Taiwan Cement Corporation

Case:

Key Words:

ready-mixed concrete, synchronous price increase, consistency

Reference:

Taipei Supreme Administrative Court Decision (99)Pan Tzu No.503

Industry:

Ready-mixed Concrete Manufacturers (2332)

Relevant Laws:

Article 14 of the Fair Trade Law

Summary:

1. The appellee, the Fair Trade Commission (FTC), conducted investigation on complaints from the public and discovered that the conduct of the appellants, Taiwan Cement Corporation and 10 other ready-mixed concrete manufacturers, to consult with one another and jointly increase the prices of ready-mixed concrete in the Chiayi area was a concerted action having the capacity to affect the supply and demand in the ready-mixed concrete market of the said area and therefore violated Paragraph 1 of Article 14 of the Fair Trade Law. The said offenders were subsequently sanctioned in accordance with the regulation of the first section of Article 41 of the same law. After the appeal of the offenders overruled, and the offenders filed the administrative litigation.
2. The term "concerted action" does not refer only to price increase of the same amount or at the same margin. When competing enterprises reach an agreement that leads to unusual price invariability or increase and hence has an impact on the supply-demand function of the very market, it is a concerted action. During the period between October 2004 and January 2005, there was apparently no price increase in cement, gravel, and transportation that are the three major variable costs in concrete production. However, the appellant and the other offenders increased their prices by large margins at the same time. The conduct was obviously unjustifiable. The average price per 3,000 pounds of ready-mixed concrete from the aforesaid 11 manufacturers had been rising steadily since the beginning of 2004. Then, between October 2004 and January 2005, when there was no significant cost increase, the price of ready-mixed concrete per cubic meter went up between 150 and 200 NT dollars, and the price increases of the said manufacturers appeared consistent. Moreover, according to certain downstream businesses of the appellant and the other offenders, when they made price inquiries to the appellant and the other offenders between the second half of 2004 and June 2005, the quotations they received were all the same. This indicates that there had to be consensus between the appellant and the other offenders to raise the prices of ready-mixed concrete jointly.
3. Under normal circumstances, as the said manufacturers make similar products, competition on the ready-mixed concrete market should be harsh. The salespeople of each company ought to make active contact with customers, finding out their needs and providing price quotations without being asked in order to get business and makes sales. Nevertheless, during the aforementioned period in which the illegal conduct took place, the appellant and the other offenders stopped providing price quotations and sometimes even refused to quote any prices when receiving inquiries. The fact that the appellant and the other offenders withheld from competing was evidently contradictory to normal behaviors. Undeniably, refraining from actively providing price quotations would be in conflict with the interests of the appellant and the other offenders under normal circumstances. Therefore, this conduct could only be reasonably interpreted as the appellant and the other offenders had established consensus to jointly increase the prices of ready-mixed concrete in the Chiayi area. The conduct was a concerted action with the capacity to affect the supply and demand in the ready-mixed concrete market around Chiayi and was evidently in violation of the first section of Paragraph 1 of Article 14 of the Fair Trade Law. There was neither inappropriate application or interpretation of any regulations nor contradiction in the reasons of decision in the original sanctions. The laws and regulations applied were the ones currently applicable to the case. The original sanctions were not inconsistent with any laws or regulations. The argument of the appellant that the original sanctions were inappropriate should therefore have to be regarded unjustifiable and overruled.

Summarized by: Lai,Chia-Ching; Supervised by: Lee, Wen-Show

Taiwan Cement Corporation's Uniform Invoice Number: 11913502