Fair Trade Commission Disposal Directions (Policy Statements) on the Sales of Elementary and Junior High School Textbooks

Passed by the 450th Commissioners' Meeting on June 22, 2000
Amended by the 571st Commissioners' Meeting on October 17, 2002
Promulgated by Order (91) Kung Er Tzu No.0910010993 on November 11, 2002
Amended by the 684th Commissioners' Meeting on December 16, 2004
Promulgated by Order (93) Kung Er Tzu No.0930009785 on December 27, 2004
Titled Amended by the 688th Commissioners' Meeting on January 13, 2005
Promulgated by Order (94) Kung Fa Tzu No. 0940001278 on February 24, 2005
Article 3 Amended by Order (94) Kung Fa Tzu No.0940006493 on August 26, 2005
Amended by the 919th Commissioners' Meeting on June 17, 2009
Promulgated by Order (98) Kung Fa Tzu No. 0980006170 on June 29, 2009

  1. Background
    Elementary and junior high school textbooks were exclusively issued by the National Institute for Compilation and Translation of the Ministry of Education in the early days, and these textbooks were accordingly known as "Ministry Textbooks." Private publishers have been allowed to edit and print such textbooks since 1996; however, such textbooks are termed "Approved Textbooks" in reflection of the fact that they must be examined and approved by the Ministry of Education. Currently, elementary and junior high schools' administrative conferences handle the procurement of textbooks in accordance with Article 8-2 of the National Education Act. After the textbook publication market was opened, some publishers of "Approved Textbooks" have used marketing methods such as the donation of free teaching aids or gifts to boost their first sales or retain market shares. Some publishers attempt to restrain the business activities of their trading counterparts by selling packages of books or restrict distributor’s resale prices. Above all, actions such as giving commissions to teachers or other disguised benefit-seeking behavior are actually tantamount to corruption and in violation of the Teachers Act, and have a negative influence on national compulsory education.
    The aforementioned improper marketing actions have obviously impacted on the selection of national elementary and junior high school textbooks. These actions constitute unfair competition for those other competitors in the same business which has not employed the same marketing actions. In order to maintain trading order and ensure fair competition, the Fair Trade Commission has gathered and analyzed the various types of action by relevant companies that may violate the Fair Trade Act to compile this Policy Statements, with which relevant businesses must comply; the Commission shall apply the Policy Statements as a reference for relevant cases.
  2. Definition
    The "sales enterprises" in the Policy Statements shall refer to publishers, distributors, bookstores, and other sales enterprises involved with elementary and junior high school textbooks.
  3. Abuse of Monopolistic Status
    If a sales enterprise, whose market status conforms to that of a monopolistic enterprise as prescribed by the Fair Trade Act, engages in any of the following actions, it may be deemed in violation of Article 10 of the Fair Trade Act: (1) directly or indirectly preventing any other enterprises from competing by unfair means; (2) improperly setting, maintaining or changing the price for goods or the remuneration for services; (3) causing a trading counterpart to give preferential treatment without justification; or (4) otherwise abusing its market power.
  4. Concerted Action
    If a sales enterprise, by means of contract, agreement or any other form of mutual understanding, any other competing enterprise to jointly determine the price of goods or services, or to limit trading terms of quantity, technology, products, facilities, trading counterparts or trading territory with respect to such goods and services, etc., and thereby to restrict each other’s business activities, such a concerted action may be deemed in violation of Article 14 of the Fair Trade Act.
  5. Restraint of Resale Price
    Where a sales enterprise supplies goods (books) to its trading counterpart for resale to a third party or such third party makes further resale, if such a sales enterprise restrains the resale price, it may be deemed in violation of Article 18 of the Fair Trade Act.
  6. Discrimination
    Discrimination may occur when a sales enterprise sells books directly to schools through other sales enterprises prior to the end of each semester and only then, after each semester ends, supplies such books to another marketing channel provider (bookstores), causing the bookstores poor sales opportunities. Actions similar to the aforesaid example where one enterprise discriminates against another enterprise of the same competition level without justification and restrains competition or impedes fair competition may be deemed in violation of Article 19(ii) of the Fair Trade Act.
  7. Restraint of Distribution Areas
    If a sales enterprise, without justification, restrains a distributor from operating its business in multiple areas, and such an action may lessen competition or impede fair competition, the sales enterprise may be deemed in violation of Article 19 (vi) of the Fair Trade Act.
  8. Tying Products
    Where a sales enterprise requests its trading counterpart(s) to purchase tying products, and such an action may lessen the competition or impede fair competition, said sales enterprise may be deemed in violation of Article 19(vi) of the Fair Trade Act.
  9. Sale of Books in Sets
    Where a sales enterprise requests its marketing channel provider(s) to purchase books in sets, or refuses to trade otherwise; or where a sales enterprise, without requesting the marketing channel provider(s) to purchase books in sets, restrains the marketing channel provider(s) from returning the goods in single volume, directly restricting the marketing channel provider(s) to sell the books in sets to consumers, such actions may restrict trading counterparts' business activity improperly by the imposition of conditions and may be deemed in violation of Article 19 (vi) of the Fair Trade Act.
  10. Deceptive or Obviously Unfair Conducts
    If a sales enterprise improperly disseminates promotional advertisements with deceptive content sufficient to affect trading order, such a sales enterprise may be deemed in violation of Article 24 of the Fair Trade Act.
    If a sales enterprise abuses its superior market position or employs improper means to impede its trading counterpart's free will concerning entering into a transaction and transaction terms, and acts against the ethics of commercial competition, i.e. reserving a distribution agreement for its trading counterpart, or making a trading counterpart trade with itself by means of interference, importunity, or displeasure, such a sales enterprise may be deemed in violation of Article 24 of the Fair Trade Act.
    If a sales enterprise gives or foretell to give improper money, items, or other economic benefits to secure opportunities for the sale of its textbooks, such an action shall be against the ethics of commercial competition and may be deemed in violation of Article 24 of the Fair Trade Act.
    Examples of the aforementioned money, items, or other economic benefits are listed as follows:

(1) Money

  1. Money or gift certificates, etc.
  2. Money in the form of subsidizing seminars, workshops, facilities, office supplies, or in other names.
  3. Transportation fees or lodging fees for visiting the sales enterprise, etc.
  4. Travel expenses or allowances for participation in seminars, workshops, or other activities.
  5. Money in the form of textbook discounts or refund handling fees.
  6. Excessive remuneration for editing work (i.e. remuneration in the form of review fees, opinion fees, editing participation fees, information gathering fees or other editing/writing fees where the true purpose for the remuneration is to secure textbook sales opportunities.)
  7. Money to subsidize major activities of the school (i.e. games or school anniversary celebrations).
  8. Other improper payments.

(2) Items:

  1. Supplementary teaching aids that are irrelevant to the utilization of the textbooks in question, i.e. teaching aids that are not necessary to teaching
  2. Facilities, i.e. teacher’s chairs, clocks, or sports equipment.
  3. ther improper provided items, i.e. cameras, televisions, VCRs, refrigerators or clothes.

(3) Other economic benefits

  1. Invitation to parties or social events.
  2. Invitation to plays, travel or activities (such as concerts).
  3. Tour or accommodation offers.
  4. Banquets before or after a conference or seminar.
  5. Economic benefits in other improper conducts.
  1. Penalty and Legal Liability for Violations to the Fair Trade Act

The FTC, pursuant to Article 41 of the Fair Trade Act, may order any enterprise that violates the provisions of this Act to cease, rectify its conduct or take necessary corrective action within the time prescribed in the order; in addition, it may assess upon such enterprise an administrative penalty of not less than NT$ 50,000 nor more than NT$ 25 million. Shall such enterprise fails to cease, rectify the conduct or take any necessary corrective action after the lapse of the prescribed period, the FTC may continue to order such enterprise to cease, rectify the conduct or take any necessary corrective action within the time prescribed in the order, and each time may successively assess thereupon an administrative penalty of not less than NT$ 100,000 nor more than NT$ 50 million until its ceasing, rectifying its conduct or taking the necessary corrective action.
In accordance with Article 35(1) of the Fair Trade Act, if any enterprise violating the provisions of Articles 10 or 14 of the Fair Trade Act is ordered by the Commission pursuant to Article 41 to cease, rectify its conduct, or take required corrective action within a limited time period, and such an enterprise fails to cease rectify such conduct, or take any necessary corrective action, or after its ceasing, shall such an enterprise has the same or similar violation again, the actor shall be punished by imprisonment for not more than three years or detention, or a fine of not more than NT$100 million.
In accordance with Article 36 of the Fair Trade Act, if any enterprise violating the provisions of Article 19 is ordered by the Commission pursuant to Article 41 to cease, rectify its conduct, or take necessary corrective action within the time prescribed in the order, and after the lapse of such period, such an enterprise fails to cease, rectify such conduct, or take any necessary corrective action after its ceasing, shall such an enterprise has the same or similar violation again, the actor shall be punished by imprisonment for not more than two years or detention, or a fine of not more than NT$50 million.
If any enterprise violates the provisions of the Fair Trade Act, in addition to criminal or administrative liabilities, such an enterprise shall also bear civil liabilities for damage compensation in accordance with Chapter 5 of the Fair Trade Act.

  1. This Policy Statements only illustrates possible violations of the Fair Trade Act by the elementary and junior high school textbook supplying industry. Where the content is incomplete, the Commission may supplement or rectify the Policy Statements at any time. Specific cases shall still be handled and judged in accordance with individual facts.