This article purports to examine the enforcement of punishment of vertical restraints, in hopes that through the comparison of the competition laws of certain other countries, the legislative principles and the position of the government of the Republic of China in the enforcement of its Fair Trade Law ("FTL") can be examined.

Considering that resale price maintenance is by itself an act that highly obstructs fair competition, the legal systems of most of other countries have invariably followed the doctrine that resale price maintenance is "per se illegal" Under the legal system of most of other countries, whether imposing vertical non-price restraints constitutes a violation of law is determined on the "rule of reason", in the consideration that it has its advantages and disadvantages for market competition purposes.

Article 18 of the Republic of China FTL provides that resale price maintenance is prohibited in principle, though no prohibitive "inaction obligation" is imposed. Moreover, the proviso of the first paragraph of the same article, which as an exception permits daily necessities dealers to resale price maintenance , appears to be going against the legislative trend of strictly prohibiting the practice. Meanwhile, concerning the vertical non-price restraints, Article 19 (6) of the FTL is based on such vague legal concepts as "likely to constitute an obstruction of fair competition" and "improper practice." Although those concepts appear to smack of making judgment based on the "rule of reason", the FTL seems to be not exact enough as it, unlike its counterpart of other countries, fails to set forth the exact "quantitative" judgment criteria, in particular when it is a matter involving the "market position" of the parties.

To be in line with the current legislative trend, it is imperative that Article 18 of the ROC FTL be revised to strictly prohibit business operators from resale price maintenance . As to the vertical non-price restraints , the market position of the parties concerned should be taken into account and the so-called "quantitative" judgment criteria established. For further preciseness of the regulation, it would be advisable if the conditions under which distributorship agreements are governed by the FTL can be prescribed. Furthermore, since imposing vertical restraints is a kind of unfair competition practice that should be cracked down, it is proposed that both Articles 18 and 19 of the existing FTL be revised to be incorporated in Chapter II, with the title thereof changed into "Competition Restrictions."

In terms of the effect of law enforcement and weighing the significance of said effect for criminal policy purposes, the FTL is proposed to include a new provision to hold those guilty of resale price maintenance criminally liable at law. Moreover, it appears necessary that before administrative action is taken to punish those guilty of imposing vertical non-price restraints , all lines of business be urged to rectify themselves so that the normalcy and flexibility of market and marketing shall not be prejudiced. Further, imposing vertical restraints also involves price-combination, transaction denials, abuse of monopoly and other deceits sufficient to disrupt the trading order or acts that appear unfair, for which whether articles conflict, absorb or supplement one another should be considered to ensure proper law can be chosen to govern.