The Fair Trade Commission (FTC) yesterday rejected Uni-President Enterprises Corp’s (統一企業) application to raise its holding in domestic rival Wei Lih Food Co (維力食品) to more than 50 percent, citing concerns over market monopoly and price-fixing.
The commission said in a statement yesterday that Uni-President and Wei Lih are the first and second-largest producers of instant noodles in Taiwan respectively.
Although a merger would help reduce manufacturing costs for the two companies, it would also allow them to control nearly 70 percent of the instant noodles market, it said.
The commission said it could not rule out the possibility that the companies might jointly increase prices if they had a monopoly.
The domestic instant noodles market is already saturated and given its small market scale and customer loyalty to certain brands, has failed to attract new manufacturers, the commission said.
Improved economies of scale resulting from a merger would not necessarily benefit consumers in light of monopoly concerns, it added.
This was not the first time the commission had rejected Uni-President’s application to acquire a controlling stake in Wei Lih.
In April 2008, Uni-President applied to control up to one-third of Wei Lih’s shares, but the commission rejected the move.
In October the same year, the commission launched an investigation into Uni-President after media reports said the company had won three board member seats and one supervisory seat during Wei Lih’s board reshuffle.
With Uni-President controlling more than half of the board, Uni-President president Alex Lo (羅智先) was elected to serve as chairman of Wei Lih.
The commission slapped Uni-President with a NT$500,000 (US$15,600) fine in February last year for failing to disclose the information.
Uni-President currently holds 33 percent of Wei Lih’s shares.
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