Kingmate Co., Ltd. violated the Fair Trade Law for abusing its market position to improperly set its price level for small generator sets during the 921 earthquake-recovering period
Chinese Taipei
Case:
Kingmate Co., Ltd. violated the Fair Trade Law for abusing its market position to improperly set its price level for small generator sets during the 921 earthquake-recovering period
Key Words:
921 Earthquake, abuse of market position, small generator sets
Reference:
Fair Trade Commission Decision of December 8, 1999 (the 422nd Commissioners' Meeting), Disposition (88) Kung Ch'u Tzu No. 163
Industry:
Manufacturing and Maintenance of Power Generation, Transmission, and Distribution machinery (3111)
Relevant Laws:
Articles 24 of the Fair Trade Law
Summary:
Kingmate is a major importer
in the small generator set market. Power outages and power rationing in
the period following the earthquake caused demand to outstrip supply, leaving
Kingmate with a superior market position in terms of market supply. Kingmate
took advantage of the severe market imbalance to significantly raise the
sales prices of its products. Its trading counterparts, whose urgent demands
for power supply, had few choices other than to accept the prices. This
was evidenced by the facts that some of its trading counterparts initially
purchased the goods but subsequently returned them due to the excessively
high sales prices. Clearly, Kingmate's price increase had capitalized on
the emergency conditions and the serious imbalance between supply and demand.
Kingmate was thus suspected of restraining its trading counterparts' freedom
of price choice, and of disrupting stable trading order and setting off
a series of price fluctuations.
The Japanese yen appreciated by about 18% from the beginning of 1999 through
September of that year. This fell short of the 30% appreciation forecasted
by Kingmate for the period. Yet Kingmate raised the prices of its 1,000
watt and 2,500 watt household generators by more than 100%. Clearly, these
price increases could not be justified by the appreciation of the yen. The
price increase could not be explained by the fluctuations in shipping prices
either. The small generators that Kingmate sold to retailers on September
28 were originally intended to be imported by air, but eventually were shipped
by sea. Since there was no perceivable shipping fee increase, it is hard
to connect the price increase with the rise of the shipping costs.
During the earthquake-recovery period, Kingmate took advantage of the emergency conditions and abused its market position to improperly set product prices. By so doing, it seriously disrupted market stability and trading order and hindered its trading counterparts' freedom of price choice, resulting in the impairment of consumers' interest. At a time when the supply and demand of public necessities were seriously out of balance, these acts were sufficient to set off a series of price fluctuations and spur general price increases as well. The stability of life for the public had thereby been affected and the economic development of society as a whole impeded. They were obviously unfair acts sufficient to affect trading order. Accordingly, Kingmate had violated Article 24 of the Fair Trade Law and was disposed a fine of NT$800,000 pursuant to the fore part of Article 41 after considering factors such as its market impact and the respondent's willingness to cooperate during the investigation.
Summarized by Ch'en Ying-ju
Supervised by Ma T'ai-ch'eng
Appendix:
Kingmate Co., Ltd.'s Uniform Invoice Number: 20784114