Taipei High Administrative Court Judgment on the administrative litigation
case brought by Chia Min Insurance Brokers Company against the Executive Yuan’s
decision number Yuan-Tai-Su-Tzu-0920083719 (on the plaintiff’s petition regarding
the complaint against other companies for their violation of the Fair Trade
Law)
Chinese Taipei
Case:
Taipei High Administrative Court Judgment on the administrative litigation
case brought by Chia Min Insurance Brokers Company against the Executive Yuan’s
decision number Yuan-Tai-Su-Tzu-0920083719 (on the plaintiff’s petition regarding
the complaint against other companies for their violation of the Fair Trade
Law)
Key Words:
concerted price-setting, joint operation
Reference:
Taipei High Administrative Court Judgment (92) Su Tzu No. 1213
Industry:
Property and Liability Insurance (6420)
Relevant Laws:
Article14 of the Fair Trade Law
Summary:
- On November 25, 1999, the plaintiff, Chia Min Insurance Brokers Company,
filed a complaint against twenty eight domestic non-life insurance companies,
alleging that they had jointly set the price of compulsory automobile liability
insurance through premium rate regulations, co-insurance and joint operation,
and had also jointly agreed on the products’ minimum premium. Such actions
led to the uniformity of insurance products, and the prices tend to be higher
and identical. The scale of the accused concerted action exceeds NT$ 50 billion
every year and causes consumers to incur losses. The aforementioned companies
were alleged to be involved in a concerted action as defined in Article 7
of the Fair Trade Law and violate Article 14 of the same Law that prohibits
enterprises from conducting concerted actions. The complaint was filed with
the Fair Trade Commission to investigate and ban the aforementioned concerted
action. On November 10, 2000, the Fair Trade Commission replied to the complaint
with a letter number (89) Kung-Yi-Tzu-88151261008, concluding that: the supposition
of violating the Fair Trade Law is not found after the case was investigated.
The plaintiff did not accept the investigation result and thus raised an appeal
to the Executive Yuan, which appeal was rejected. Thereafter, the plaintiff
filed an administrative litigation with Taipei High Administrative Court.
The Court repealed the original appeal decision in its judgment number (90)
Su-Tzu-4990, remanding the case to the Executive Yuan for a new and lawful
disposition. However, the Executive Yuan ruled against the plaintiff’s appeal.
Dissatisfied with the ruling, the plaintiff filed this administrative litigation.
- According to the stipulation of Article 46 of the Fair Trade Law, “where
there is any other law governing the conducts of enterprises in respect of
competition, such other law shall govern; provided that it does not conflict
with the legislative purposes of this Law.” Also for conducts as stipulated
in the anterior paragraph of Article 12, the anterior paragraph of Article
144, Article 175 of the Insurance Law and the anterior paragraph of Article
25 of Regulations Governing the Administration of Insurance Enterprises, “The
term [competent authority] as used in this Law means the Ministry of Finance”;
“The competent authority shall prescribe formula used to calculate premium
collected by insurance enterprises;….”, “The approval of the Ministry of Finance
must be obtained prior to the implementation of various insurance premiums,
insurance policy’s items, insurance application and the relevant information
designated by the Ministry of Finance; the same procedure shall be applied
in any alteration and amendment thereof”; “the enforcement rules of this Law
and the Regulations Governing the Administration of Insurance Enterprises
shall be drafted by the Ministry of Finance and submitted to the Executive
Yuan for approval and promulgation.” Thus, the Ministry of Finance, in accordance
with the aforementioned Insurance Law and Regulations Governing the Administration
of Insurance Enterprises, shall aggressively and strictly ratify, supervise
and manage different policy’s items and calculation of insurance premiums
rates. Hence, to the extent of not conflicting with the legislative purposes
of maintaining trade order and protecting consumers’ interests as prescribed
in the Fair Trade Law, the aforementioned Laws shall prevail over the Fair
Trade Law.
- The establishment of premium rate regulations and system can be traced
back many years ago, the policy background being the lack of relevant experiences
and heavy regulation of the insurance industry. Considering the facts that
the consumers of fire insurance and automobile insurance were less knowledgeable
and informed than those of engineering, nuclear or other kinds of insurances,
the Ministry of Finance established controls on major trading terms of basic
premium, adjustment factors, preferences or premium reductions in automobile
insurance, fire insurance and compulsory automobile liability insurance in
order to ensure the consumers’ rights and interests. And, in accordance with
the anterior paragraph of Article 144 of the aforementioned Insurance Law,
the Ministry of Finance wrote to Insurance Association asking for the collection
of payout data and statistical information. With these data, the conditions
of risks and probabilities were also taken into consideration for drafting
premium rate, based on actuarial study. The rates were submitted to the Ministry
of Finance for auditing and became rates regulations abided by the whole industry
after audited and ratified by the Ministry of Finance. The procedure is for
the purpose of attaining fair and reasonable premium rates. The Ministry of
Finance’s February 11, 2000 letter number Tai-Tsai-Pao-0890002451 and the
Non-Life Insurance Association of the Republic of China’s April 27, 2000 enclosure
for the original decision’s letter number (89)-Chan-Chi-Tzu-067 are provided
as references. It is evident that the Non-Life Insurance Association was merely
following the directions of the Ministry of Finance to study and draft the
rates regulations. Therefore, the rate regulations for various types of non-life
insurances are ratified and controlled by the Ministry of Finance in accordance
with the regulations of the Insurance Law. In fact, the Non-Life Insurance
Association has not directly determined the kinds and prices of products for
insurance enterprises and thus was not involved in the concerted action for
price-setting. Accordingly, the requirements of concerted action, as stipulated
in the aforementioned Article 7 of the Fair Trade Law, are not met. The plaintiff
persists in this argument that the Non-Life Insurance Association has drafted
the aforementioned premium rate regulation and violated the prohibition against
concerted action; such argument is not acceptable. In conclusion, the defendant’s
decision on the appeal affirming the Fair Trade Commission’s non-disposition
was consistent with the law, the reason being the lack of evidence to find
prohibited concerted actions relating to the aforementioned premium rate regulation,
co-insurance and joint operation, compulsory automobile liability insurance
premium and agreement of the minimum premium for insurance products. Therefore,
the plaintiff’s action to revoke the original disposition and petition resolution
and to punish the aforementioned non-life insurance enterprises for concerted
actions is groundless and is hereby dismissed.
Summarized by: Lai, Chia-Ching
Supervised by: Wang, Rong-Ging
Appendix:
None
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