The Taiwan Institute of Economic Research
invited related companies to form a Strategic Alliance for the Research and
Development of Battery-Powered Motorcycles, and sent a letter to the Commission
asking for its opinion with respect to the timing of applying for approval to
engage in a concerted act
Chinese Taipei
Case:
The Taiwan Institute of Economic Research invited related companies to form
a Strategic Alliance for the Research and Development of Battery-Powered Motorcycles,
and sent a letter to the Commission asking for its opinion with respect to
the timing of applying for approval to engage in a concerted act
Key Words:
strategic alliance, joint research and development, apply to engage in a
concerted act, legitimate reason, likely to obstruct fair competition
Reference:
Fair Trade Commission Decision of January 26, 2000 (the 429th Commissioners'
Meeting); Disposition (88) Kung Er Tzu No. 8816469-001
Industry:
Electrical and Electro-mechanical Equipment and Materials Production Repair
and Replacement Industry (2190)
Relevant Laws:
Article 14
of the Fair Trade Law
Summary:
- The Taiwan Institute of Economic Research ("the Institute") invited
San Yang, Kuang Yang, Asia-Pacific Energy, and other related companies, to
form a Strategic Alliance for the Research and Development of Battery-Powered
Motorcycles. The Institute initiated the alliance in support of the Environmental
Protection Administration's Action Plan for the Development of Electric-Powered
Motorcycles. Point two of the memo regarding the alliance stated that the
specific content and future direction of the research and development plan
could not be made clear until the alliance's establishment funds were received.
Therefore, the Institute asked the Fair Trade Commission (the "Commission")
in a letter to the Commission that pursuant to Article 14(1)(ii) of the Fair
Trade Law if it could delay filing for approval to engage in joint research
and development until the funds were received and the plan was completed.
- Article 14(1)(ii) of the Fair Trade Law provides that enterprises that
have not been approved by the Commission may not engage in joint research
and development on goods or markets for the purpose of upgrading technology,
improving quality, reducing costs, or increasing efficiency.
**2In its reply to the Institute, the Commission said that the plan initiated
by the Institute constituted a concerted act under the aforesaid provision
of the Fair Trade Law, and that an application for approval to engage in a
concerted act must be filed with the Commission, as well as that the approval
must be received before the plan could commence. Much in the regulations upon
application requirements and related requisite documents was specifically
related to the concrete parts of a plan, so there was a legitimate reason
for requesting a delay. There would be no conflicts with the provisions related
to concerted acts under the Fair Trade Law.
- Point two of the memo also stated that: "...it (the Institute)... shall
coordinate the various work items..." First of all, this clause was too
broad and unclear on its face. It seemed to leave open the possibility that,
while coordinating the work items, the Institute might improperly or carelessly
urge alliance members to engage in concerted acts such as engaging in mutually
binding activities with respect to price, quantity, technology, products,
equipment, or trading counterparts. Point three of the memo further stated
that: "the establishment funds management committee...shall be responsible
for making decisions regarding the utilization and handling of the establishment
funds, the alliance membership entrance and exit, and other important matters
related to the rights and interests of alliance members." This clause
seemed to leave open the possibility that companies having specific mutual
competitive relationships might engage in competitively unfair or obstructive
acts likely to obstruct fair competition in violation of the Fair Trade Law.
Therefore, there remain many doubts with respect to the contents of the alliance
as expressed in the memo.
- In Summary, the Commission agreed that the filing for approval to engage
in a concerted act could be delayed until the funds were received and the
plan was completed. However, provided that the memo is executed, the Institute
shall take related precautions to avoid any violations of the Fair Trade Law.
Summarized by He P'ei-wen
Supervised by Ma T'ai-ch'eng
**:
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