Disposition against Ni Hui Hung KTV for inciting other KTV businesses to raise their prices

Chinese Taipei


Case:

Disposition against Ni Hui Hung KTV for inciting other KTV businesses to raise their prices

Key Words:

to raise prices; to recommend; concerted action; KTV

Reference:

Fair Trade Commission Decisions of July 14, 1999 (the 401st Commissioners' Meeting); of August 25, 1999 (the 407th Commissioners' Meeting); of September 22, 1999 (the 411th Commissioners' Meeting); Disposition (88) Kung Ch'u Tzu No. 119

Industry:

Audio-Visual and Sing-Along Centers (8703)

Relevant Laws:

Article 19 (4) of the Fair Trade Law

Summary:

1. Complaints were filed with the Fair Trade Commission (FTC) after consumers of two KTV (sing-along) establishments in Tainan City found that the prices were doubled during the Lunar New Year holidays in 1999. The complaints alleged that the KTV establishments acted in concert to raise prices. Investigation showed that during the Lunar New Year, the KTV establishments in Tainan City actually charged different rates, but that the KTV establishments did indeed have an "amity association" which notified all KTV establishments to double their rates during the Lunar New Year.

2. Further investigation by the FTC showed that KTV operators in the Tainan area had gathered for a year-end party prior to the Lunar New Year. During the gathering, some establishments recommended to the amity association that a meeting be convened to discuss to double the rates during the Lunar New Year. However the association was concerned that such an action would violate the Law and thus no resolution was reached. Before the Lunar New Year, the chairman and the executive officer of the association notified its members to double their rates when sending new year's greetings by telephone or facsimile. Since the amity association and Ni Hui Hung KTV had the same business address, and the amity association chairman was likewise the responsible person of the Ni Hui Hung KTV's business, the FTC believed that Ni Hui Hung KTV took advantage of its close relationship with the amity association and the members' trust in the association to convey, in the name of the association, recommendations or instructions to other KTV establishments to raise their rates. Since this action was tantamount to bringing about a meeting of minds among the various KTV establishments with regard to concerted action, or would produce an effect in the market equivalent to that of concerted action, and since some KTV establishments did in fact consequently double their prices during the Lunar New Year, the FTC determined that such action interfered with the setting of prices by the other businesses, and was likely to impede the mechanisms of free competition within the market. In addition, due to its close relationship with the amity association, the Ni Hui Hung KTV was aware that it was unlawful to uniformly increase prices, yet notified the other businesses to do so anyway. Thus its actions were improper and blameworthy.

3. In summary, the FTC determined that Ni Hui Hung KTV used improper means to cause other enterprises to participate in the concerted action, and its actions, moreover, were likely to restrain competition or impede fair competition, and were in violation of Article 19 (iv) of the Fair Trade Law.

Summarized by Lin Hsing-wen
Supervised by Lin You-ch'ing

Appendix:
Ni Hui Hung Cold Drinks Parlor's Uniform Invoice Number: 83957423


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