Complaint against The Great Taipei Gas
Corp. for inappropriately installing large-quantity natural gas meters
Chinese Taipei
Case:
Complaint against The Great Taipei Gas Corp. for inappropriately installing
large-quantity natural gas meters
Key Words:
monopolist, abuse of market position, gas meter
Reference:
Fair Trade Commission Decision of May 9, 2000 (the 444th Commissioners' Meeting);
Disposition (89) K'ung Tzu No. 083
Industry:
Gaseous Fuel Supply Industry (4200)
Relevant Laws:
Article 10(1)(ii)
of the Fair Trade Law
Summary:
- This case originated from a complaint filed by a citizen against The Great
Taipei Gas Corp. (Taipei Gas) for charging basic monthly fees for expired
services. During investigation, the Fair Trade Commission (the "Commission")
found that Taipei Gas had inappropriately installed a large-quantity No. 5
natural gas meters for customers. Taipei Gas, a monopolistic enterprise in
Greater Taipei, offered its customers two types of gas meters: No. 3 and No.
5 meters set with the basic monthly usage levels of 12 and 18, respectively.
However, in case that the basic monthly usage level was not reached, the customers
would still be charged the basic monthly fee. In 1983, Taipei Gas installed
No. 5 gas meters in the dormitory of which the complainant in this case is
a resident. As the former resident of that dormitory noticed that the gas
usage was below the basic level, he requested Taipei Gas to replace No. 5
with No. 3 meters. In 1991, the former resident of the dormitory cancelled
the service. When the complainant in this case applied to resume the service,
Taipei Gas reinstalled No. 5 meters despite that the size of the dormitory
and its usage levels remained the same. It was also found that Taipei Gas
installed more No. 5 meters than No. 3 meters for household customers, and
that it sold more No. 5 meters than any other suppliers in the industry.
- The Commission understood that the two-burner gas stoves and hot water
heaters sold on the market respectively had flow rates of about 1.2 and 2.28
or less cubic meters per hour, and a combined flow rate of about 3.48 or less
cubic meters per hour. Gas meters were typically designed for the combined
flow rate per hour of all gas appliances in a household when they were operating
simultaneously at 80%. No. 3 meters had a flow rate of between 3.0 and 3.5
cubic meters per hour, although they could accommodate a maximum flow rate
of 3.7 cubic meters per hour. Therefore, Taipei Gas's No. 3 meters, having
a flow rate of 3.53 cubic meters per hour, would have been adequate for the
needs of a household having one two-burner gas stove and one hot water heater.
Compared with other suppliers in the industry, the number and percentage of
No. 5 meters installed by Taipei Gas, and that of customers paying only the
basic monthly fee were excessively high. The percentage of No. 5 meters to
No. 3 meters installed by gas providers ranged from 1.77% to 13.99%; and there
were also some providers that did not install No. 5 meters. No. 5 meters installed
in households by Taipei Gas accounted for 69.49% of its total customers as
of December 1994, and 69.51% as of May 1999. The percentage of households
using No. 5 meters and being charged the basic monthly fee by other suppliers
in the industry was between 0.02% and 1.32%. Yet, the percentage of households
using No. 5 meters installed by Taipei Gas and being charged the basic monthly
fee was 8.65%, a figure eight to ten times that of other suppliers.
- The Commission conducted a survey on Taipei Gas' customers in Greater Taipei
for whom the meters were installed after February 1999. It found that Taipei
Gas installed mainly No. 5 gas meters for new users without first ascertaining
the number of appliances fueled by natural gas in their houses and without
explaining to them the differences between No. 3 and No. 5 gas meters. By
so doing, Taipei Gas had been using its market position as a monopolistic
enterprise to install the higher flow rate No. 5 meters in order to increase
the number of customers paying the higher basic monthly fee and thereby to
obtain improper gains. That practice constituted an abuse of monopolistic
position to unduly set the prices for its product. It is the decision of the
Commission that Taipei Gas had violated Article 10(1)(ii) of the Fair Trade
Law. Pursuant to the forepart of Article 41 of the same Law, accordingly,
Taipei Gas was ordered to cease such a practice and to pay a fine of NT$5
million after taking into consideration of its business scale and revenues,
and the improper gains obtained.
Appendix:
The Great Taipei Gas Corporation's Uniform Invoice Number: 11072304
Summarized by Huang Chung-chie
Supervised by Tsuo Tien-liang
**:
For information of translation, click here