Taiwan's Fair Trade Commission (FTC) has approved the proposed merger between Advanced Semiconductor Engineering (ASE) and Siliconware Precision Industries (SPIL).

ASE's merger with SPIL is expected to have a positive rather than a negative impact on Taiwan's IC packaging and testing sector, the FTC indicated.

With at least 70 players worldwide rivaling ASE and SPIL in the IC backend sector, the merger between the two should not have an adverse impact on competition in the market, the FTC said.

The FTC also believes that the ASE-SPIL merger will enhance further the competitiveness of Taiwan's IC backend sector in the global marketspace.

According to the proposed merger deal, ASE will obtain more than one-third of SPIL, and the two companies will form an entity which will own both ASE and SPIL. ASE and SPIL will become parallel sibling companies under the parent entity, and will still be able to maintain their separate legal entity status and run operations independently.

The merger is expected to complete by the fourth quarter of 2017, the companies have said. Once completed, shares of ASE and SPIL will be delisted while the parent entity will trade its shares on the Taiwan Stock Exchange and the New York Stock Exchange.