Chung Chun Industries Ltd. is alleged to have violated the Fair Trade Law by raising and setting uniform prices for petroleum products at its T'u Niu gas station during the "921" earthquake disaster period
Chinese Taipei
Case:
Chung Chun Industries Ltd. is alleged to have violated the Fair Trade Law by raising and setting uniform prices for petroleum products at its T'u Niu gas station during the "921" earthquake disaster period
Key Words:
inflating prices, gas station, trading order
Reference:
Fair Trade Commission Decision of November 3, 1999 (the 417th Commissioners' Meeting); Disposition (88) Kung Ch'u Tzu No. 138
Industry:
Gas Station Industry (5441)
Relevant Laws:
Article 24 of the Fair Trade Law
Summary:
1. The Fair Trade Commission (the Commission) formed the "Task Force to Investigate Artificial Inflating of Prices for Important Consumer Commodities during the '921 Earthquake' Disaster Period" on September 23, 1999 and set up a special hotline for related complaints. (The "921 Earthquake" struck on September 21, 1999.) A number of complaints were received from the general public alleging that Chung Chun Industries Ltd. had artificially inflated gas prices at its T'u Niu gas station during the period following the earthquake. A joint investigation by the Task Force and the Taichung County Police Department found that of the total of nine other gas stations in the local market, only two - the Yi Hsin and Tung Ch'i gas stations - offered competition to the T'u Niu gas station during the period after the "921" Earthquake, and those two only sporadically. Chinese Petroleum Corp.'s Shih Kang and Tung Shih stations and the Chin Hsing and Fu Yi stations were all closed for business. The Yi Hsin station was open sporadically on September 21 and 22. The Tung Ch'i station was open intermittently from about 11 a.m. to 4 p.m. on September 22. (The other three stations are located in Hsinshe.) Because of a combination of factors such as obstructed local transportation routes and the demand for gas for disaster relief efforts, consumers were desperately anxious for continued gas supply. They were therefore willing to line up for as long as two to three hours at the T'u Niu gas station for fill-ups. Clearly, that gas station was in a decisive position in respect of local gas supply, sufficient to affect the order of trade. 2. On September 21 and 22, because of the power outage, the T'u Niu gas station used hand cranks to fill up customers' gas tanks. This process required two persons - one to turn the crank (either the attendant or the consumers themselves) and one to hold the nozzle. The amount of gas dispensed was calculated by the attendants. The investigation found that the T'u Niu station at the time had six pump nozzles - one "Premium," two "92 Unleaded," and three "95 Unleaded" - but only three hand cranks, so it could only fill up three cars or motorcycles at a time. Each pump nozzle had a mechanical flowmeter with an upper and lower row of digits that measured the gas dispensed in units of liters. The upper rows had four digits and could be rolled back to zero; the lower rows had seven digits and could not be rolled back. Since the mechanical flowmeters measured in units of liters, the gas station manager admitted that prices were calculated on the basis of 0.5 liter units. A consumer survey revealed that some consumers were aware of the mechanical flowmeters, but, whether aware of them or not, all said they had been unable to see the numbers on the flowmeters while the gas was being dispensed. Only one consumer reported witnessing an action similar to "rolling back the meter to zero"; none of the others saw the attendants roll the meters back to zero, nor were the consumers told the quantity of gas dispensed. The mechanical shortcomings of the hand cranks notwithstanding, the T'u Niu gas station obviously failed to adequately inform consumers of the method for calculating the gas dispensed and the actual amount dispensed, and so was suspected of taking advantage of the power outage and consumers' anxiety for gas supply to raise and unify the prices of its gas products. It raised the price for "92," "95," and "Premium" gas to a uniform NT$20 per liter despite the differences between those products in cost and regular sales price, and failed to disclose important information such as unit price to consumers at the time of the transactions. These were deceptive or obviously unfair acts sufficient to affect the order of trade. 3. In sum, Chung Chun Industries Ltd.'s T'u Niu gas station violated Article 24 of Fair Trade Law. The Commission decided at the 417th Commissioners' Meeting to order it, pursuant to Article 41 of the same law, to cease the aforesaid deceptive or obviously unfair acts sufficient to affect the order of trade, and imposed a fine of NT$800,000.Appendix: Chung Chun Industries Ltd.'s Uniform Invoice Number: 23505973 Summarized by Hung Hsuan; Supervised by Li Yen-hsi