A Study of Failing Firm Defense under the Merger Control of the Fair Trade Act

• Main Authors: Yu-LinGuo, 郭昱伶
• Other Authors: Yi-Tien Lin
• Format: Others
• Language: zh-TW
• Published: 2013
• Online Access: http://ndltd.ncl.edu.tw/handle/84474248996490582418

碩士 === 國立成功大學 === 法律學系 === 101 === Under our legal system, the overall economic benefits and disadvantages resulted from competition restraint of the merger shall be measured in accordance with Article 12 of the Fair Trade Act, and the Fair Trade Commission will make the decision whether the proposed merger should be prohibited or not. One factor to consider in assessment of the overall economic benefits is one of the merging parties is a failing firm. Acquisitions of failing firms, through rearranging of funds, equipments and staff, not only increase the productivity and improve the competitiveness of combined utilities, but also resolve the waste of resources. From standpoint of efficiency, acquisitions of failing firms are good for economic development, so we should recognize mergers generate the economic benefits enough to offset disadvantages resulted from competition restraint. Thus, acquisitions would be allowed to proceed. However, acquisitions of failing firms are allowed to proceed not due to efficiency. Pursuant to paragraph 13.2 of the Guidelines on Handling Merger Filings, a failing firm is defined as follows: (1) It is unable to reimburse its debts within a short period; (2) It is unable to continue to operate in a less restrictive way of competition on the relevant market except through the merger; (3) In the absence of a merger, It will inevitably exit from the market. These elements show that acquisitions of failing firms would not give rise to the deterioration of the market structure because the competitive structure of the market would deteriorate to at least the same or worse extent in the absence of the merger. In this case, there is obviously no causation between proposed mergers and the anticipated harms to competition, so the goverment and court have no authority to forbid the proposed mergers under the United States’ and European Union’s competition law. There are some related cases in this thesis which can prove above situation, such as the U.S. Supreme Court’s decision in International Shoe Co. v. FTC(1930), the U.S. Department of Justice’s decision in Hercules Offshore Inc. / Seahawk Drilling Inc. case(2011), the EU Commission’s decision in BASF / Eurodiol / Pantochim(2002) and JCI / VB / FIAMM(2009) case, etc.. Under our legal system, the Fair Trade Commission makes decisions resting on the measurement of overall economic benefits and disadvantages resulted from competition restraint. In that situation, acquistions of failing firms will possibly be prohibited because overall economic benefits do not certainly outweigh the disadvantages. This diverges from the development of failing firm defense theory. Besides, through case studies, acquistions of failing firms have no special position under our legal system. In order to put our legal system back on track, the following suggestions sould be considered: (1) Cases which conform to rules of acquiring failing firm can be identied that its overall economic benefits are greater than disadvantages of restricting competition should be appended; (2) In the absence of the merger, assets of failing firms will inevitably exit from the market” should also be appended; (3) The Fair Trade Commission should follow the international trend to speed up the examination.