Newsletter
FAIR TRADE COMMISSION CONSIDERS REVISING DEFINITION OF CONTROL
The Fair Trade Commission (FTC) is currently considering whether to revise the definition of control by following the Company Law provision which states that a controlling interests exist if an enterprise holds 50% of the stock of another enterprise.
Article 6 of the Fair Trade Law (FTL) provides that acquiring one-third or more of another enterprise's voting stock constitutes a combination under the FTL. In computing the one-third threshold, the stock held or acquired by any enterprise controlling or controlled by the enterprise in question, or by any enterprise having a parent-subsidiary relationship with it, should be included.
The FTC's original interpretation was that the definition of control should follow the tests under Article 6 of the FTL, i.e. holding of one-third or more. If the FTC follows the test under the Company Law, a controlling interest will be found if an enterprise holds more than 50% of the stock of another enterprise. Consequently, combination cases requiring the FTL approval may be reduced.