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:

  1. 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.

  2. 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.

  3. 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.

  4. 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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