The Fair Trade Commission Does Not Prohibit the 3.5 GHz Frequency and Network Sharing Between Far EasTone and Asia Pacific but Impose Conditions for the Merger (Taiwan)

Aaron Chen and Sally Yang

The Fair Trade Commission (hereinafter “FTC”) decided in their 1555th meeting resolution on August 4th, 2021 not to prohibit the merger between Far EasTone Telecommunications Co., Ltd. (hereinafter “FET”) and Asia Pacific Telecommunications Co., Ltd (hereinafter “Asia Pacific”) to share 3.5GHz frequency and network, but impose conditions.

This case was the first merger case between telecommunications companies in Taiwan. It is a case of horizontal merger. The FTC believes that Asia Pacific may enter the 5G service market by sharing FET’s 3.5GHZ frequency and internet capacity, which enhances resource sharing, reduces costs, improves service quality, and benefits the economy and development of relevant industries. However, FET and Asia Pacific’s collaboration agreement includes FET investing 5 billion NTD in Asia Pacific and receiving 11.58 of their shares, thus taking a seat in their board of directors. To assuage the public concerns (including worries about exchanges in business operations in the collaboration and potentially decreasing competition in the market), the FTC imposed the following conditions to ensure that the benefits of this merger case outweigh the harm of reducing market competition:

1. FET and Asia Pacific may not join operations, entrust operations, cooperate, or exchange information on operational matters such as mobile broadband service costs, terminal equipment subsidies, marketing activities, customer and accounting information, etc.

2. FET and Asia Pacific should provide the following information for 5 years after the merger before July 1st each year to the FTC:

a. Organization graph for the supervisory task force[1], work distribution and specific work obligations, names of the members and their departments, and minutes for each meeting (including a list of participants and items discussed).

b. Records of Asia Pacific’s shareholder and board of director meetings.

[1] The National Communications Commission (NCC) gave conditional approval for FET and Asia Pacific sharing 5G frequencies in March 2021. FET and Asia Pacific committed to set up a supervisory and monitor information security task force and hold regular meetings, as well as to increase the base station coverage.