Newsletter
HOLIDAY KTV GROUP FINED FOR FTA VIOLATION
At a meeting on 29 July 2004, the Fair Trade Commission (FTC) found that KTV operator Holiday Group Co. Ltd. (Holiday) had made false and misleading statements in its report of an intended business combination with Cashbox Party World Karaoke Parlors (Cashbox), filed on 9 May 2003. This had breached Article 11 Paragraph 5 Subparagraph 2 of the Fair Trade Act (FTA), and the FTC imposed a fine of NT$400,000.
In the above case, the FTC determined that Holiday and Young Sound Multimedia Co., Ltd. (Young Sound), a music video distributor, have a control and subordinate relationship, and Holi-day directly or indirectly controlled the business operations and personnel management of Young Sound. However, in its filing of 9 May 2003 with the FTC on its proposed merger with Cashbox, Holiday had not listed Young Sound as a company over which it had control, and in the market structure information included in the fil-ing it had also failed to disclose its relationship with Young Sound. Furthermore, in its state-ments to the FTC during the FTC's earlier in-vestigation of whether multimedia karaoke en-terprises were in compliance with the FTA, Holiday had stressed that Holiday, its affiliated enterprises, and its directors and supervisors did not hold shares in Young Sound, and that market rumors suggesting that Young Sound was affili-ated to Holiday were baseless.
From this it was clear that before filing its report on its intended combination with Cashbox, Holiday had been aware that its relationship with Young Sound would be an important factor for consideration by the FTC in reviewing both the compliance case and the merger application. Yet during the FTC's compliance investigation, Holiday had repeatedly denied its relationship with Young Sound, and in its merger filing it had entirely failed to disclose its controlling interest in Young Sound.
Holiday had deliberately concealed its relation-ship with Young Sound and taking into account all the circumstances of the case, including Holiday's sales turnover, its motive for breaking the law, the nature of its illegal actions, the de-gree of harm to the orderly conduct of trade, the state of the company's operations, its market po-sition, the scale of the enterprise, and its degree of cooperation, the FTC decided to impose an administrative fine on Holiday of NT$400,000.