Complaint by the Taiwan Silk & Filament Weaving Industrial Association, Taiwan Knitting Industry Association Republic of China, and Taiwan Weaving Industry Association of China alleging the Taiwan Man-Made Fiber Industries Association Republic of China and Taiwan Synthetic Texturize Industry Association lowered output in a concerted action to raise prices
Chinese Taipei
Case:
Complaint by the Taiwan Silk & Filament Weaving Industrial Association, Taiwan Knitting Industry Association Republic of China, and Taiwan Weaving Industry Association of China alleging the Taiwan Man-Made Fiber Industries Association Republic of China and Taiwan Synthetic Texturize Industry Association lowered output in a concerted action to raise prices
Key Words:
concerted action to raise prices
Reference:
Fair Trade Commission Decision of September 15, 1999 (the 410th Commissioners' Meeting); Reply Letter (88) No. Kung Erh Tzu No. 8804729-005 and 006
Industry:
Synthetic Fiber Spinning Industry (1313), Synthetic Fiber Processing Industry (1314)
Relevant Laws:
Summary:
1. Silk & Filament Weaving Industrial Association, Taiwan Knitting Industry Association Republic of China, and Taiwan Weaving Industry Association of China indicated that their upstream suppliers applied with the Fair Trade Commission (the Commission) to reduce output by concerted action after their overproduction of polyester (PET) and polyester fiber lead to price competition between them and they claimed to have suffered losses as a result. Beginning at the end of March, 1999, the suppliers substantially increased prices, they were reluctant to sell their product, and had no goods to supply. This forced the textile companies to ship at a loss to maintain their credibility in international commerce. The act weakened the overall fiber industry. Textile companies filed an application with the Commission requesting that the act be stopped. 2. The investigation indicated that one of the main reasons for this price increase was a reflection of the costs. Since the final selling prices of the suppliers and the margin by which they were adjusted were not uniform, the degrees of their reductions in output also were not uniform. Before the trade associations had applied for the reduction of output by concerted action, the selling prices of the suppliers were indeed lower than their average costs. Therefore, raising prices would be a reasonable course of action when the economy is rebounding and market demand is returning. Based on changes in the synthetic fiber market over the first three quarters of 1999, the price increases were merely the consequence of the normal functioning of the market. 3. There is no substantive evidence for believing that members of the two trade associations were in violation of the Fair Trade Law. Nonetheless, the Commission issued letters requesting that these trade associations remind their members that concerted actions, tacitly collusive acts, and acts of a unified nature are prohibited under the Fair Trade Law. Summarized by Ma Ming-ling; Supervised by Shih Chin-ts'un