Thu, Jul 05, 2012 - Page 14 News List

FTC fines Nexon for not reporting share purchase

BUSTED:Nexon was fined NT$900,000 for violating share purchase rules and told to submit an application or reduce its stake in Gamania within three months

By Kevin Chen  /  Staff reporter

The Fair Trade Commission (FTC) yesterday fined South Korean online gaming giant Nexon Co NT$900,000 (US$30,100) for failing to report its acquisition of more than a one-third stake in Taiwan’s Gamania Digital Entertainment Co (遊戲橘子) in a closely watched hostile takeover deal in the online gaming industry.

The commission said Nexon’s purchase of stock in the Taiwanese firm violated the Fair Trade Act (公平交易法), which stipulates that any merger within certain parameters must be reported to the authorities in advance.

In the Gamania case, the commission said it discovered that Nexon already held more than one-third of the total voting rights or total capital of Gamania. In addition, Nexon is seeking to take over a company that has a market share of more than 25 percent in a particular field domestically, the commission said in a statement posted on its Web site.

Based on statistics provided by the Industrial Development Bureau and calculations made by the -commission, “Nexon holds a 34.6 percent share in Gamania, which has a market share of 28.53 percent in Taiwan’s online gaming industry,” the commission said.

As Gamania has secured about a quarter of the nation’s online gaming market, any merger involving it would have an influence on competitors and Nexon is required by law to submit any share purchase plans to the authorities before it proceeds, the commission said.

“Nexon did not file an application with the authorities in advance,” it said.

Since the South Korean company failed to follow existing regulations, the commission said it had decided to impose an administrative penalty of NT$900,000 and demand that Nexon submit an application or reduce its stake in the company within three months, according to the statement.

Nexon has adopted an aggressive strategy in expanding its market share. The company announced on Thursday last week that it would acquire all the shares of Japanese mobile game developer inBlue and that it had purchased a strategic 14.7 percent share in rival NCsoft Corp of South Korea on June 8.

The company is currently one of Gamania’s partners, but its move has sparked market speculation that Gamania could be bought out by its foreign partner. However, the Taiwanese firm is insisting on remaining independent and has rejected any merger with Nexon.

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