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FTC to review Nexon takeover bid of game firm, may issue fine

Fair Trade Commission (公平會, FTC) Chairman Wu, Shiow-ming (吳秀明) stated yesterday that the FTC will summon representatives of Nexon Co. to talk next week concerning the takeover of Gamamia Digital Entertainment Co. (遊戲橘子). Nexon may be fined up to NT$25 million (US$833,333) and the FTC might acquire the authority to nullify the takeover of Gamamia, according to officials.

According to Wu, the FTC is investigating whether Nexon should submit the takeover of Gamamia. Based on the Fair Trade Act, any merger consisting of an enterprise with one-fourth of the market share should be filed to the Fair Trade Commission in advance. If so, Nexon is likely to be fined by NT$25 million (US$833,333) because the company did not report to the FTC.

Furthermore, if Gamamia is deemed to have more than one-fourth of the market share, the FTC will have the authority to terminate the merger if they deem that action appropriate.

Point of Dispute: Definition of 'Market'

The point of dispute is whether Gamamia has over one-fourth of the market share in Taiwan, stated Wu.

Nexon claims that Gamamia should be classified as a company in the digital content market, which comprises DVDs, Web service and digital games. If the market is defined as the selling of all digital content, Gamamia does not have one-fourth of the market share and Nexon did not need to report to the FTC in advance, argue the firm's representatives.

Wu stated that the definition of “market” will not just be based on Nexon's statement and the FTC leans toward identifying the “market” as the online game market. If this is determined to be the case, Gamamia may be considered to have more than one-fourth of the market share.

According to Wu, the identification of what comprises the market is based on whether online games can be substituted by other products, such as digital games or DVDs. If online games cannot be substituted by any other product, the online game market is likely to be viewed by the FTC as a single market.

Wu said the final result will be based on the decision of the committee members of the FTC.

Economic Minister Shih Yen-shiang (施顏祥) stated that the ministry will support Gamamia's position that the company will cooperate with others but does not welcome any hostile takeover attempts.

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