United Evening News Co., Ltd. and China Times Evening News Co., Ltd. violated the Fair Trade Law for boycotting a newspaper distributor for its concurrently delivering the Power News

Chinese Taipei


Case:

United Evening News Co., Ltd. and China Times Evening News Co., Ltd. violated the Fair Trade Law for boycotting a newspaper distributor for its concurrently delivering the Power News

Key Words:

newspaper industry, boycott, deceptive acts capable of affecting trading order

Reference:

Fair Trade Commission Decision of December 15, 1999 (the 423rd Commissioners' Meeting)

Industry:

News Publishing Industry (8310)

Relevant Laws:

Articles 19 (i) and 19(vi) of the Fair Trade Law

Summary:

  1. This case came to the attention of the Fair Trade Commission, (the "Commission"), on August 9, 1999, by way of a headline report in the Power News (the "PN"). The report alleged newspaper publishers boycotted Power News Multimedia Co., Ltd.'s ("PNMC") newspaper delivery channels after PNMC was founded. The Commission quickly contacted PNMC for background information and details of the allegations.
    On August 10, 1999, the Commission received a complaint from Weng Ts'ai-wen, the responsible person for Ts'ai Wen Newspaper Delivery ("TWND"). The complaint is summarized as follows:
    Weng Hsin-an, Weng Ts'ai-wen's son, was obstructed and harassed by the United Evening News Co., Ltd. ("UENC") and China Times Evening News Co., Ltd., ("CTENC") after he began delivering the PN. Weng Hsin-an's distribution rights for both publishers were subsequently terminated on August 1, 1999. Weng Ts'ai-wen accused UENC and CTENC of improperly requiring newspaper delivery companies to refrain from delivering the PN as a condition for acquiring the distribution rights for the United Evening News (the "UEN") and the China Times Evening News (the "CTEN"). These acts had weakened the function of competitive market mechanisms in violation of Article 19(vi) of the Fair Trade Law (the Law).
    The Commission also received a complaint from PNMC alleging that UENC and CTENC had by improper means boycotted its newspaper distribution business in violation of FTL Article 19(i). The complaint requested that the Commission investigate and dispose the case.

  2. (1) As the disputed matters of the two alleged violations are identical, the Commission reviewed both cases together pursuant to its rules governing case review. The complainant submitted supplementary information and provided a statement before the Commission, the respondents submitted their arguments; and the interested party, Hui An Newspaper Delivery ("HAND"), also provided its testimony to aid the Commission during investigation. The information obtained is summarized as follows:
    The PN is published by PNMC, founded on July 26, 1999. Its weekday edition, published Monday through Friday, consists of ten large full color sections selling for NT$15 per issue. Its weekend edition, published Saturday, but not Sunday, consists of five large sections and a repackaged magazine titled the Weekend Power News.
    The complainant's relevant business operations and the assertions in the complaint are summarized as follows:
    TWND (i.e., Weng Ts'ai-wen) has been in the daily and evening newspaper business for 18 years. The company hires approximately four to six newspaper delivery boys and is one of the main companies in this industry in Taipei's Ta-an District.
    The main arguments made in his complaint are :
    "Weng Hsin-an, Weng Ts'ai-wen's son, started his own business right after being discharged from military service. Taking into consideration of the facts that his son had just been discharged from military service and had no work or real life experience, NMC agreed to let his son deliver a large circulation of newspapers (and to be the PN's main distributor in Taipei's Ta-an District) during the initial period when PN was just published. Although he and his son worked separately and did not interfere with each other's newspaper delivery business, he learned indirectly that the two publishers intended to switch his customers to other newspaper delivery companies beginning August 1, 1999 (The publishers were unable to provide specific factual evidence or information that could facilitate the Commission's determination in this case.) He ran a preemptory notice in the PN on July 31, 1999, stating that: "Is it a crime for a young person to go into business for himself? As of today, I will be delivering the PN instead of the UEN and CTEN. The price will be NT$10 per issue." The PN helped contact the media and draft the complaint to the Commission alleging the respondents violated Article 19(vi) of the Law.

    (2)According to PNMC, the price for monthly subscription to the PN is NT$390, while the retail price is NT$15 per issue. For retail sales, it hires its own people to deliver newspapers to sales outlets (e.g., convenience stores) in the greater Taipei area. (No boycott had been alleged with respect to this distribution method.) For subscription sales, PNMC hires delivery or retail companies to deliver the newspapers after paying them delivery fee. This is a commonly adopted practice by the major newspaper publishers. PNMC also ran large "News Reports" in the PN on August 9~11, 1999 asserting that the complainant had been "stalked by unknown persons" and that the PN had been "forced out by companies in the same industry." They also held that UEN and CTEN "sleazy" and called their boycotting "malevolent and shameless." However, although PNMC had been urged by the Commission on many occasions to provide evidence regarding "the occurrence of other delivery companies' delivery rights being also terminated by UEN and CTEN for their delivery of PN," PNMC said it had no other concrete evidence apart from Weng Ts'ai-wen himself.

    (3) The description of the respondents' businesses and their response with respect to the allegations made in the complaint:
    (i) Responses from the UENC
    As to the PN allegation that the UEN had harassed the delivery company for concurrently delivering the PN by threatening to terminate its newspaper delivery rights, and as to the matter of the UEN's alleged threat to terminate TWND's newspaper delivery rights, the UENC's responses are summarized as follows:
    "The distributors (i.e., delivery companies) for each newspaper are becoming more and more concentrated and overlapped." "Publishers has been competing for subscriptions from the readers mainly by their contents and quality. There is no way we could require distributors to refrain from delivering other newspapers by boycotting them. The PN allegation that our company had obstructed and harassed delivery companies that concurrently delivered both the PN and our newspapers, and that we threatened to terminate their newspaper delivery rights is wholly nonexistent and imaginary." "The termination of TWND's delivery right was a result of the received complaints from our subscribers concerning missing issues or late delivery, and after several requests to TWND for service improvements were vainly made. We terminated our newspaper delivery relationship with TWND for quality-control reasons." "As to PN's allegation that TWND's newspaper delivery rights were terminated because it delivered PN newspaper in addition to ours, the fact is that other delivery companies have also delivered PN newspaper in addition to ours, but we never terminated their newspaper delivery rights. This fact serves as counterevidence to PN's allegations."
    (ii) Responses from CTEN
    CTEN stated that:
    "Although competition between our newspaper and others exists, particularly that with the UEN, we have never obstructed or harassed delivery companies that concurrently delivered other newspapers. The statement made in the PN is clearly arbitrary and irrelevant." "Mr. Weng Ts'ai-wen, TWND's responsible person, was formerly a distributor for the China Times (the "CT") and the CTEN. On June 16, 1999, Mr. Weng reported that there could be a problem in writing off the newspaper (evening newspaper) expenses, and subsequently reported that insufficient subscriptions from the readers have made continuing operations unprofitable. He verbally called for the termination of the newspaper delivery relationship between TWND and us. After much thought being given to this request, an agreement was reached to partially terminate the relationship (with respect to the evening newspaper, not the daily newspaper). The disputes between Mr. Weng and CTEN are purely contractual in nature and have absolutely nothing to do with the delivery of PN by Mr. Weng." "All of our distributors (i.e., delivery companies) are currently delivering PN in addition to our own newspaper and several of them are also delivering UEN; yet, none of the distributors' delivery rights has therefore been terminated."
    CTEN supplementary explanations and opinions,
    "Although Mr. Weng Ts'ai-wen had been one of our delivery units, the PN and Mr. Weng's statements indicated that his son was in charge of the business of delivering PN. The newspaper delivery agreement with Mr. Weng was terminated not because of whether he delivered the PN but because he was unwilling to deliver our newspaper. This is substantiated by a complaint made to the Commission by Mr. Weng at a press conference on August 10, 1999, in which he indicated that: " He and his son worked independently and did not involve in each other's business." This further proved that Mr. Weng did not involve in the operation of PN. There is no reason for CTEN to terminate Mr. Weng's delivery right for his concurrently delivering PN. Such a decision was made solely on the consideration of Mr. Weng's lack of interest in delivering our newspaper, and the protection of subscribers' interest. Under no circumstances had we imposed customers restriction on our distributors, nor had we obstructed other enterprises from entering the market. Therefore, we did not violate the provisions in the Law governing the acts of improper restrictions having the effect of impeding fair competition."
    Mr. Weng was the only delivery unit whose delivery right was terminated by CTEN, and for his own personal reason. Abide by the spirit of fair competition, we have never considered terminating our agreement with a delivery company for his concurrently delivering the UEN or PN. PN's statements are completely unsubstantiated. What is more, since this matter involves a personal agreement, it has nothing to do with the legislative purpose of the Law.
    The newspaper business is an extremely competitive one with each player fighting tooth and nail. Our aim in it has always been to provide quality news and services. PNMC and our delivery company's efforts to maliciously vilify us for no reason is a complete surprise to us and have severely damaged our longstanding reputation. We reserve the right to take legal actions for remedy, and provide the above responses to PN's allegation.

    (4) With respect to the PN's report on August 11, 1999 stating that: "the delivery company had been repeatedly threatened and UENC had been caught red-handed trying to order HAND to produce the list of delivery boys for the PN," Kuo Shih-an, the responsible person of HAND, an interested party, appeared before the Commission to testify. He stated that: "The aforesaid report is entirely untrue. What actually happened is that while UENC supervisor Chang Chih-sheng and I were discussing newspaper delivery and customer service, a PNMC reporter on his own initiative took a photograph of Chang Chih-sheng, which precipitated an argument between them. The UENC did not "order the delivery company to produce the list of delivery boys for the PN" as stated in the PN report. The reporter did not check the facts with the delivery boys under my charge or with me. It was a one-sided report." "I have been delivering the PN since that newspaper was first published and yet neither UENC nor CTENC people have threatened me or terminated my delivery rights." "Apart from Mr. Weng Ts'ai-wen, whose allegation that his newspaper delivery rights were terminated by UENC or CTENC was perhaps prompted by service or accounting issues, I have heard of no other delivery company that has been intimidated.

  3. After reviewing the facts of the case, the Commission made the following the determination:

    (1) Issue relating to Mr. Weng Ts'ai-wen's allegation that UENC and CTENC terminated TWND's newspaper delivery rights on August 1, 1999:
    (i) The Commission found that the termination of the newspaper delivery agreement between the complainant and the respondent were based entirely on the consideration of the complainant's unwillingness to deliver the newspapers, the service quality, and the newspaper's demands. Whether or not the complainant delivered the PN was irrelevant to the decision. After considering the responses given by the respondents, the Commission found that Mr. Weng did not deliver the PN (it was his son who delivered the PN after going into business for himself and registering to deliver for PNMC). The respondents asserted that they clearly did not terminate his newspaper delivery rights for such a reason. On July 31, 1999, before the delivery agreement between Mr. Weng and the respondents was terminated, the following report was run in the PN: "Is it a crime for a young person to go into business for himself? As of today, I will be delivering the PN instead of the UEN and CTEN. The price will be NT$10 per copy." This unilateral preemptive move in which the subscribers of the UEN and CTEN had been informed that PN rather than UEN and CTEN would be delivered also substantiates that the complainant had planned to terminate the evening newspaper delivery agreement with the respondents. The complainant did not lose its primary source of revenue derived from delivering the respondents' daytime newspapers as the result of the termination of its delivery of the respondents' evening newspapers. Those are undisputed facts.
    (ii)The complainant also submitted evidence and gave explanations with respect to its allegation that the respondents had threatened to terminate the newspaper delivery rights of, HAND, an interested party in this case, if HAND did not cease delivering the PN. However, after reviewing the respondents' testimony, the Commission found that HAND has been delivering the PN without interruption since the newspaper was first published. During this time, the respondents have never terminated the delivery rights for its evening newspaper. HAND also said that the PN's report on August 11, 1999 report was inconsistent with the facts. It stated also that it had never before heard of any cases where delivery companies had been subject to intimidation. The respondents also submitted detailed evidence that quite a few delivery companies concurrently deliver the PN, and yet none of them have had their newspaper delivery rights terminated by the respondents, which serves as counterevidence to the statements of the complainant. Therefore, there still is no concrete evidence sufficient for the Commission to make a determination that the respondents violated Article 19(vi) of the Law.

    (2) PNMC's allegation that UENC and CTENC boycotted its newspaper delivery channel (to its subscribers):
    (i) The Commission pressed PNMC on several occasions to provide evidence of "other delivery companies whose delivery rights had also been terminated for delivering the PN." However, PNMC's merely responded that: "We have no other concrete evidence apart from Weng Ts'ai-wen." In line with this, the termination of the evening newspaper delivery agreement between Mr. Weng and the respondents is a personal dispute and hence the legislative intent of the FTL is not relevant in this case. There is no concrete evidence to prove whether the aforesaid circumstances are relevant to Mr. Weng's taking up the delivery of the PN. HAND also said that it knew of no other delivery company that had been intimidated.
    (ii) According to the statement given by the interested party, HAND, the reporter did not check the contents of the PN report on August 11, 1999" with HAND's responsible person or his delivery boys. HAND said that the report was inconsistent with the facts. It found that HAND has been delivering the PN without interruption since the newspaper was first published. During this time, the respondents had never terminated the delivery rights for its evening newspaper. The explanations given by the respondents also revealed that quite a few delivery companies now deliver the PN, and yet none of them have had their newspaper delivery rights terminated by the respondents.
    In sum, the information filed by the complainant still lacks evidence sufficient enough for the Commission to rule thereupon that the respondents violated Article 19(i) of the Law. After the investigation aided by the relevant parties in this case, the Commission is still unable to find that there were specific facts and evidence indicating that the respondents were involved and that such acts were culpable under the Fair Trade Law.


Summarized by Cheng Chia-ling
Supervised by Lin Tso-ch'ing

Appendix:
The China Times Express' Uniform Invoice Number: 03798509
The United Evening News' Uniform Invoice Number: 22817338
The Power News' Uniform Invoice Number: 16830381


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