Hung Ou Yang
Brain Trust International Law Firm, Taipei
mark@btlaw.com.tw

Throughout 2024, Uber Eats’ planned acquisition of foodpanda sparked widespread public discussion. By the end of the year, the Taiwan Fair Trade Commission (FTC) issued a decision forbidding the merger – a ruling that earned broad consumer approval. However, consolidation plans within the food delivery platform sector have not gone away. In 2026, Grab’s announcement that it will acquire foodpanda’s Taiwan business operations has once again sent shockwaves through the entire Taiwan market. On the surface, this merger differs from the 2024 situation. The Uber Eats–foodpanda deal would have turned two food delivery platform operators active in Taiwan into one, triggering widespread concern about a single dominant player. Now, the latest acquisition plan merely tries to replace the entity behind foodpanda with the new entrant Grab, ostensibly preserving a ‘two-player competition’: Uber Eats and Grab – foodpanda. The real question, however, is whether Uber Eats and Grab can maintain effective competition beneath this surface appearance, and whether the degree of competition will be weakened in a way which harms consumers.

Uber Eats’ ‘minority shareholding’ in Grab and ‘interlocking directorates or officers’

If we look only at market-share figures, Grab currently has no food delivery platform business in Taiwan and therefore does not hold any market share. This could superficially lead to the mistaken conclusion that ‘even if Grab acquires foodpanda's Taiwan business, there is no monopoly risk from an increase in market share, so this case warrants no concern’. Under modern antitrust analysis, however, static market-share metrics are merely one consideration; dynamic and substantive competitive relationships are the paramount concern. The media in Taiwan has already raised the substantive competition concern in this case. That said, Uber actually is Grab’s largest institutional shareholder, holding approximately 13.5 per cent of its shares.^[1] Although this falls well short of 50 per cent, it has already triggered an antitrust issue: ‘minority shareholding’. Furthermore, it was found that Uber has nominated a director to Grab’s board.^[2] Mr Li-Chung Lee, former Commissioner of the Taiwan FTC, has already indicated that Uber CEO Dara Khosrowshahi has served concurrently as a Grab director since 2018.^[3] In other words, another antitrust issue, ‘interlocking directorates or officers’, shall not be neglected.

‘Interlocking directorates or officers’ may trigger a merger review

As a general matter, the antitrust concern regarding ‘interlocking directorates or officers’ refers to a single person simultaneously holding management positions at two competing enterprises. This type of situation will trigger a merger review for ‘direct or indirect control’.

The Taiwan Fair Trade Act’s definition of a merger does not rely on illustrative examples alone. Section 1(5) of Article 10 of the Taiwan Fair Trade Act provides that ‘directly or indirectly controlling the business operations or personnel appointments of another enterprise’ constitutes one of the statutory forms of merger. Section 1(4) of Article 8 of the Enforcement Rules of the Taiwan Fair Trade Act further requires the controlling enterprise to file a merger notification accordingly.

Based on the existing legal framework, if Uber can – through interlocking directorates or officers – exercise direct or indirect control over foodpanda after Grab acquires its Taiwan business, Uber would be deemed a controlling enterprise which will be required to file a merger notification. In this scenario, the merger would not be limited to Grab and foodpanda. Rather, Uber, Grab and foodpanda would all end up with participating enterprises under the Taiwan Fair Trade Act. Once Uber is deemed a participating enterprise, Uber Eats’ substantial market share in Taiwan would be reviewed together with foodpanda’s. Here, the risk of a monopoly from the combined market share would rise sharply. The outcome could closely resemble the 2024 merger case, in which the FTC found that the combined market share of Uber Eats and foodpanda reached as high as 90 per cent, and overruled the merger simply on that basis.

Important precedents

In that case, would the Taiwan FTC find Uber a participating enterprise? Here, the issue is, under what circumstances does an ‘interlocking directorate or officer’ satisfy the standard of ‘directly or indirectly controlling the business operations or personnel appointments of another enterprise’? The following two cases are instructive.

Case 1: Chuan Kuo Gas Station

The Taiwan FTC found that Chuan Kuo Gas Station Co, Ltd (Chuan Kuo) was able to directly or indirectly control the business operations and personnel appointments of Formosa Oil (Asia Pacific) Corporation through the concurrent appointment of its general manager. Consequently, when Chuan Kuo was required to file a merger notification as a matter of law but failed to do so, it was sanctioned by the Taiwan FTC (FTC Decision No 096148). The Taiwan FTC pointed out that a general manager, a key position, was in practice responsible for the business and personnel affairs of both companies, including determining procurement and sales counterparties and transaction terms, as well as the appointment and dismissal of principal management-level staff and above. Therefore, this scenario reached a level clearly sufficient to influence the enterprises’ major business operation. Accordingly, the Taiwan FTC found that this form of control over a specific enterprise through the concurrent appointment of a general manager fell squarely within the scope of ‘directly or indirectly controlling the business operations or personnel appointments of another enterprise’.

This case occupies an important place in the FTC’s handling of matters involving interlocking directorates or officers because the decision sets out a number of significant enforcement positions, outlined below.

As the enterprises are originally in a competitive relationship, the concurrent appointment of the individual actually responsible for corporate management will manifestly eliminate competition between them. Accordingly, the concurrent appointment of any director, supervisor, general manager, or other person with authority to determine business affairs across enterprises should all be regarded as falling within this merger category.

The assessment of control relationships between merging enterprises is divided into: legal control, actual control, and substantial influence. While legal control is relatively clear-cut, the standard for actual control or substantial influence between enterprises must be evaluated based on the specific facts of each case. In particular, even where shareholding falls below the threshold or the proportion of directors does not reach a certain level, a merger relationship involving substantial influence or actual control between enterprises may still exist.

Where the substantive or formal relationship between enterprises satisfies a merger type regulated by the Taiwan Fair Trade Act, they may still be found merging enterprises regardless of whether the merger type was formed through acquisition, assignment, interlocking directorates, or otherwise.

Case 2: Uni-President Enterprises

Uni-President Enterprises Corp (Uni-President) is the largest food production company in Taiwan and the 12th largest globally. When Uni-President obtained exactly half of Wei Lih Co, Ltd’s (Wei Lih) board seats, and Uni-President’s general manager concurrently served as Wei Lih’s chairman, a similar issue immediately came to the fore. The Taiwan FTC found that Uni-President’s actions directly or indirectly controlled Wei Lih’s business operations and personnel appointments, thereby constituting a merger as a matter of law. The Taiwan FTC sanctioned Uni-President for failing to file a merger notification.^[4] However, Uni-President filed a lawsuit to challenge the decision. The Supreme Administrative Court ultimately set aside the Taiwan FTC’s sanction. The Court’s judgment set out the following important legal principles.

Directly or indirectly controlling the business operations or personnel appointments of another enterprise requires that the controlling enterprise’s degree of influence over the other enterprise’s business operations or personnel appointments reaching a level which poses a risk of impairing market competition.

Directly or indirectly controlling the business operations or personnel appointments of another enterprise does not require acquiring more than half of that enterprise’s board seats. Neither is the concurrent appointment of a responsible person sufficient in itself. Rather, the inquiry must turn on the specific facts of each case, examining whether two or more enterprises that were originally independently operating have, through that particular connecting link, formed a single operating entity, reached a level of substantial restriction to competition, and thereby have the potential to create a monopoly or lead to market concentration.

An enterprise must have already placed the business operations or personnel appointments of another enterprise in a state of autonomous control before the statutory merger can be satisfied. The mere possibility that such a state might contingently arise due to other uncertain factors is insufficient to constitute the statutory merger.

From the legal principles set out in the above two cases, it is apparent that current practice has not reached a fully consistent view on the circumstances under which interlocking directorates or officers will be found to satisfy the statutory merger. The standard could be somewhat stricter or more lenient in the future. But what approach the Taiwan FTC will adopt in the Grab acquisition case remains an open question, adding yet another variable to the analysis.

More importantly, both the Chun Kuo case and the Uni-President case proved a key principle: substantive relationships are paramount when assessing this statutory merger. Formalities are just secondary regardless of whether a stricter or more lenient standard will be applied.

To date, the Taiwan FTC spokesperson has already commented that Grab’s acquisition will be assessed on the basis of ‘actual control’ going forward.^[5] Apparently, it is consistent with the emphasis on substance reflected in the above cases. In response, Grab only stressed that ‘Uber holds approximately 13 per cent of Grab’s shares with its voting rights below four per cent, and the Grab director nominated by Uber has already recused himself from board decisions relating to Taiwan’.^[6] In other words, Grab only addressed formal appearances. When the determinative question is whether actual control exists, it must therefore be rigorously examined during the review process. Absent of concrete evidence to substantiate Grab’s assertion, Grab will have a very hard time in convincing the Taiwan FTC.

A competitor’s ‘minority shareholding’ is another issue

Even if concrete evidence can ultimately establish that Uber has not achieved ‘direct or indirect control’, it does not mean the case will be free from antitrust issues. Uber is Grab’s largest institutional shareholder, with approximately 13.5 per cent of its shares. When a merger involves ‘partial ownership’ or ‘minority interests’, even in the absence of controlling power, the minority stake may still enjoy certain rights. For example, appointing directors, observing board meetings, influencing financing capacity, affecting operational decisions, or accessing competitively sensitive information. In other words, an enterprise holding a minority stake may still substantially weaken market competition by influencing the target company’s decision-making or altering competitive incentives. The US 2023 Merger Guidelines specifically address this issue under Guideline 11, which emphasise that the enforcement agencies must ‘assess its impact on competition’.^[7] The US 2023 Merger Guidelines further explain that a competitor’s ‘minority shareholding’ requires assessment because it may present some risks of reducing competition. Generally speaking, the Taiwan FTC may take it into consideration.

‘Minority shareholding’ may trigger ‘coordinated effects’ review in Taiwan

Although the Taiwan Fair Trade Act does not contain a provision which directly addresses a competitor’s ‘minority shareholding’ like those of the US 2023 Merger Guidelines, this does not mean that minority shareholding can fall outside of the scope of review entirely. According to Point 9 of the Taiwan Fair Trade Commission Disposal Directions (Guidelines) on Handling Merger Filings, it provides for the review criteria in horizontal mergers, including a review of ‘coordinated effects’.^[8] Put simply, the coordinated-effects review focuses on situations in which ‘the market structure on the surface appears competitive, but the merger results in the effective absence of competition in practice.’ Accordingly, the risks of reducing competition mentioned by the US 2023 Merger Guidelines are highly likely to be carefully assessed on the basis of the coordinated-effects review. Furthermore, even if a small portion might fall outside the coordinated-effects framework, the Taiwan FTC may still invoke the catch-all provision within Point 9 by referring to ‘other factors affecting the effect of restricting competition’, bringing them within the scope of review.

As to the coordinated-effects review, it encompasses examination of enterprises’ ‘transaction patterns’. According to Taipei Times, because Uber’s shareholding in Grab exceeds ten per cent, Uber filed a Schedule 13D form with the US Securities and Exchange Commission (SEC).^[9] Here, Uber admitted that its investment is held for the purpose of exerting influence rather than as a passive investor. If true, how this admission should be interpreted will definitely be an issue that Grab and Uber must deal with. In addition, Taipei Times further pointed out that the ‘non-compete agreement’ between Uber and Grab remains legally in effect.^[10] Under Grab’s 2021 SEC filings, it expires no earlier than one year after Uber disposes of all its Grab shares. Since Uber continues to hold approximately 13 per cent of those shares, the restriction appears to remain there.^[11] Again, if true, the transaction pattern between Uber and Grab represents that, beyond the minority-shareholding issue, there will be an immense latent risk arising from the non-compete agreement.

A non-compete agreement itself carries the very possibility that ‘the market structure on the surface appears competitive, but the merger results in the absence of effective competition in practice’. It even carries a risk of concerted action. Therefore, the content and effects of that agreement constitute a critical area which cannot be taken lightly. Whether the Taiwan FTC will conduct a comprehensive, in-depth investigation and careful assessment of this case to ensure that effective market competition will be maintained shall be an issue very much worth watching.