted actions and other changes as shown below.

1. Merger control

Article 10 of the TFTA defines “merger” as encompassing both acquisitions and mergers. While the TFTA does not prohibit the act of merger, any action that meets the thresholds provided therein must be reported to the TFTC in advance.

The merger is generally allowed to proceed unless the TFTC, after assessing that the anti-competitive disadvantages outweigh the overall economic benefits of such merger, issues an objection. If the TFTC does not issue an objection within the statutory period of review, the enterprises involved may proceed with the merger.

Prior to 30 June 2023, certain types of mergers may qualify for simplified filing procedures in accordance with the Taiwan Fair Trade Commission Disposal Directions (Guidelines) on Handling Merger Filing Cases (the merger filing directions), including:

1. Horizontal mergers where the enterprises involved hold a combined market share of less than 20%;
2. Horizontal mergers where the enterprises involved hold a com-bined market share of less than 25%, with one of the participating enterprises holding a market share of less than 5%;
3. Vertical mergers, with the aggregate market share of the participating enterprises in each relevant market being less than 25% of the total market;
4. Conglomerate mergers, where the TFTC has determined that there are no significant potential competitive concerns between the enterprises involved; and
5. A merger where one of the participating enterprises holds more than one-third but less than one-half of the voting shares or capital contributions of another enterprise and is merging with the said enterprise.

Regulatory updates

Expanding the scope for simplified filing procedures. On 30 June 2023, the TFTC announced amendments to the above-mentioned merger filing directions to expand the scope of simplified filing procedures to include the below:

1. 1. Mergers conducted by enterprises outside of Taiwan’s jurisdiction, with the transaction amount not exceeding TWD$2.5 billion (USD76.9 million); and
   2. In cases where merger filings are required due to reaching the statutory market share thresholds, if the merger meets one of the following criteria:

(i) For horizontal mergers, the total domestic sales of related products or services did not exceed TWD200 million in the preceding fiscal year;

(ii) For vertical mergers, the domestic sales of related products or services by each participating enterprise did not exceed TWD200 million in the preceding fiscal year; or

(iii) There are no domestic sales of the merging enterprises in the preceding fiscal year.

Expanding the types of mergers exempt from merger filing requirements. On 28 June 2023, the TFTC announced amendments to the “Merger Types to Which Paragraph 1 of Article 11 of the TFTA Does Not Apply”, providing that foreign enterprises jointly establishing or operating joint ventures outside Taiwan’s jurisdiction that do not engage in economic activities within Taiwan are exempt from merger filing requirements under the TFTA.

Using sales amount as the criterion to determine whether merger filing is required. On 6 June 2023, the TFTC announced a bill of amendment to the TFTA, proposing to delete the provision setting market share as the threshold for reporting the act of merger. If the TFTA Bill is passed and becomes effective, only sales amount will serve as the threshold for reporting such merger.

2. Concerted action

The TFTA defines concerted action as actions taken by enterprises in competitive relationships, where such enterprises collectively bind their operations through agreements such as contracts to set prices, transactions or other business terms related to goods.

The TFTA generally prohibits such concerted actions but allows exceptions under specific circumstances. If the concerted action meets the criteria outlined in article 14 of the TFTA and contributes positively to the overall economy and public welfare, the TFTC may grant an exception permit.

Regulatory updates

Broadening the scope of regulation for concerted actions. The TFTA Bill proposes to broaden the scope of regulation for concerted actions by including provisions to cover concerted actions involving third-party enterprises that facilitate or participate in activities within the same production and distribution phase, irrespective of their upstream or downstream trading relationships with enterprises in competitive relationships.

That is, any agreement among enterprises to collectively constrain business activities that could impact market supply and demand functions may fall within the scope of concerted actions regulated by the TFTA.

3. Inappropriate gifts and prizes

Currently, article 23 of the TFTA prohibits enterprises from improperly offering gifts or prizes to gain business opportunities.

Under the Regulations Governing the Amount of Gifts and Prizes Offered by Businesses, promulgated by the TFTC, if an enterprise provides goods or services valued at over TWD100, the value of the gift must not exceed “half of the value of the goods or services”. Additionally, the maximum amount for prize giving activities held by enterprises should not exceed TWD5 million.

Regulatory updates

Deleting the inappropriate gifts and prizes provision. Considering that promotional activities involving gifts and prizes benefit new entrants and the introduction of new products into the market, and that international competition laws generally impose fewer restrictions on such activities, the TFTA Bill proposes to delete this provision to enhance the free operation of the market.