The Fair Trade Commission (FTC) yesterday rejected Uni-President Enterprises Corp’s (統一企業) application to merge with Wei Lih Food Industrial Co (維力食品工業) because of concerns that it may lead to a restriction of competition.
Uni-President and Wei Lih are the No. 1 and No. 2 instant noodle manufacturers in Taiwan, with 47.4 percent and 21.2 percent market share last year, the FTC said.
Uni-President currently holds 31.84 percent of Wei Lih’s shares, and planned to increase its stake to 49.75 percent through its subsidiary.
The merger was not approved because FTC believed the competition between the two companies would have been eliminated and Uni-President would have had less reason to avoid raising prices.
Any company that plans to hold more than one-third of another company’s shares must gain approval from the FTC.
“Retail channels are the key to successful instant noodle marketing and sales, and many instant noodle makers find it is hard for them to enter,” FTC commissioner Chou Ya-shu (周雅淑) said yesterday.
Uni-President has the added advantage of 4,000 7-Eleven convenience stores nationwide, run by its subsidiary President Chain Store Corp (統一超商).
Chou said Wei Lih is not in danger of going under, and has no urgent need to raise funds to ensure the company’s survival.
Uni-President had said the merger was an attempt to exchange experience and expand overseas markets. Chou said the acquisition of additional shares in Wei Lih was not the only way to achieve these goals.
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