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) 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