A complaint was filed stating that the
Chinese [Chinese Taipei] Motion Picture Advertising Association had restricted
media advertising prices in violation of the Fair Trade Law
Chinese Taipei
Case:
A complaint was filed stating that the Chinese [Chinese Taipei] Motion Picture
Advertising Association had restricted media advertising prices in violation
of the Fair Trade Law
Key Words:
movie advertisements, concerted action, price limitation, page layout, pulling
of advertisements, Chinese [Chinese Taipei] Motion Picture Advertising Association
Reference:
Fair Trade Commission Decision of March 8, 2000 (the 435th Commissioners'
Meeting); Disposition (89) Kung Ch'u Tzu No. 034
Industry:
Film Distribution Industry (8420)
Relevant Laws:
Article 14
of the Fair Trade Law
Summary:
- Because the membership of the Chinese [Chinese Taipei] Motion Picture Advertising
Association ("Advertising Association") is drawn from members of
the Taipei City Film and Theater Industry Association and the Taipei City
Film Business Industry Association, the Advertising Association exercises
considerable influence over the market. Since 1993, the Association has repeatedly
set limits on newspaper movie advertising. It enforces these limits by pulling
advertising from newspapers that do not cooperate and thereby affects the
supply and demand of newspaper movie advertising. The Fair Trade Commission
(the "Commission") therefore found that the Advertising Association
had affected market competition through such agreements in violation of Article
14 of the Fair Trade Law and disposed by requiring the Advertising Association
to cease these acts and imposing a fine of NT$1.5 million on each of its members.
- The Commission received a letter dated 12 August 1999 from a citizen complaining
that the Advertising Association was limiting media advertising prices in
the print media in violation of the Fair Trade Law. In brief, the complaint
stated that:
(1) The Advertising Association limited and fixed advertising prices in media
outlets and unfairly treated businesses that did not comply with the restrictions.
For example, the Advertising Association banned all its members from advertising
in the Liberty Times beginning in mid-July after the Liberty Times ran its
movie reviews of "Prelude" and "Mummy." Moreover, newspapers
had not dared to adjust the pricing for movie schedules or advertising for
several years because if they had, the Advertising Association would have
prohibited its members from advertising in the offending newspaper.
(2) The major newspapers had also jointly leased office space and hired employees
to process movie advertising so that it would become more convenient for film
companies to make copy changes on a daily basis. This joint project was called
the "Taipei City Daily and Evening Newspaper Advertising Liaison Group."
Claiming that advertising copies were being distributed unfairly to the Liaison
Group, the Advertising Association ordered the Liaison Group to move into
the same offices and centralize all movie advertisings. This allowed the Advertising
Association to control the placement of movie advertisements, making it difficult
for small film distribution companies to survive.
(3) The complaint letter also included a movie review from the 28 July 1999
edition of the Liberty Times,Yeh Tzu Letter No. 022 from the Taipei City Film
Business Industry Association and report, and Chieh Hsiang Tzu Letter No.
0064 from the Advertising Association.
- The Commission's Investigation and Decision
(1) Concerted Action
(i)The membership of the Chinese [Chinese Taipei] Motion Picture Advertising
Association is drawn from members of the Taipei City Film and Theater Industry
Association and the Taipei City Film Business Industry Association. The American
Chamber of Commerce's Movie Committee, however, usually does not attend the
meetings held by the "Advertising Association" unless it has a special
issue to raise, in which case the Advertising Association mediates on the
Movie Committee's behalf. The Advertising Association is not a juristic entity,
and the chairmen of the Taipei City Film and Theater Industry Association
and the Taipei City Film Business Industry Association take turns serving
[as the chairman of] the Advertising Association. The members of these two
industry associations are the movie theater owners in Taipei City and County
and film distributors. In these industry associations, the theater owners
and the film distributors are equals. The movie advertising that they supply
in Taipei City and County thus constitutes a specific market. If the members
of these Associations abide by the Association's decisions, trading counterparts
in that market will suffer great competitive disadvantage. Moreover, "Associations"
meet the definition of "enterprises" in Article 2 of the Fair Trade
Law and therefore fall under the scope of the Fair Trade Law.
(ii) As the Taipei City Film and Theater Industry Association admitted, the
Chinese [Chinese Taipei] Motion Picture Advertising Association's previous
incarnation was the Chinese [Chinese Taipei] Motion Picture Advertising Control
Action Committee, and another person who is also disposed by the Commission,
the respondent Wang Chun-ch'eng, the Chairman of the Taipei City Film and
Theater Industry Association stated that during his tenure as Commissioner
of the Advertising Association, the Adverting Association had no other names
at all. Consequently, he did not know what the Advertising Association had
been before it was known as the Advertising Association. However, Article
3 of the "Bylaws of the [Chinese Taipei] Motion Picture Advertising Control
Action Committee," provided by the interested party of this case, stated
that "This Committee is made up of 19 representatives of the Taipei City
Film and Theater Industry Association, the Taipei City Film Business Industry
Association, Taipei City Film Business Industry Association, and the American
Chamber of Commerce's Movie Committee with full authority to control movie
advertising." Clearly then the Chinese [Chinese Taipei] Motion Picture
Advertising Association's previous incarnation was the Chinese [Chinese Taipei]
Motion Picture Advertising Control Action Committee.
(iii) The American Chamber of Commerce's Movie Committee, which also does
not have the status of a juristic person, is composed of representatives of
the eight major American studios. Although the Chamber of Commerce's Movie
Committee belonged to the Advertising Control Action Committee, the disposed
Chairman of the Taipei City Film and Theater Industry Association, Wang Chun-ch'eng,
stated that the American Chamber of Commerce's Movie Committee did not participate
in the Advertising Association's decisions and only came to the Advertising
Association for mediation when it wanted to have a specific issue addressed.
The Chairman of the American Chamber of Commerce also stated that the mediation
services provided to the eight major studios by the Advertising Association
simplified communications between the studios and the newspapers on advertising
affairs. All the above facts indicate that the American Chamber of Commerce's
Movie Committee did not consent to the limiting of movie newspaper advertising.
(iv) The above analysis demonstrates that the Taipei City Film and Theater
Industry Association and the Taipei City Film Business Industry Association
were the agents of the concerted action.
(2 )Rate Limitation
(i)According to the minutes of the 56th committee meeting of the Chinese [Chinese
Taipei] Motion Picture Advertising Control Action Committee on 18 August 1993,
the Advertising Control Action Committee resolved that:
"this Committee agrees that in response to the letter from the Min Sheng
Daily regarding the price of movie schedules and black and white previews,
the price of each paragraph be raised from NT$23.5 to NT$28 as of 20 September.
If this Committee finds that Min Sheng Daily has not published the advertisements
as agreed, the original price of NT$23.5 will be restored. As for the letter
from the Central Daily News requesting that the price on the business page
be adjusted, this Committee has resolved to set the prices as follows:
4.5 black and white: NT$8100 (originally NT$7800)
3 Full black and white: NT$18,400 (originally NT$17,5000)
20 Full color: NT$204,700 (original NT$195,000)."
This resolution demonstrates that the Advertising Control Action Committee
set prices for the publication of movie advertising at its meetings. If newspapers
did not abide by the Advertising Control Action Committee's resolutions, the
Action Committee restored the original low prices.
The Action Committee also limited rates for color advertising. Although the
respondent claimed that they were not the representatives of the Advertising
Control Action Committee at that time, they cannot be allowed to evade responsibility
under this excuse. What is more important, according to the minutes of the
66th meeting of Advertising Association on 16 July 1996 under the heading
"Business Discussed," it was recommended that beginning on 1 August,
members cease placing all advertising on the business page and the black and
white movie page. Members should take note and act accordingly." From
this resolution, we learn that the Advertising Association pulled member advertising
from the Liberty Times when the Liberty Times raised its rates. Thus, the
Taipei City Film and Theater Industry Association and the Taipei City Film
Business Industry Association reached consent by other means through the resolutions
of the Advertising Association and is unmistakably an instance of concerted
action.
(ii) Layout Restrictions
On 15 December 1997 the Advertising Association held its 73rd meeting. According
to the meeting minutes, the Advertising Association resolved that " Items
Discussed: One theatre places 3 centimeter advertisements, five-seven theaters
place 10 cm. advertisements, and 15 to 18 theaters place 18 centimeter advertisements."
Although the respondent argued that this resolution was to prevent contractors
from publishing advertisements in a disorderly fashion, this concerted act
affected market supply and demand.
In its Kuang Chieh Tzu Letter No. 006 issued on 27 July 1999, the Advertising
Association stated that:
"Re: This Association has recently decided to consolidate its work by
publishing all advertisements uniformly beginning on 1 September 1999 ...explanation:
2. To publish movie advertisements in a uniform fashion and to improve quality
of service, the Association has decided, after discussion by the entire membership,
that commencing on 1 September 1999, the Advertising Association will issue
all advertising copy. "
The Taipei City Film Business Industry Association sent a letter to the same
effect to its membership on 7 August 1999. According to the respondent, they
made this arrangement because film companies often became embroiled in disputes
over advertising and also because videotape distributors used the movie advertising
page to place ads for movies on videotape. To protect the film distributors'
business reputation and to reclaim privileges extended to contractors, the
respondent decided to exercise control over layout.
However, the members of the Advertising Association and the newspapers are
the suppliers and consumers respectively in the movie advertising market.
Although the contractors are the newspapers' agents, the Advertising Association
arbitrarily resolved to force the contractors and the newspapers' business
agents to consolidate their work without negotiating or otherwise reaching
an agreement with the newspapers in advance. They then used this consolidation
to achieve their goal of controlling the allocation of advertising page space.
This resolution had a significant impact on the supply and demand in the movie
advertising business.
(iii) Pulling of Advertising
At its 53rd meeting on 11 March 1993, the Advertising Control Action Committee
discussed the false reportings on the Kuo Wang and the Huang Hou theaters
by the Independence Evening Post. The Action Committee then decided that the
Independence Evening Post should give a reasonable explanation for its reportings
or the Action Committee would pull its membership's advertising. On 27 June
1999 and 4 July, the Liberty Times published its reviews of "Star Wars:
Prelude to Rebellion" and "Mummy," The Liberty Times was then
notified on 13 July that its movie advertising was being pulled. On 27 July
1995, the Advertising Association issued Kuang Chieh Letter No. 21. This letter
stated that:
"commencing on 1 August 1995, the three groups will cease providing those
two newspapers with any information regarding current movies (including the
theater, the name of the movie, the showings, and the times). The Taipei City
Film Business Industry Association will also assist in these efforts by pulling
its full black and white ads in the Saturday editions of the two newspapers
in question."
Moreover, beginning on 2 August 1995, the "Advertising Information"
section on the page 23 of the United Daily News read:
"This newspaper publishes current movie information for Taipei City and
its suburbs in this space from the Chinese [Chinese Taipei] Motion Picture
Advertising Association as a service to our readers. The Association is now
unable to provide this information. In keeping with this newspaper's tradition
of service, we will continue to publish theater phone numbers free of charge
beginning today."
This announcement from the United Daily News shows that the Advertising Association's
moves to blacklist certain newspapers did in fact take place.
On 18 October 1995, the Advertising Association lifted the ban. Although the
respondent argued that they had not pulled advertising to punish the newspapers,
the minutes cited here prove that the respondent's testimony is false and
should not be given any credence. By agreeing to pull advertising, the Association
and those members who complied with the agreement violated the prohibition
against concerted action in Article 14 of the Fair Trade Law.
- In summary: The Advertising Association passed resolutions on several occasions
to limit rates and page space for movie advertising, punished newspapers that
did not comply with its resolutions by pulling advertising, and affected the
supply and demand market mechanism. These acts were in violation the provisions
of Article 14 of the Fair Trade Law prohibiting concerted action. Given the
considerable market power enjoyed by the members of the Advertising Association
and the fact that these acts have continued since 1993 to the significant
detriment of the trading order, the Commission disposes in accordance with
the former part of Article 41 of the Fair Trade Law.
Summarized by Yang Min-ling
Supervised by Lin Yu-Ch'ing
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