Taiwan

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

Merger filing in Taiwan is a mandatory regime. If a transaction falls into the definition of combination, the parties meet any of the filing thresholds and the transaction does not fall into any exemption prescribed under the TFTA, a merger filing in Taiwan is mandatory.

The Taiwan Fair Trade Commission (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.

The Taiwan merger control rules apply to all industries and the TFTC’s review of a merger filing is based on the same principles regardless of which business sector is involved. However, the turnover filing threshold applied to the financial industry is much higher than the turnover filing threshold for a non-financial industry. Please see Question 3.1 for details.

There is no supranational merger control framework in Taiwan. The TFTC is the only government agency that makes the decision on a merger filing.

The TFTC is an independent government authority in charge of the merger control and is empowered to make its own decisions. Having said that, the TFTC may seek comments from other authorities that are in charge of the specific industries in which the parties operate during the review process if it deems necessary.

For a global transaction that requires a filing in Taiwan or a cross-border transaction, the TFTC may also seek the parties’ consent of waiver for discussion with the other competition authorities if needed.

There are several co-operation agreements and memorandums for the application of competition regulations between the TFTC and the following countries: Paraguay, Eswatini, Japan, Indonesia, Panama, 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.

Currently, there is no proposal for reform of the merger control regime in Taiwan.

The transaction that may be caught by the merger control rules in Taiwan are defined under the TFTA (see Question 2.3, below, for details). Among various types, a direct or indirect control over the business operation or personnel management of another enterprise is also one of the transaction structures that will be caught.

“Control” over an enterprise is defined in the TFTA and the Enforcement Rules as arising when another person or enterprise (including all enterprises it controls, or are controlled by it):

• holds more than half of the total number of voting shares or total capital of the enterprise;
• directly or indirectly controls the personnel, financial strategy, or business operation of the enterprise;
• is assigned by, or leases from, the whole or a significant part of the business or assets of the enterprise; or
• operates jointly with the enterprise on a regular basis or is entrusted by the enterprise to operate its business.

Although the concept of control is articulated in the TFTA and the Enforcement Rules, whether “control” exists is still evaluated on a case-by-case basis. In particular, when the parties enter into an agreement to stipulate the corporate governance details that involve meeting the quorum for directors meetings and shareholders meetings, appointment rights on management teams, veto rights on certain important business decisions or prior consultation rights, etc., such arrangements may be considered as a type of control. Also, a minority share acquisition may be caught if the minority shareholder is granted any of the rights that would constitute a control.

Temporary changes of control are not explicitly excluded from filing under the TFTA. Therefore, each transaction in a series of transactions should be reviewed as a separate transaction and assessed as to whether a filing is required for such a transaction, instead of assessing the final result of the transaction for filing.

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.

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.

There is no unique treatment for joint ventures. If the establishment of the joint venture is a notifiable transaction, the filing thresholds are met and no exemption applies, then the parties are obliged to make a notification and await the TFTC’s approval before closing.

A joint venture often falls into combination type “the holding or acquisition of one-third or more of the voting shares of another enterprise” and/or “a contractual arrangement with another enterprise for joint operation on a regular and ongoing basis”. There is no requirement that a joint venture be “full function” or similar in order to be notifiable.

There is no clear guidance regarding how interrelated transactions should be treated under the TFTA. Therefore, for filing assessment, each transaction should still be considered as a separate transaction to determine whether a filing is required. If the interrelated transactions are conducted by the same parties and one or two steps of the transactions trigger the filing obligation, there should be a flexibility to notify all of the transaction in one filing without separating each notifying transaction as a separate filing.

However, if various different parties are involved in the interrelated transactions, separate filings may be required.

As there is no universal rule applied to interrelated transactions, whether interrelated transactions should be notifiable separately or inclusively and by whom should be reviewed on a case-by-case basis.

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, that is to say:
  • the aggregate global turnover of all the participating enterprises in the preceding fiscal year exceeded TWD 50 billion, and at least two of the participating enterprises had a turnover in Taiwan of at least TWD 3 billion in the preceding fiscal year;
  • for a combination among non-financial enterprises, one of the participating enterprises generated a turnover in Taiwan of at least TWD 20 billion in the preceding fiscal year, while the other participating enterprise generated a turnover in Taiwan of at least TWD 3 billion in the preceding fiscal year; or
  • for a combination between financial enterprises, one of the participating enterprises generated an annual turnover of at least TWD 40 billion, while the other participating enterprise generated an annual turnover of at least TWD 3 billion.

When calculating the turnover filing threshold, the parties involved in the transaction should be considered, which include seller, buyer, target company, merging companies, parents to a joint venture, etc., depending on the deal structure.

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. Please see Question 2.1 for definition of control.

Please note that, when calculating the domestic turnover threshold for foreign entities, only the following Taiwanese sales are relevant:

• 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.

With respect to the turnover of a joint venture, its turnover shall be entirely attributed to the parent that has control over the joint venture.

The TFTA stipulates that when calculating the turnover filing threshold, it is the parties’ turnover in the preceding fiscal year that is relevant.

There are no assets-based thresholds under the TFTA.

The TFTA is silent on how the currency conversions should be conducted, neither is there any written guidance from the TFTA on this issue. In practice, it is acceptable to use the average exchange rate of a particular calendar year for currency conversions.

There is no clear guidance as to how to calculate market share under the TFTA.

According to Principles Regarding the Definition of Relevant Markets, promulgated by the TFTC:

• Relevant market refers to the regions or scopes within which the merging parties of particular goods or services are competing.
• Product market refers to the scope comprising goods or services that are considered to have high demand or supply substitutability in terms of functionality, features, uses or prices.
• Geographic market refers to a region where trading counterparts of certain goods or services provided by an enterprise can easily choose or switch to other trading partners.

The demand substitution is the primary factor for the TFTC to define relevant markets and, depending on the features of such goods or services, the TFTC may consider supply substitution.

In practice, the merging parties could rely on its internal assessment or any third-party report to calculate the market share. Meanwhile, it is the Taiwan market share that is relevant for the jurisdiction assessment.

The TFTA does not specifically mention anything about the local nexus requirement. According to the Merger Guidelines, a transaction where the buyer meets the market share threshold, but the target generates no sales in Taiwan can qualify for the simplified procedure. This indicates that a single party’s local activity can trigger notification.

Meanwhile, a foreign-to-foreign transaction that meets any of the filing thresholds triggers an obligation to notify in Taiwan, unless any exemption is applied. (Please see exemptions stated in Question 3.7.)

The following circumstances are exemptions from 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;
• where an enterprise redeems its outstanding shares in order to convert them into treasury stock or because of the exercise by minority shareholders’ 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.

According to a ruling issued by the TFTC on 28 June 2023, the following types of transactions are exempted 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;
• 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; and
• 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 merger filing is mandatory in Taiwan, the TFTC has the power to call in a deal that should be notifiable in Taiwan but has not been notified.

Legally speaking, the TFTC has no power to call in or take action against a “below-threshold” transaction. However, the TFTC may request the parties to provide evidence supporting their filing analysis that the parties’ turnover or market share thresholds are indeed below the threshold.

There is no longstop date for the TFTC to call in a notifiable transaction.

A merger filing is mandatory in Taiwan. If a merging party is not sure whether it meets the filing threshold, it is permissible for a merging party to submit a filing with the TFTC for the sake of prudence. If a merging party would like to submit a filing under this circumstance, it shall submit the filing after the transaction document is signed and before closing by taking into consideration the timing required for the TFTC to make a decision.

Filing a notification with the TFTC is mandatory when parties to a proposed transaction exceed certain turnover or market share thresholds under the TFTA, subject to some exemptions. Such obligations cannot be waived.

A notifiable transaction cannot be closed until the parties receive clearance granted by the TFTC or the statutory waiting period has expired. Because a standstill obligation already applies, the TFTC generally does not need to impose “hold separate” measures prior to closing.

Failing to notify a combination that meets any of the filing thresholds or implementing a transaction prior to receiving clearance 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 ranging from TWD 200,000 to TWD 50 million.

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

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; 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 could be the notifying party;
• 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 responsible for filing has not yet been established, the existing enterprises in the merger shall file the notification.

No filing fee is required.

The obligation to notify is triggered when a transaction has reached a sufficiently concrete stage and meets the filing thresholds under the TFTA. This is typically the case when the parties have entered into a binding agreement, adopted corporate resolutions approving the key terms, or otherwise demonstrated a clear intention to proceed with the transaction (e.g., launch of a tender offer).

Pre-signing filings are generally not permissible in Taiwan unless corporate resolutions approving the key terms of the transaction have been duly adopted, as evidenced by the relevant meeting minutes.

There is no deadline for submission of a notification. However, a notifiable transaction cannot be closed until the parties receive clearance granted by the TFTC or the statutory waiting period has expired.

The prescribed form for notifications is available at www.ftc.gov.tw/internet/english/doc/docDetail.aspx?uid=656&docid=2712. The following information is required for a filing:

• Basic information of the parties.
• Taiwan-specific production, cost, pricing, and sales data for the top three products/services over the past three years.
• Horizontal market structure and key competitors.
• Upstream and downstream market information.
• Description of the transaction.
• Relevant market definition (product/geographic) and competition analysis.
• Barriers to market entry.
• Economic analysis.

The following supporting documents should be enclosed with a filing:

• Latest annual or financial reports of the parties.
• Transaction agreement or board resolutions approving the deal.
• Power of attorney for local counsel filing the notification.
• Most recent certificate of incorporation of the parties.

Filings must be submitted in Chinese (Mandarin). If any document is written in a foreign language, an excerpted translation should 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).

The following circumstances can be eligible for the simplified procedure:

• where the combining parties engage in a horizontal combination, the combined market shares after the merger are below 20%;
• where the combining parties engage in a horizontal combination, the combined market shares after the merger are below 25% and the market share of one of the participating parties is below 5%;
• where the combining parties engage in a vertical combination, the combined market shares in each individual market are below 25%;
• where the combining parties engage in a conglomerate combination with certain factors considered, and it is established that the parties do not have any major potential for competition between each other;
• where one of the enterprises participating in the combination directly owns more than one-third and less than half of the voting shares or paid-up capital of the other merging party;
• where the transaction is a foreign-to-foreign transaction and its transaction value is below TWD 2.5 billion;
• where the enterprise files the notification for reaching the market share thresholds, and it meets one of the following criteria:
  • in a horizontal combination, where the combined Taiwan revenues of the participating parties’ relevant products or services does not reach TWD 200 million;
  • in a vertical combination, where none of the participating parties has generated TWD 200 million or more in Taiwan for the relevant products or services; or
  • where the enterprise being combined generates no Taiwan revenue.

The TFTC may still require the standard procedure in cases involving significant public interest or high entry barriers, even if the simplified criteria are met.

In terms of information, both procedures are broadly similar, but the standard procedure requires three years of production and sales data and top three products, while the simplified procedure requires only two years and top two products.

Procedurally, the standard review includes a formal acceptance notice, public comment consultation, review by a commissioners’ meeting, and a press release. In contrast, the simplified procedure involves no acceptance notice, no public consultation, no commissioners’ meeting, and no press release. Clearance is instead issued by letter to the parties (usually via local counsel) and is generally faster.

Pre-notification discussions are not required.

The review process of the TFTC is not formally divided into phases. After the initial filing, the TFTC may issue requests for information (RFIs) requesting supplemental information. The 30-working-day waiting period only starts once the TFTC considers the filing complete. The parties may proceed if the TFTC raises no objections within a 30-working-day waiting period. The TFTC may shorten or extend this period by up to 60 additional workings days where necessary.

Procedural deadlines applied by the TFTC are calculated on a working-day basis unless otherwise specified. Where a deadline is expressed in working days (e.g. the merger review waiting period), Saturdays, Sundays, and official public holidays in Taiwan are excluded from the calculation.

The preparation time for a filing mainly depends on how quickly the parties can gather the required Taiwan-specific data. In practice, completing the annexes usually takes around two to four weeks. The main body of the filing can generally be prepared within about one week after receiving a briefing note or a draft filing from another jurisdiction for reference.

After submission, the TFTC usually takes about a week to conduct an initial review and request supplemental information, which the parties must provide within the given time period. The 30-working-day waiting period starts only once the filing is deemed complete, and multiple rounds of supplements are often required. If necessary, the TFTC may extend the review period by an additional 60 working days in complex cases. In practice, the overall timeline from initial filing to clearance is typically around two to three months.

Even if a public offer is launched, the transaction cannot be closed until the TFTC has granted clearance. The public offer process may proceed in parallel with the TFTC’s review, but the completion of the public offer must be conditional upon obtaining TFTC approval. Parties typically include such a condition precedent in the offer documentation.

There are currently no special fast-track or expedited procedures for public offers under the TFTC’s merger review process. Parties should carefully coordinate the timing of the public offer and the merger filing to ensure compliance with both regimes and to avoid unnecessary delays.

Third parties such as customers, competitors, and complainants may participate in the review process under the TFTA.

If the TFTC adopts the standard procedure, it will publish a summary of the transaction on its website for one week to invite public comments. In cases with potential significant market impact, the TFTC may also hold a public hearing and/or directly seek views from customers, suppliers, competitors, and relevant experts.

In addition, it is not uncommon for third parties to alert the TFTC to non-notified or potentially reportable transactions, which may lead the TFTC to request a filing or open an investigation.

If the submitted merger notification is incomplete or does not meet the prescribed requirements, the TFTC may require the parties to supplement or correct the filing within a specified period. If the parties fail to comply, or if the supplemental information remains insufficient (at the TFTC’s discretion), the filing may be rejected.

In practice, this gives the TFTC broad authority to request necessary documents and information to ensure a complete review. Such requests are formal, and non-compliance may result in the filing not being accepted.

The TFTC is subject to statutory confidentiality obligations regarding business secrets and sensitive commercial information obtained during merger review. Parties may request confidential treatment of specific information or that the filing be handled confidentially, but such requests are subject to the TFTC’s discretion.

If, after considering all relevant factors, there is no indication of significant competitive concerns, the TFTC will conclude that the overall economic benefits of the merger outweigh any potential anti-competitive effects and will clear the transaction. Otherwise, the TFTC will conduct a further assessment of whether the merger’s economic benefits outweigh its potential restriction of competition.

The assessment is primarily competition-based; non-competition public interest considerations are not a formal standalone factor under the statutory framework.

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.

The TFTC generally communicates its concerns through formal written information requests, and in complex cases, through meetings during the review process. While there is no formal statement of objections procedure, the TFTC may raise issues or request clarification as the review proceeds.

Parties may respond by submitting written explanations. In practice, the process usually involves both formal correspondence and informal discussions.

Although the TFTA does not set out a formal remedy procedure, in practice parties may propose remedies to the TFTC at any stage of the merger review. If proposed remedies materially change the filing, the TFTC may request additional information, and the review timeline may be reset once the supplementary submission is complete. If not, the TFTC may take the remedies into account when deciding whether to grant conditional clearance within the waiting period.

The TFTC may also impose remedies on its own initiative, with or without the parties’ agreement, although it will usually consult the parties before doing so.

The TFTC can impose structural remedies, such as divestiture of shares or assets, transfer of business units, or removal of personnel; and behavioural remedies, such as obligations to supply essential inputs, license intellectual property, or restrictions on exclusive dealing, discrimination, and tying. The TFTC may also impose other remedies on a case-by-case basis as it considers appropriate.

Depending on the nature of the remedy, the parties may be allowed to complete the merger before full compliance. The TFTC may conduct periodic monitoring to ensure compliance with conditions imposed under the TFTA.

Remedies are binding conditions of clearance. If breached, the TFTC may impose corrective measures such as unwinding the transaction, divestiture, transfer of business, or removal of personnel, and may also impose administrative fines ranging from TWD 200,000 to TWD 50 million.

When the TFTC clears a transaction without conditions under the standard procedure, it generally only publishes a press release on its website and does not issue a formal written decision. Under the simplified procedure, the TFTC issues a formal clearance decision directly to the parties (usually via local counsel).

Clearance decisions come into immediate effect.

To the best of our knowledge, there is no case precedent in Taiwan, and it therefore remains unclear whether ancillary restraints, such as non-compete agreements, are covered by a clearance decision.

Parties (or any interested parties with legal standing) who are dissatisfied with a TFTC decision (including clearance with conditions or prohibition decisions) may file an administrative appeal for judicial review within two months of receipt of said decision.

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 TWD 200,000 and TWD 50 million.

Penalties imposed on parties for violating merger control rules will be published by the TFTC. Publicly available information indicates that between 2024 and 2025, the TFTC imposed two sanctions for failure to notify a combination that met the filing thresholds under the TFTA. Both cases involved domestic transactions, with fines of TWD 200,000 imposed on each enterprise. To the best of our knowledge, enforcement of penalties has been mostly against domestic companies.

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

The TFTC may impose remedies if it finds that a notifying party has provided inaccurate or misleading information and proceeds with the transaction, including prohibition of the combination, divestiture, transfer of acquired business, or removal of designated personnel. The TFTC may also impose an administrative fine ranging from TWD 100,000 to TWD 1,000,000.