|
In a decision dated 29 October 2010, the Fair Trade Commission (FTC), with conditions, approved the combination application submitted by Dafu Media Co., Ltd. (Dafu) for the acquisition of Kbro Co., Ltd. (Kbro) and twelve cable system operators controlled by Kbro.
|
|
|
|
The FTC held that the combination violates neither (a) the 1/3 nationwide market share restriction on total cable television subscribers nor (b) the 1/4 restriction on SO's cross-over engagement in the channel supply business (i.e., channels supplied by an SO and its affiliates cannot exceed 1/4 of the total available channels of its system). Nonetheless, considering possible anti-competition concerns that may arise from the combination, the FTC imposed thirteen conditions on the approval, mainly in four categories:
|
|
|
|
l
|
Conditions to prevent Dafu and its affiliates (collectively "Dafu Group") from further combination with other cable system operators ("SO") to abuse its market power: (1) Dafu Group cannot directly or indirectly acquire or own any shares in a Taiwan SO (other than that within Dafu Group) or its affiliates; (2) no directors, supervisors or managers of Dafu Group can simultaneously serve as a director, supervisor or manager in a Taiwan SO (other than that within Dafu Group) or its affiliates; (3) Dafu Group cannot sell any shares in a group company to Taiwan Mobile Co., Ltd. group companies (including but not limited to TFN Media Co., Ltd. and SOs controlled by it, collectively the "TMC Group"), or directly or indirectly acquire or own any shares in a TMC Group company; (4) no directors, supervisors or managers of Dafu Group can simultaneously serve as a director, supervisor or manager in TMC Group, and vice versa; and (5) Dafu Group cannot collocate headends, jointly use trademarks or customer services, or jointly conduct any other business with SOs not within Dafu Group.
|
|
|
|
l
|
Conditions to prevent Dafu Group from further vertical combination with channel providers to abuse its market power: (1) Dafu Group cannot increase the number of analogue channels being produced or distributed by its group companies; (2) Dafu Group cannot, jointly with other SOs or their affiliates, collectively procure programs from channel providers, set the purchase price for the procurement, boycott channel providers, or conduct any concerted actions under the Fair Trade Act through any kind of agreements; (3) for channels produced or distributed by Dafu Group, Dafu Group cannot, jointly with other program distributors, collectively sell programs or conduct any concerted actions under the Fair Trade Act; (4) for channels produced or distributed by Dafu Group, Dafu Group can neither, without reasonable grounds, refuse to license, impose different license fee schedules, or place conditions other than license fees upon licensing, to other SOs, DTH operators, multi-media content transmission service operators, or other competing wired or wireless content transmission service providers to broadcast such channels nor discriminate against them.
|
|
|
|
l
|
Conditions to ensure digitalization of cable television and developments on digital convergence: (1) Dafu Group must actively implement digitalization of cable televisions, the two-way network constructions, and the Digital Convergence Plan announced by the Executive Yuan on 8 July 2010; (2) Dafu Group must actively obtain a license from channel providers for broadcasting through IPTV, and reasonably re-license IPTV operators such rights; (3) Dafu Group must actively assist in the development of HD contents and channels.
|
|
|
|
l
|
Conditions with respect to providing information to ensure Dafu Group comply with conditions being imposed by the FTC: Dafu must submit the following information to the FTC for the next five years from the date of the combination approval (1) names of the channels and the distribution/agent agreements for the channels being produced or distributed by Dafu Group, and information related to pricing, licensing fees, discounts, and licensees of such channels; (2) a report on how the combination benefits the general public. Further, Dafu must submit any changes to the chairman of the board, directors, supervisors, managers or articles of incorporation of each Dafu Group company to the FTC for its records.
|
|
|
