Changes in the Administrative Sanction System of the Fair Trade Law and Reform Suggestions

1. Background of Study
The regulations on competition restrictions and unfair competition are consolidated in the Fair Trade Law (hereinafter referred to as the Law). Sanctions are imposed according to Article 41 of the Law on businesses violating the regulations. In 1999, Article 41 was amended and the upper limit of administrative fines to be imposed was raised considerably. Meanwhile, with the principle of proportionality taken into account, it was also deemed necessary to establish the criteria of fine amounts. Hence, the factors to be considered were added in Article 36 of the Enforcement Rules to the Law However, as most of these factors were undefined legal concepts, the Fair Trade Commission Administrative Fine Amount Reference Table (hereinafter referred to as the Reference Table) was established to provide clear-cut standards for determination and imposition of administrative fines and it was distributed on Aug. 2, 1999 for every department to determine sanctions accordingly.
The legal attribute of the Reference Table complied with the regulation set forth in Subparagraph 2, Paragraph 2 of Article 159 of the Administrative Procedure Act. The Reference Table was a set of sanction standards to guide the staff members of the Fair Trade Commission (hereinafter referred to as the FTC) in evaluating facts and exercising the right to sanction within the range of authority conferred on the FTC by law. Meanwhile, it was confirmed that the factors listed in Article 36 of the Enforcement Rules to the Law as to be considered when determining sanctions complied with Article 18 of the Administrative Penalty Act that took effect on Feb. 5, 2006, “In the case of imposition of a fine, consideration shall be given to such factors as the culpability of the Law in breach of duty under administrative law, the impact resulted therefrom and the benefits gained from such an act. Additionally, the financial ability of the person penalized may also be taken into account.” There was neither contradiction nor uncertainty in application. However, after the aforesaid Reference Table went into effect on Aug. 2, 1999, the Cabinet and administrative courts became increasingly strict when reviewing the Reference Table and this increased the difficulty for the FTC when presenting the defense in administrative litigations and also the likelihood of revocation of original sanctions. As a consequence, the FTC decided at the 786th Commissioners’ Meeting to abolish the Reference Table. After the abolishment of the Reference Table on Dec. 15, 2006, the number of the FTC’s original sanctions getting revoked did decrease, but the Cabinet, besides dissimilar findings of fact, continued to question the legal basis of the FTC’s imposition of large fines in certain cases as it considered the explanations provided were inadequate.
In 2011, Article 41 of the Fair Trade Law was amended and Paragraph 2, “The Central Competent Authority may impose an administrative fine up to 10% of the total sales income of an enterprise in the previous fiscal year without being subject to the limit of administrative fine set forth in the preceding paragraph if the enterprise is deemed by the Central Competent Authority as in serious violation of Articles 10 and 14,” and Paragraph 3, “The Central Competent Authority shall enact the regulations with regard to the calculation of the total sales income of the previous fiscal year, definition of serious violations, and calculation of administrative fines,” were added as a result of the proposal from Legislator Ting Shouchung and 29 other members of the Legislative Yuan. Although the said provisions were formulated after reference was made to EU regulations, they were different from domestic stipulations. Moreover, controversies over the fine amount criteria adopted at the time never stopped. With the new sanction regulations added, it was obviously necessary to conduct in-depth studies to establish a set of concrete standards to ensure that the administrative sanction system of the Law could stay in line with the domestic circumstances.
This study is intended to examine the application of Article 41 after the amendment by comparing the legislative precedents in different nations, reviewing the legislative history and objectives in Chinese Taipei, and analyzing the factors involved in application to ascertain the relations between the said article and other laws when applied. In the end, more representative cases that have taken place in recent years are scrutinized to find out how the article can be applied appropriately and the conclusions and suggestions are established.

2. Methods and Process of Study
The three following approaches are adopted to ensure that this paper is a complete discourse:
(1) Historical analysis
The sanction regulations set forth in the Administrative Penalty Act, the developments of the administrative sanction system practiced according to the Law, and the legislative history of the Reference Table are reviewed and analyzed.
(2) Comparative Analysis
The legislative precedents from different nations are studied to find feasible approaches to establish a set of concrete standards according to which the FTC can exercise its right to sanction. Since the legislative systems of different countries had been referred to when the Law was legislated, it is therefore necessary to repeat the comparisons to analyze the said article.
(3) Empirical analysis
It is not enough to review the concrete standards that the FTC abides by when exercising the right to sanction only according to theoretical reviews. The Law has been implemented for years. The right to sanction exercised by the FTC, whether in accordance with the Reference Table or Article 36 of the Enforcement Rules to the Law, has resulted in many controversies and it is necessary to describe these controversial cases.

3. Principal Suggestions
After the Reference Table was abolished, the FTC has acted mainly according to Article 36 of the Enforcement Rules to the Law and Article 18 of the Administrative Penalty Act to determine fine amounts. However, the elements to be considered as prescribed in the said articles contain many subjective factors and undefined legal concepts. There are no quantitative standards. The Law and Regulation Commission of the Cabinet and Administrative Courts have revoked the administrative fine sanctions imposed by the FTC in a number of cases on the grounds that the FTC’s decisions lacked legal explicitness.
In this study, the legislative precedents of the US, the EU, Germany, and Japan are examined to work out possible solutions to the problems. It is suggested that the factors to be considered as set forth in the Enforcement Rules to the Law be revised. The reasons for increase and reduction of sanctions have to be clearly defined by establishing a set of concrete and unequivocal standards that the FTC can apply when determining fine amounts. Meanwhile, the system for calculating “unlawful gains” must also be established so that people can be aware of the extent of penalty they may be subject to. Thus, when the FTC exercises the right to sanction, there will be more transparency.