Excessively high pricing of bottled gas in the Shetzu District of Taipei

Chinese Taipei


Case:

Excessively high pricing of bottled gas in the Shetzu District of Taipei

Key Words:

distribution center, bottled gas, joint management of entrusted business operations, concerted action, supervision and correction in a case with broader implications

Reference:

Fair Trade Commission Decision of August 16, 1999 (the 404th Commissioners' Meeting); Letter Kung Er Tzu No. 8701406-024

Industry:

Gas Fuel Supply (4200)

Relevant Laws:

Articles 14 of the Fair Trade Law

Summary:

1. Mr. Wang, a resident of Taipei's Shetzu area, filed a complaint to the effect that bottled gas retailers in the Shetzu area had linked their businesses and increased prices. A 20-kilogram bottle of gas was selling for NT$40-70 more than in other areas.

2. The Fair Trade Commission investigated and found that Shih Lin Li Hsing Gas Shop ("Shih Lin Gas Shop") , Kuang Jung Gas Shop ("Kuang Jung"), Ju Shan Gas Ltd. ("Ju Shan"), and Ju Shan Gas Ltd ("Chin Hu Lu"), 4 of the 14 bottled gas retailers in the Shetzu area, had combined their equipment, employees, and customers at the Shih Lin Gas Shop's assembly and distribution center where they were filling and distributing household bottled gas jointly. This distribution center accounted for more than 50% of bottled gas sales volume in the Shetzu area. These four shops not only were setting prices together, but also had agreed not to engage in the gas business in the Shetzu area (they could, however, operate gas shops in other areas, counties, or cities). The four shops also agreed that delivery personnel would charge an extra service fee to customers on high floors without elevators. These acts affected price competition mechanisms in the Shetzu area retail bottled gas market.

3. Before the Law took effect, the Liquefied Petroleum Gas Supply Office of the Vocational Assistance Committee for Retired Servicemen, Executive Yuan encouraged bottled gas retailers, beginning in 1982, to form joint service and distribution centers pursuant to considerations relating to Article 19 of the "Procedures for Dangerous Materials and Safe Management of High Pressure Gas," which provided that gas retailers [may] store 128 kilograms of liquefied petroleum gas. Other considerations included the difficulties bottled gas retailers had in hiring laborers and contraction of the market for bottled gas as more natural gas was installed. With the encouragement of the Vocational Assistance Committee, bottled gas distribution centers became common throughout Chinese Taipei.

4. In view of the fact that the activities of the gas shops involve multiple issues and that the matter has broader significance, the Commission decided to place the gas shops under supervision. If, after a period of supervision, the shops do not reform their business practices, the Commission will investigate and dispose of each case. To improve its supervision, the Commission has begun to conduct a joint research project entitled "Bottle Gas Service and Distribution Centers and the Fair Trade Law." This research project will delve deeply into the issues of how to preserve competition in the bottled gas market, whether to continue to permit distribution centers or not, whether retailers should merge, and public safety. Through this research project, the Commission expects not only to maintain trading order in the bottled gas market, but also to protect consumer rights.

Summarized by Hsieh Hsiu-ling
Supervised by Tso T'ien-liang

Appendix:
Shih Lin Li Hsing Gas Shop's Uniform Invoice Number: 29515105
Kuang Jung Gas Shop's Uniform Invoice Number: 29560023
Ju Shan Gas Ltd.'s Uniform Invoice Number: 29584658
Chin Hu Lu Gas Ltd.'s Uniform invoice number: 29576545


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