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Taiwan: Adapting to ongoing macroeconomic and regulatory uncertainty

What's inside

Key legal developments in 2023 and their implications for Taiwan

Executive summary

The past two years have witnessed significant geopolitical fracturing and macroeconomic difficulties that continue to hamper certain dealmaking. Several sectors have posted transactional lows throughout 2023, and persistent inflation and high interest rates look set to remain in place for now. Economic decoupling and growing global regulations also create transactional hurdles, while China's slowing economy and now the Israel-Hamas war add to a steady sense of market unpredictability.

And yet, with volatility comes opportunity, such as infrastructure and renewables projects, growth in the semiconductor industry, and the rise of private credit. As many companies and investors in Taiwan are discovering, economic or regulatory setbacks are an invitation to think innovatively and to recalibrate their approach. With the right information and careful planning, they can position themselves for success now and in the future.

Following our 18th Annual Taiwan Roundtable Series in September, we hope this year's report for Taiwan-focused companies and investors provides helpful guidance in a rapidly evolving political and economic landscape.

We begin with a look at the continued proliferation of foreign direct investment (FDI) regimes in the US and the European Union. The Committee on Foreign Investment in the United States (CFIUS) has ramped up its activity to an all-time high, while EU member states continue to implement, refine and expand their regimes. Many FDI focus areas overlap with those of Taiwanese companies—technology in particular—meaning early-stage analysis is critical in this arena.

We then analyze the impact of forum selection in contracts with mainland Chinese (PRC) companies. Despite the tensions between PRC and Taiwan, their economies remain inextricably intertwined, so Taiwanese companies should consider how the provision of "interim measures" in Hong Kong arbitration can benefit their business.

Next, we provide an overview of the EU's new Foreign Subsidies Regulation (FSR), which scrutinizes foreign financial contributions received by companies engaging in M&A and public tenders in the EU, and grants the European Commission the power to investigate any other potentially distortive market situation. Taiwanese companies should be aware that the FSR casts a wide net and could also encumber merger control and FDI filings.

We then turn to the growing popularity of the US International Trade Commission (ITC) for trade secrets litigation. The ITC's unique global reach means trade secret owners can make a claim of misappropriation on any product that enters the US, even if the trade secret and alleged misappropriation are entirely extraterritorial. The risk of these claims has broad implications, especially for foreign companies trying to diversify and broaden their global footprint.

Our transaction-focused piece looks at the evolution of M&A, debt finance and investment funds practices in a tough macroeconomic environment. Certain technology and renewables remain attractive for M&A and private equity, while local consumer brands are considered the next target of credit investors, and the funds space is seeing growth in the secondaries market and NAV financings.

Aligning with the Roundtable Series' "clubs and fences" theme, we consider trade and sanctions through this framework. Taiwanese companies have the difficult task of balancing often-competing interests in Asia-Pacific and the West, but they will benefit from taking advantage of regional trade clubs and nimbly navigating regulatory fences that include tariffs, sanctions and export control.

Lastly, we examine two major proposed changes to US antitrust policy by the US Federal Trade Commission (FTC) and the Department of Justice, Antitrust Division: the FTC's proposed ban on non-compete clauses and both agencies' radical proposed changes to the Hart-Scott-Rodino Form. One key takeaway examines the possible use of employee NDAs to protect company information.

We look forward to discussing these and other issues with you.

Foreign direct investment reviews increasingly impact cross-border deals

Continued emphasis on FDI around the world, particularly in the US and Europe, creates additional challenges for investors


Hong Kong arbitration clauses offer advantage to Taiwanese companies doing business in China

Provision of "interim measures" strengthens Hong Kong's position as a level playing field in arbitration against PRC counterparties

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New challenges for Taiwanese companies under the EU’s Foreign Subsidies Regulation

The bloc's new scrutiny of foreign financial contributions poses regulatory hurdles for Taiwanese investments in M&A and public tenders in the EU

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Trade secret litigation at the US International Trade Commission: A rising fence

The growing popularity of the ITC as a regulatory venue with global reach has implications for Taiwanese trade secret owners and investigation targets

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Getting deals done despite the odds

M&A, debt finance and investment fund actors seek alternative routes to dealmaking in the face of a dim macroeconomic outlook

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Taiwanese companies in a world of “clubs” and “fences”

The evolving trade and sanctions landscape reflects a new global regulatory paradigm


Major proposed changes to US antitrust rules present new hurdles

US antitrust agencies step up enforcement with proposed policy changes that create uncertainty and new regulatory burdens

train railroad
train railroad

Major proposed changes to US antitrust rules present new hurdles

US antitrust agencies step up enforcement with proposed policy changes that create uncertainty and new regulatory burdens

5 min read

Under the Biden administration, the US antitrust agencies—the Federal Trade Commission (FTC) and Department of Justice, Antitrust Division (DOJ)—have proposed widespread changes to antitrust policy, creating uncertainty for companies doing business in the US. Two examples in particular point to the agencies' radical departure from decades of precedent: the FTC's proposed total ban on non-compete clauses and both agencies' proposed sweeping changes to the Hart-Scott-Rodino (HSR) Form and Instructions. Both moves would require businesses to plan and make significant adjustments to how they comply.

Proposed FTC rule banning non-competes

In January 2023, the FTC proposed a rule prohibiting employers from including non-compete clauses in employee contracts, based on a preliminary finding that non-compete clauses violate Section 5 of the FTC Act and constitute an unfair method of competition.

The proposed rule is broad in scope and would prohibit an employer from entering or attempting to enter into a non-compete clause with a worker; maintaining a non-compete clause with a worker; or representing to a worker that they are subject to a non-compete clause. The rule would apply to independent contractors and both paid and unpaid employees. Further, the rule would apply retroactively, meaning employers would be required to rescind pre-existing non-compete clauses, and it would apply functionally, meaning any employment terms that perform as non-compete agreements—for instance broad non-disclosure agreements—would not be permitted.

The proposed rule includes certain exemptions, namely those entities that are exempted from coverage under the FTC Act. This includes certain banks, savings and loan institutions, federal credit unions, common carriers, air carriers and foreign carriers, persons subject to the Packers and Stockyards Act of 1921, and non-profit organizations. Further, in the context of mergers and acquisitions, the FTC recognizes that non-compete clauses may be necessary to protect the value of a business where the seller has a large stake in the business. Accordingly, a non-compete clause would be exempt where the seller of a business is subject to the clause and is a "substantial" owner, member or partner in the business entity.

Importantly, the FTC acknowledged three main ways in which the proposed rule could differentiate among employees—based on job functions, earnings, or whether the worker subject to the clause is a senior executive. Ultimately, however, the FTC concluded that the proposed rule would apply uniformly to all workers.

The public comment period closed in April, with more than 21,000 comments submitted. Although it is not clear whether the FTC will revise the proposed rule to accommodate criticisms, a number of comments noted the lack of an intellectual property-related exemption, and the consequent potential adverse impact on IP protection, and expressed concern over the lack of distinction between low- and higher-wage employees.

Proposed changes to the HSR Form

In June 2023, the FTC, together with the Antitrust Division of the DOJ, proposed rules to amend the HSR Form and Instructions. The proposed changes would be the most significant changes to the form in 45 years and would increase the time and burden required to prepare HSR filings.

The new HSR Form would require the merging parties to submit narrative responses discussing horizontal overlaps as well as non-horizonal relationships, such as supply relationships, in response to a new "competition analysis" section. This section would also require the parties to identify and provide contact information for top customers, explain the rationale behind the transaction and disclose the timeline for the deal.

Notable among a number of proposed changes is the requirement that parties submit English-language translations for all foreign-language documents required as part of the HSR filing. Currently, parties must submit English-language translations only where they already exist in the ordinary course of business. Further, the proposed rules would require that parties disclose all jurisdictions where merger control filings will be made, superseding what is currently a voluntary practice.

Key takeaways for Taiwanese businesses

In the case of a potential ban on non-compete clauses, Taiwanese employers should consider entering into confidentiality or non-disclosure agreements with workers to protect confidential business information or client relationships. In doing so, employers should ensure that NDAs are drafted sufficiently narrowly, so they do not appear to function as non-compete clauses in practice.

Employers should also consider offering comprehensive trainings to employees on maintaining the confidentiality of business information and on the proprietary right a business has to its information.

As for the HSR Form, the proposed changes would significantly increase the amount of information required for disclosure as part of the filing. Parties should take into account the additional time and cost needed to prepare this information and begin collecting documents and preparing an HSR filing several months ahead of the deadline.

When negotiating deal documents, parties should consider agreeing to longer timelines for completing an HSR filing following the execution of a transaction agreement, for example using broad language such as "as promptly as practicable."

Parties should begin evaluating antitrust risks and competitive overlaps during the early stages of planning and consider preparing an HSR filing at an earlier stage of the process.


Companies now face a significant amount of uncertainty in conduct and merger-related antitrust enforcement in the US, due to the Biden administration's proposed rules. Taiwanese companies doing business in the US should monitor the situation and plan early in order to comply with the substantial new requirements of the proposed rules, as the new HSR Form could become effective as early as Q1 2024 and the non-compete ban in late 2024.

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This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.

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