The Fair Trade Commission initiated an investigation on the domestic market of sandstone and pre-mixed concrete suppliers for any concerted actions or monopoly

Chinese Taipei


Case:

The Fair Trade Commission initiated an investigation on the domestic market of sandstone and pre-mixed concrete suppliers for any concerted actions or monopoly

Key Words:

monopoly, raw materials, weight control

Reference:

Fair Trade Commission Decision of February 17, 2005 (the 693rd Commissioners' Meeting); Letter Kung Erh Tzu No. 0940001264; Letter Kung Erh Tzu No. 0940001265

Industry:

Other Quarrying (0690); Concrete Mixing Manufacturing (2232)

Relevant Laws:

Article 14 of the Fair Trade Law

Summary:

  1. This case originated from the price hikes of the sandstone and pre-mixed concrete of the domestic market in the beginning of 2004. In order to ensure that the suppliers of the aforementioned raw materials will not jointly bid up prices during the course of transferring cost to their clients, this Commission initiated an investigation on the domestic sandstone and pre-mixed concrete suppliers.
  2. Upon the investigation, this Commission found that:

    (1) Sandstone at issue:
    Since October 2003, the supply/demand of domestic sandstone market is in disequilibrium and the price is skyrocketing due to the ban of sandstone extraction at domestic rivers. Furthermore, since the beginning of 2004, the construction market had been in recovery and major projects had been speeding up for completions that consequently led to a serious shortage of sandstone before the 2004 Chinese New Year. However, the government had implemented measures of open up rivers' gravel sand extraction. Moreover, since March 2004, there had been a price support for the sandstone import. The aforementioned measure and policy assisted sandstone market to attain the equilibrium of supply and demand. As for the prices of Northern region sandstone at issue from mid 2003 to February 2004, the prices of imported Mainland China's sandstone were raised to be in the range of NT$ 39 – NT$ 58 per cubic meter; the prices of Hualien and Taitung's sandstone were raised to NT$ 48 – NT$ 112; the prices of Central region grading were raised around NT$ 90 – NT$ 140 per cubic meter, the prices of gravel sand were raised around NT$ 50 – NT$ 100 per cubic meter, the prices of gravel were raised around NT$ 100 – NT$ 140 per cubic meter; the prices of Southern region sandstone were raised around NT$ 30 – NT$ 40 per cubic meter and the prices of gravel sand were risen around NT$ 30 – NT$ 50 per cubic meter. The prices of all domestic sandstone, regardless of northern, central or southern regions, had been increased since 2003. However, the prices of sandstone varied from region to region due to cost differences and thus the price increases were also different. The price increase of southern region sandstone was the lowest, following that of northern region and central region. The costs of raw materials for sandstone suppliers from different region were different as their sources of sandstone were different. Consequently, the sale prices of sandstone were also different. Therefore, it cannot be concluded that the sandstone suppliers were involved in a concerted action.

    (2) Pre-mixed concrete at issue:
    Beginning from June 1, 2004, the Ministry of Transportation enforced the vehicle weight control policy to stop overload. The pre-mixed concrete suppliers, among all other line of business, were affected by the increases of costs of sandstone material, cement and transportation, hence, had made a larger price increase. The major raw materials of pre-mixed concrete were sandstone and cement. From the beginning of 2003 to June 2004, the cost price of sandstone was increased NT$ 56 – NT$ 138 per cubic meter; the costs of cement, slag powder and fly ash were increased NT$ 60 – NT$ 75 per cubic meter. Moreover, after the enforcement of vehicle weight control policy by the Ministry of Transportation, the pre-mixed concrete suppliers, in addition to the reflection of costs of transportation for sandstone and cement, also had to reflect the cost of transportation for agitator vehicle and the increase of cost of management as a result of great reduction of transportation volume, the transportation charges of agitator vehicle on average were increased around NT$ 59 per cubic meter. Since the Ministry of Transportation enforced vehicle weight control policy on June 1, 2004, the pre-mixed concrete suppliers from southern region started to increase the price of pre-mixed concrete. It was evident that the enforcement of vehicle weight control policy had adverse impact on the cost of pre-mixed concrete suppliers. Additionally, the investigation found the sale price of concrete at Kaohsiung area had been increased gradually since the beginning of 2004. However, there was a variation of cost structure among the concrete suppliers. In December 2004, the sale price for 3,000-pound concrete at the aforementioned area was NT$ 1650 – NT$ 1942 per cubic meter, depending on which concrete supplier had the construction company bought concrete. Although the construction companies had heard about the suspected concerted action among the concrete suppliers, there was no concrete fact and evidence related to the aforementioned suspicion. Also, several construction companies from Kaohsiung area stated that they might select different concrete supplier according to their own requirements. On this account, it cannot be concluded that a territory is allocated for a concrete supplier for price manipulation. Therefore, it is difficult to conclude that the pre-mixed concrete suppliers at issue are involved in a concerted action.

Summarized by Wang, Hung-Chu
Supervised by Shih, Chin-Tsun

Appendix:

None


! : For information of translation, click here