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) 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.
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