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Taiwan – Broad Changes Introduced To Its Competition Law.

2 June, 2015

 
 
On 22 January 2015, the Taiwan Legislative Yuan passed the most extensive amendments to the Taiwan Fair Trade Act (“TFTA”) since the TFTA was first enacted in 1992. The amendments came into force on 4 February 2015.
 
Merger Control
 
When considering if a transaction has crossed the merger notification thresholds and therefore needs to be mandatorily notified, the Taiwan Fair Trade Commission (“TFTC”) will now consider the turnover and shareholding of the companies affiliated with the merging parties (eg companies that are, together with the merging parties, under common control). Previously, the TFTC only considered the turnover and shareholding of, amongst others, parties to the transaction and companies that the parties have controlling relationships over.
 
The period for a merger to be reviewed by the TFTC has also been extended. From an initial period of 30 days with a possible extension of another 30 days, the TFTC may now extend the period of additional review for up to 60 days.
 
Unusually, the TFTC is also empowered under the new amendments to stipulate different turnover notification thresholds for different industries.
 
Cartels
 
Under the new amendments, a cartel agreement may be presumed to exist on the basis of circumstantial evidence. The TFTC may, for example, look at the characteristic of the products or services, market structure, economic rational of the conduct, and cost and profit considerations, in determining if a cartel agreement exists.
 
Resale Price Maintenance
 
Under the new amendments, resale price maintenance arrangements are now classified as competition law violations instead of unfair competition violations. Accordingly, where they were previously per se illegal, resale price maintenance arrangements will now be assessed under a rule of reason approach.
 
Investigations
 
The TFTC is now empowered under the amendments to suspend an investigation if the entity being investigated commits to ceasing the conduct under investigation and takes corrective measures. Notably, the proposal to grant the TFTC additional powers to conduct dawn raids and seizures did not receive approval by the Taiwan Legislative Yuan.
 
Penalties
 
The maximum amount of fines that may be imposed for anti-competitive infringements has been doubled. Entities that infringe competition laws for the first time may be subject to a fine from NTD 100k (SGD 4,400) to NTD 50m (SGD 2.18m), while repeat infringers may be fined NTD 200k (SGD 8,800) to NTD 100m (SGD 4.36m). The maximum cap on the level of fines still remains at 10% of the infringing entities’ sales revenue in the last fiscal year.
 
Drew & Napier

  
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