Merger Control 2024 Comparisons

The Taiwan Fair Trade Act (TFTA) is the relevant merger control legislation in Taiwan and was last amended on 14 June 2017, with the newly amended Enforcement Rules of the TFTA (“Enforcement Rules”) being announced on 7 April 2022. The supplementary rules on merger control include:

• the Directions for Enterprises Filing for Mergers;
• the Taiwan Fair Trade Commission Disposal Directions (Guidelines) on Handling Merger Filings (“Merger Guidelines”); and
• the Guidelines on the Provision of Pre-Filing Consultation Service.

See 10.1 Recent Changes or Impending Legislation for details of a series of amendments to the merger control regime promulgated by the Taiwan Fair Trade Commission (TFTC) in June 2023.

The Taiwan Fair Trade Commission Disposal Directions (Guidelines) on Extraterritorial Mergers (“Guidelines on Extraterritorial Mergers”) used to be the relevant legislation for merger filings related to foreign mergers, under which the TFTC took the local effect into consideration when determining whether it will exercise the jurisdiction. However, the Guidelines on Extraterritorial Mergers were repealed by the TFTC on 30 June 2023.

In Taiwan, there is no other legislation for mergers relating to particular sectors. However, under several of the TFTC’s guidelines on sectoral control of certain industries affecting public welfare, such as airlines, banking/finance or 4C industries, certain specific factors will be taken into account by the TFTC when reviewing a merger involving that particular industry.

The TFTC is the competent authority enforcing the TFTA. It is the regulatory body responsible for the execution of the TFTA, and also the agency that interprets the TFTA by rulings and stipulates the enforcement rules and relevant regulations of the TFTA. The TFTC may seek comments from other authorities during the review process but has the final say on its own decision.

If any of the filing thresholds is met, a notification is compulsory.

The following circumstances are exceptions for a notification even if the filing thresholds are met:

• where an enterprise or its 100% held subsidiary combines with another enterprise in which it already holds 50% or above of the voting shares or capital contribution;
• where enterprises of which 50% or above of the voting shares or capital contribution are held by the same enterprise combine;
• where an enterprise assigns all, or a substantial part of, its business or assets, or all or a substantial part of its business that could be separately operated, to another enterprise to be newly established and wholly owned by the former enterprise – please note that “substantial part” is not further defined under the TFTA and should thus be judged on a case-by-case basis;
• where an enterprise redeems its outstanding shares in order to convert them into treasury stock or because of minority shareholders’ exercise of appraisal rights, causing the other shareholders’ shareholdings to be increased to one-third or more of the voting shares in the enterprise; or
• where a single enterprise reinvests to establish a subsidiary and holds 100% of the shares or capital contribution of such subsidiary.

On 18 July 2016, a ruling was promulgated by the TFTC to exempt the following types of transactions from the requirement to make a filing:

• an enterprise merging with another enterprise that is under the control of the latter enterprise or is subordinate to it;
• an enterprise merging with another enterprise where both are under the control of the same controlling enterprise;
• an enterprise transferring its part of (or entire) voting shares or capital contribution of a third enterprise to another enterprise that is under the control of the latter enterprise or is subordinate to it; and
• an enterprise transferring its part of (or entire) voting shares or capital contribution of a third enterprise to another enterprise that is under the control of the same controlling enterprise.

On 28 June 2023, the TFTC promulgated amendments to the “Combination Types to Which Paragraph 1, Article 11 of the Taiwan Fair Trade Act Does Not Apply” by adding an additional “non-notifiable/exemption” type of combination of joint ventures. Please see 10.1 Recent Changes or Impending Legislation for details.

To correspond with its amendments to the Merger Guidelines, the TFTC concurrently 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. Please see 10.1 Recent Changes or Impending Legislation for details.

Failing to notify a combination that meets a filing threshold may cause the TFTC to impose penalties, including the prohibition of the combination, divestiture, transfer of the business acquired, and/or removal of personnel designated by the enterprises if the TFTC discovers such violation. The TFTC is also authorised to impose an administrative fine of between TWD200,000 and TWD50 million.

Penalties imposed on parties for violating merger control rules will be published by the TFTC. Public information shows that there was no penalty imposed during 2023 in terms of merger control violation.

According to the TFTA, a transaction that falls under the definition of a “combination” and also meets certain thresholds prescribed by the TFTA requires a notification to the TFTC in advance. According to the TFTA, a “combination” is broadly defined to include:

• a merger;
• the holding or acquisition of one-third or more of the voting shares of, or interest in, another enterprise;
• a transfer or lease of the whole, or a substantial part, of an enterprise’s business or assets;
• a contractual arrangement with another enterprise for joint operation on a regular and ongoing basis, or the management of another enterprise’s business on a contract of entrustment; and
• a direct or indirect control over the business operation or personnel management of another enterprise – whether “control” exists should be evaluated on a case-by-case basis since there is no definitive definition thereof.

Internal restructuring or reorganisation, under certain circumstances, may fall into the exceptions under the TFTA and be exempted from a filing obligation; please refer to 2.1 Notification for details. An operation that does not involve the transfer of shares or assets (eg, shareholders’ agreements, contractual arrangements on joint business operation) will constitute a combination only if it falls under the combination defined under one of the last two points set forth above.

Whether “control” exists is not defined under the TFTA, and thus should be evaluated on a case-by-case basis.

The acquisition of a minority shareholding or other interests less than control will constitute a combination only if it falls under the combination defined under the second, fourth or fifth points set forth in 2.3 Types of Transactions.

Under Article 11 of the TFTA, a notification would be required if:

• the combination would result in any of the enterprises acquiring at least one-third of the market share;
• any of the enterprises participating in the combination holds a market share of at least one-quarter before the combination; or
• the preceding fiscal year’s turnover of a participating enterprise exceeded the amount set forth by the TFTC – ie:
1. the aggregate global turnover of all the participating enterprises in the preceding fiscal year exceeded TWD40 billion, and at least two of the participating enterprises had a turnover in Taiwan of at least TWD2 billion in the preceding fiscal year;
2. for a combination among non-financial enterprises, one of the participating enterprises generated a turnover in Taiwan of at least TWD15 billion in the preceding fiscal year, while the other participating enterprise generated a turnover in Taiwan of at least TWD2 billion in the preceding fiscal year; or
3. for a combination between financial enterprises, one of the participating enterprises generated an annual turnover of at least TWD30 billion, while the other participating enterprise generated an annual turnover of at least TWD2 billion.

Article 11, Paragraph 2 of the TFTA specifically stipulates that the turnover should be calculated on a “group/consolidated” basis by including the sales revenues 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 under common control of the same enterprise or enterprises.

The “control/subordinate” relation under Article 11, Paragraph 2 of the TFTA is further explained in Article 6 of the Enforcement Rules, as follows.

• When enterprise X holds more than half of the shares in enterprise Y, or if enterprise X directly/indirectly controls the business operation or the appointment or discharge of the personnel of enterprise Y, enterprise X can be viewed as having control over enterprise Y. Furthermore, in the event that the whole or the substantial part of the business or assets of enterprise Y is assigned or leased to enterprise X, or where enterprise X jointly operates with enterprise Y on a regular basis, or is entrusted by enterprise Y to operate enterprise Y’s business that results in enterprise X having control over enterprise Y, this situation can also be deemed to be a type of “control/subordinate” relation.
• If a person or an organisation and/or its related persons hold a majority of the total number of outstanding voting shares or the total capital of another enterprise, it should be concluded that the “control/subordinate” relation exists among the aforementioned entities.
• The “control/subordinate” relation is presumed to exist if a majority of the executive shareholders or directors in a company are simultaneously acting as the executive shareholders or directors in another company, or if a majority of the total number of outstanding voting shares or the total amount of the capital interest of a company and another company is held by the same shareholders.

Please note that, when calculating the turnover threshold for foreign entities, only the Taiwanese sales are relevant, which shall include:

• sales generated “in” Taiwan by the parties’ affiliates, branch offices or any other entities defined by Article 11, Paragraph 2 of the TFTA; and
• direct sales “into” Taiwan by selling to Taiwanese customers.

For more details on the calculation of the jurisdictional thresholds, please see 2.5 Jurisdictional Thresholds. The TFTA is silent on the conversion of sales booked in a foreign currency. In practice, using the annual average exchange rate published by the Central Bank of Taiwan for the conversion is acceptable to the TFTC.

For details, 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 business during the reference period (such as other acquisitions, 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.

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 concurrently 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. Please see 10.1 Recent Changes or Impending Legislation for details.

As the TFTA does not limit the filing threshold assessment to only overlapping products/services, it is possible for one party – either a target or an acquirer – to meet the threshold in the absence of a substantive overlap.

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 establishment of a joint venture, whether it is a newly incorporated enterprise or an existing enterprise, will be subject to merger control if it constitutes a combination 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 10.1 Recent Changes or Impending Legislation for details.

The TFTC does not have the power to investigate a transaction that does not meet the jurisdictional thresholds. However, 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.

The implementation of a transaction must be suspended until clearance is obtained.

The sanctions for implementing a transaction prior to receiving clearance are the same as those applicable for the failure to file a notification; please see 2.2 Failure to Notify. Public information reveals that no penalties have been imposed in the case of foreign-to-foreign transactions.

There are no general exceptions to or waivers from the suspensive effect.

There is no exception under the TFTA that allows parties to close a transaction prior to receiving the TFTC’s clearance. Furthermore, whether the TFTC will accept the parties’ proposal to temporarily carve-out transactions related to Taiwan is unclear, since no case precedent is available.

The law does not stipulate a deadline for making a filing. However, since the TFTC requests a definitive agreement or relevant board resolution to be submitted with the notification to evidence the parties’ intention of conducting the transaction, once the parties’ board approves the proposed transaction or completes the signing of the definitive agreement, the parties may then make a filing, which is deemed to be the earliest time at which to do so.

A definitive agreement or relevant board resolution to be submitted along with the notification is required in order to prove the parties’ intention of conducting the transaction. The TFTC will review whether a filing based on a less formal agreement such as a letter of intent or memorandum of understanding is acceptable in each case. If the parties are unable to provide any written agreement indicating their intention of proceeding with the proposed transaction, the TFTC may reject the filing.

No filing fee is required.

The following parties shall file a combination notification:

• all the enterprises involved in the transaction, where an enterprise is merged into another enterprise, regularly runs operations jointly with another enterprise or is commissioned by another enterprise to run operations;
• the holding or acquiring enterprise, where an enterprise holds or acquires shares or capital contribution of another enterprise;
• the transferee or lessee, where an enterprise transfers or leases its operations or assets to another enterprise; and
• the controlling enterprise, where an enterprise directly or indirectly controls the business operations or the appointment or discharge of personnel of another enterprise.

If an enterprise required to file has not yet been established, the existing enterprises in the merger shall file the notification. Companies considering a combination should note that the Enforcement Rules indicate that, in a combination-type acquisition of shares or capital contributions of another enterprise, if a control/subordinate relation exists between the acquirers or the acquirers are under common control of one or more entities, the ultimate parent company of the acquirers shall be the notifying party.

The following information is required to be included in the main content of a filing.

• The participating parties' basic information.
• Information on the cost of production or other operational costs, selling prices, the quantity and value of production, and sales of the top three major services, and related products/services, of the participating parties for the last three years in Taiwan.
• Horizontal competition information regarding the structure of the relevant market of the participating parties in Taiwan.
• Market information regarding the upstream (suppliers) and downstream (customers) industries for the participating parties in Taiwan.
• A description of the transaction, including:
1. the estimated timeframe and closing date;
2. the consideration;
3. the result of the transaction (ie, post-closing structure); and
4. whether the proposed transaction is also notified in other jurisdiction and, if so, its review status.
• A description of the relevant market, including:
1. the product market;
2. the geographic market; and
3. horizontal and vertical competition status (including major competitors).
• Information regarding the possible obstacles in entering the relevant market, including:
1. the minimum capital or working capital requirement for entering into the relevant market, if any;
2. the legal restriction for entering into the relevant market, if any;
3. the intellectual property involved in the relevant market, if any;
4. the materials supply sources, if any;
5. the ratio of the fixed cost to the total cost of the production of relevant products, if applicable;
6. the tariff or non-tariff barrier, if applicable;
7. the transaction's impacts on the market, if any; and
8. any other obstacle regarding the market entry.
• An economic analysis of:
1. the advantages created by the proposed transaction to each of the participating parties;
2. the disadvantage to each of the participating parties if the proposed transaction is prohibited;
3. the advantages created by the proposed transaction to the overall economy in Taiwan created by the proposed transaction; and
4. the anti-competition disadvantages to the Taiwan market caused by the proposed transaction.
• The participating parties' investment status in Taiwan, such as subsidiaries and branches.

The following supporting documents should be enclosed with a filing:

• the participating parties' latest annual reports or financial reports;
• a copy of the definite agreement of the proposed transaction or resolutions adopted by the board meeting of the participating parties approving the proposed transaction;
• a power of attorney executed by the participating parties' ultimate parent company authorising local counsel to file the combination notification on their behalf; and
• the participating parties' most recent certificate of incorporation.

Filings must be submitted in Chinese (Mandarin). If any document is written in a foreign language, an excerpted translation should also be prepared. All other documents can be in duplicate copy, except the power of attorney, which should be an original copy (no certifications, notarisations or apostilles are required).

In practice, the TFTC may reject the filing or request the parties to withdraw the filing if the notification is deemed incomplete after several rounds of requests for information (RFIs). There is no penalty under such circumstance but the parties cannot close the deal since no clearance has been granted.

The TFTC may impose penalties, including the prohibition of the combination, divestiture, transfer of the business acquired and/or removal of personnel designated by the enterprises, if it discovers that the notifying party is deemed to have supplied inaccurate or misleading information in the filing and proceeds with the combination. The TFTC also has the power to impose an administrative fine of between TWD100,000 and TWD1 million.

There has been no case precedent in this regard in the past five years, according to public information.

The review process is not divided into different phases by the TFTC. Rather, after the initial filing is submitted, the TFTC will request the parties to provide supplemental information by issuing an RFI letter. The RFI procedure will end once the TFTC deems that all the required documents and information have been provided. Once the TFTC deems that the filing is complete, the waiting period can start to run. The parties to the proposed transaction are then free to proceed with the merger if the TFTC does not make any objection to the filing within 30 business days following the filing date (with complete documents and information). If it is deemed necessary, the TFTC may shorten the 30-day waiting period or extend it by up to 90 business days.

The Guidelines on Offering Pre-Filing Consultation were published by the TFTC on 18 August 2021 and aim to help the notifying parties clarify certain filing-related issues before the parties submit a formal filing. However, as the TFTC’s opinions expressed in such consultation are non-binding, the parties might not necessarily find such consultation to be beneficial to their filing decision. The process is treated confidentially.

The RFIs will be issued by the TFTC during the review process requesting the parties to supplement information; such requests reset the clock. Subject to the complexity of the case, there may be two or more rounds of RFIs.

Other than the simplified procedure stated below, there is no other type of accelerated procedure or informal way to expedite the clearance.

The waiting period of the following circumstances can be shortened by applying the simplified procedure.

• The enterprise files the notification for reaching the turnover threshold, but its respective market shares meet one of the following criteria:
1. where the combining parties engage in a horizontal merger, the combined market shares after the merger are below 20%;
2. where the combining parties engage in a horizontal merger, the combined market shares after the merger are below 25% and the market share of one of the participating parties is below 5%; or
3. where the combining parties engage in a vertical merger, the combined market shares in each individual market are below 25%.
• Where the combining parties engage in a conglomerate merger, the factors below are considered, and it is established that the parties do not have any major potential for competition between each other:
1. the impact of an increase of regulation and control on the cross-industry operation by merging parties;
2. the probability of cross-industry operation by the merging parties because of technological advancement; and
3. the merging parties' original cross-industry development plan besides the merger.
• One of the enterprises participating in the merger directly owns more than one-third and less than half of the voting shares or paid-up capital of the other merging party.

Nonetheless, the TFTC would still request the parties to follow the standard procedure in certain situations, such as where the merger involves major public interest or the entry barriers are high, even if they have met the above-mentioned criteria to be eligible for the simplified procedure.

If there is no suspicion of obvious competition restraints after all relevant factors have been considered, the TFTC will conclude that the overall economic benefits of the merger outweigh the disadvantages resulting from competition restraint. Otherwise, the TFTC should further examine the overall economic benefits of the merger to determine whether they outweigh the disadvantages resulting from competition restraint.

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.

The TFTC may sometimes rely on its own case precedents to review the present case. Although the TFTC may take the case laws in other jurisdictions into consideration, it is less likely to rely solely on other jurisdictions’ views to make its decision.

The competition concern that the TFTC will investigate varies depending on the type of combinations. If the combining enterprises engage in a horizontal combination, 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 combination, the TFTC will take the following factors into account:

• the possibility for other competitors to choose trading counterparts after the combination;
• the level of difficulty for businesses not participating 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 enabling engagement in cross-industry operations by the participating parties;
• whether any of the participating parties originally has the intention to develop cross-industry operations; 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 factors concerning anti-competition under a horizontal or vertical combination is required.

While the TFTC will certainly consider economic efficiencies when determining whether the proposed transaction will benefit the economy overall, there is no case precedent on how the TFTC weighs this factor.

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.

The ruling for foreign direct investments in Taiwan is separate from the merger control regime. In principle, an investment into Taiwan is subject to the prior approval of the Department of Investment Review of the Ministry of Economic Affairs.

There are no special considerations in the substantive review of joint ventures; however, possible co-ordination issues between joint venture parents will be examined by the TFTC.

The TFTC has the ability to prohibit or otherwise interfere with a transaction; it exercises this power by issuing a binding decision at the end of the regulatory process. Such decision is generally in one of the following four categories:

• a waiver to the jurisdiction (for extraterritorial transactions with no local effect);
• clearance without condition;
• clearance with conditions; and
• a prohibition on the combination.

In a decision to prohibit a combination, the TFTC will state its reasons regarding the anti-competition disadvantages to the Taiwan market caused by the proposed transaction.

Although the TFTA provides no remedy mechanism, experience suggests that the parties are able to propose remedies to the TFTC for its consideration when it has concerns about a transaction. If the proposed remedies would constitute a material change to the notification, and thereby lead to the TFTC requiring additional information for its evaluation, the TFTC may stop the clock and the waiting period will be reset only after the supplemental information is submitted. If the proposed remedies would not constitute a material change to the notification, the TFTC will take into account such remedies when rendering its decision on the merger notification before the waiting period expires. The TFTC will assess whether it would grant its clearance with conditions referring to such remedies.

Typical Remedies

In terms of the particular kinds of remedies that are typically used in practice, since the primary purpose of the remedies is to eliminate the anti-competition concerns, most competition authorities in different jurisdictions recognise that divestitures, a type of structural remedy, are the best way to achieve such a goal. In line with these international practices, the TFTC appears to accept structural remedies for divestitures (disposal of shares held by the party) and impose such remedies as conditions to clearance. In fact, the public records indicate that the TFTC has indeed adopted the divestment approach in a transaction involving a cable television business.

The TFTC amended the Merger Guidelines in September 2012 to include its official standards for remedies. According to the Merger Guidelines, TFTC can impose the following remedies as conditions.

• Measures impacting the structural aspect: order the parties to take measures to dispose of the shares or assets in their holding, transfer part of their operations, or remove personnel from certain positions.
• Measures impacting the behavioural aspect: order the parties to continue to supply critical facilities or essential elements to businesses outside the merger, order the parties to license such businesses to use their intellectual property rights, and prohibit the parties from engaging in exclusive dealing, discriminatory treatment and tie-in sales.

Despite the foregoing, the TFTC still reserves the right to impose other types of remedies on a case-by-case basis. The Merger Guidelines also point out that the TFTC may seek the parties’ opinions on the possible remedy before making a final decision.

Whether remedies are ever required to address non-competition issues is unclear since no case precedent is available.

There is no legal standard that remedies must meet in order to be deemed acceptable.

The parties can begin negotiating remedies with the TFTC within the waiting period by submitting a proposal to the TFTC. Meanwhile, the TFTC has the authority to propose remedies on its own motion. Although the TFTC may choose to consult the parties before imposing the remedies, it can nonetheless impose remedies that the parties have not agreed. Please see 5.2 Parties' Ability to Negotiate Remedies regarding the procedural steps with respect to remedies.

Please see 5.2 Parties' Ability to Negotiate Remedies regarding the standard approach for conditions and timing for divestitures or other remedies.

Depending on the nature of a remedy, it is acceptable for the parties to complete the merger before complying with the remedies. The TFTC will conduct periodic reviews of the parties’ behaviour or divestment status to ensure that the parties comply with the conditions imposed by the TFTC.

Since the remedies will serve as conditions to the TFTC’s clearance, the parties must adhere to the conditions. If the TFTC discovers any violation, it may impose penalties on the parties, including the prohibition of the combination, divestiture, transfer of the business acquired, and/or removal of personnel designated by the enterprises. The TFTC also has the power to impose an administrative fine of between TWD200,000 and TWD50 million.

When the TFTC clears a transaction without any condition/remedy, it will only publish a news release summarising its decision on its website and does not issue a formal decision letter. For a decision with a condition/remedy or prohibiting a transaction, the TFTC will issue an official decision to the parties, which will also be published on the TFTC’s website.

To date, the TFTC has never imposed “structural” remedies (such as divestment of assets or disposal of shares) in foreign-to-foreign mergers. However, the TFTC has certainly attached behavioural remedies to a few foreign-to-foreign mergers, most of which involve sensitive industries such as the semiconductor or technology licensing industries.

As far as is known, no case precedent is available in Taiwan, so it is unclear whether ancillary restraints (such as non-competition agreement) will be covered by a clearance decision.

Third parties (eg, customers, competitors, complainants) may have opportunities to be involved in the review process.

If the TFTC accepts a combination notification and decides to exercise its jurisdiction on the transaction, it will post a summary of the proposed transaction on its website for one week to seek public opinion. In some cases where the TFTC considers that the transaction will have a great impact on the local market, it will:

• hold a symposium or a public hearing and invite competitors, upstream and downstream enterprises, relevant competent authorities and scholars to provide their opinions; and/or
• issue letters to the parties’ Taiwanese customers, suppliers and sometimes competitors to seek their opinions.

As stated in 7.1 Third-Party Rights, if the TFTC accepts a combination notification and decides to exercise its jurisdiction on the transaction, it will post a summary of the proposed transaction on its website for one week to seek public opinion.

It is unclear whether the TFTC will “market test” any remedies offered by the parties.

As stated in 7.1 Third-Party Rights, if the TFTC accepts a combination notification and decides to exercise its jurisdiction on the transaction, it will post a summary of the proposed transaction on its website for one week to seek public opinion. Under such circumstances, the fact of the notification and/or description of the transaction will be publicised.

The parties may request the TFTC not to disclose specific confidential information to the public and to handle combination notifications confidentially. If the parties have any particular concerns about the TFTC's public announcement, they can also submit an application requesting the TFTC not to disclose certain information regarding the combination transaction. However, whether such request will be granted is subject to TFTC's discretion. If the TFTC considers that the information about the transaction has an impact on the Taiwanese market, it will reject the non-disclosure request and make a public announcement soliciting the public’s opinions. Nevertheless, the TFTC will generally not disclose the parties' commercial information that is specifically marked confidential in their filings to the general public, such as trade secrets.

While reviewing the filing for certain cross-border transactions, the TFTC will consult the regulatory authorities of the parties’ home countries. In addition, there are several co-operation agreements and memorandums for the application of competition regulations between the TFTC and the following countries: Australia, Canada, France, Hungary, Mongolia and New Zealand. Co-operation between the TFTC and these countries can be anticipated.

It is unclear whether such co-operation is simply on a general policy level or whether the TFTC exchanges specific transaction information with other jurisdictions.

In practice, the TFTC will seek the parties’ consent before sharing information with other jurisdictions.

The parties (or any interested parties with legal standing) may appeal against the TFTC’s administrative decision to the High Administrative Court for judicial review within two months of receipt of said decision.

The procedure of administrative litigation is basically the same as the procedure of civil litigation. The case will be heard in a court and the TFTC, as the defendant, and the parties subject to the decision, as the plaintiff, will be in front of judges in a formal legal proceeding.

Although the decision of the High Administrative Court can be appealed to the Supreme Administrative Court for legal review, the Supreme Administrative Court will not hold any hearing. The High Administrative Court's judgment will be reversed only when such judgment is legally flawed.

The parties (or any interested parties with legal standing) can appeal against the TFTC’s decision to the court within two months of receipt of the decision. The timeline for an appeal is approximately 12 to 18 months. As far as is known, no enterprise has filed an appeal in the High Administrative Court against the TFTC's merger filing decision in the past five years.

If any clearance decision will have an adverse effect or impose burdens on a third party, such interested third party can appeal. As far as is known, no third party has filed an appeal in the High Administrative Court against the TFTC's merger filing decision in the past five years.

Taiwan welcomes and encourages foreign direct investment (FDI). Under the Statute for Investment by Foreign Nationals, which was promulgated on 14 July 1954 and further amended on 19 November 1997, all foreign investment must be approved by the Department of Investment Review of the Ministry of Economic Affairs in advance.

FDI is generally permitted in Taiwan, except for certain specific businesses and industries in which foreign investments are prohibited or restricted due to concerns about national security, public order, environmental protection, public health, etc, such as aviation and telecommunications. To provide a clear guideline on the restricted and/or prohibited foreign investment, the Department of Investment Review promulgated the “Negative List”, which sets forth the sectors in which foreign investment is either restricted or prohibited. Sectors that are not in the Negative List are open to foreign investment without any restriction (other than the requirement to obtain foreign investment approval in advance).

However, it is important to note that investors from the People’s Republic of China (PRC) are subject to different and stricter rules and regulations, and greater regulatory scrutiny. PRC investors may only invest in certain permitted businesses listed in the “Positive List” promulgated by the Department of Investment Review. The definition of a PRC investor is a PRC individual, legal person, organisation, other institution or their third-area company. A third-area company is deemed as a PRC investor if 30% of its shares are held or controlled by a PRC individual, legal person, organisation or any other institution.

The TFTC promulgated amendments to the “Combination Types to Which Paragraph 1, Article 11 of the Fair Trade Act Does Not Apply” on 28 June 2023 and the Merger Guidelines on 30 June 2023. The key amendments are as follows.

An Additional “Non-notifiable/Exempted” Type of Combination

There is no substantial benefit to regulating a combination involving foreign enterprises that jointly establish or operate a joint venture outside of Taiwan, where the joint venture is not engaging in economic activities within Taiwan, as the transaction has less connection with Taiwan’s domestic market and there is no direct, substantial and reasonably foreseeable impact on Taiwan's relevant market; thus, the participating parties are not required to notify the TFTC of the combination. Pursuant to Article 12, Paragraph 1, Subparagraph 1 of the TFTA, this type of combination is exempted from the merger filing obligation prescribed under Article 11, Paragraph 1 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 the 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 are 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, the provision of quotations, bargaining and the conclusion of sales, contracts or engagement with counterparties in connection with the sale.

Simplified Procedure Applies to More Types of Combinations

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

• where the transaction value is below TWD2.5 billion;
• in a horizontal combination, where the combined Taiwan revenues of the participating parties’ relevant products or services does not reach TWD200 million;
• in a vertical combination, where none of the participating parties has generated TWD200 million or more in Taiwan for the relevant products or services; or
• where the enterprise being combined generates no Taiwan revenue.

To correspond with such amendments, the TFTC concurrently amended the Merger Guidelines and repealed the Guidelines on Extraterritorial Mergers. Thereafter, except for the 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.

According to public information, the TFTC reviewed a total of 46 merger filing cases in 2023, 31 of which were approved while the review process of the other 15 cases was terminated, meaning that the TFTC decided to waive its jurisdiction over those cases; no case was prohibited. Public information also shows that there was no sanction decision in terms of merger control in 2023.

In March 2022, the TFTC published a draft White Paper on Competition Policy in the Digital Economy, inviting comments and feedback from the public. After taking the opinions collected from various parties into account, the TFTC finalised the draft White Paper and released the official version thereof on 20 December 2022 (“White Paper”).

While the competition issues explored in the White Paper include “killer acquisitions” and the role of privacy in merger review, it remains unclear at present whether the White Paper will lead to amendments to the merger control rules to specifically address the issues arising from digital mergers. In fact, the TFTC states in the White Paper that the content thereof only reflects its position at this moment in time and does not preclude future adjustments to varying degrees in response to economic development and changes in the industry.