Hewlett Packard furnished improper certificates of proof with respect to a contract to supply computer peripheral consumables in FY1999 tendered by the MOTC's Management Information Center harming fair competition
Case:
Hewlett Packard furnished improper certificates of proof with respect to a contract to supply computer peripheral consumables in FY1999 tendered by the MOTC's Management Information Center harming fair competition
Key Words:
improper methods, obstructing competitive marketing, computer peripheral consumables, toner cartridges
Reference:
Fair Trade Commission Decision of February 23, 2000 (the 433rd Commissioners' Meeting); Disposition (89) Kung Ch'u Tzu No. 056
Industry:
Other Computer Equipment Industry (3149)
Relevant Laws:
Summary:
1. The MOTC's Management Information Center (MIC) tendered a contract to supply 13 consumable computer peripheral items including toner cartridges for HP-4V and HP-5SI printers in FY1999. Ch'ang Heng Enterprise Co., Ltd., a distributor of Ch'ang Ta Co., Ltd. won the contract. Ch'ang Ta Co., Ltd. was an agent of a competitor to Hewlett Packard Co., Ltd. (HP). The MIC contract specified that the toner cartridges supplied for HP-4V and HP-5SI printers were to be C3900A and C3909A toner cartridges, the contract did not specifically indicate that cartridges from "original manufacturer" were required. Pursuant to the contract, Ch'ang Heng shipped HP Lexmark 140100A and HP Lexmark 140109A toner cartridges. These cartridges were recognized among the business community as of the same quality as the C3900A and C3909A toner cartridges, and 100% compatible with HP printers. When the shipment arrived, the MIC made a conditional acceptance of the shipment. Around the same time, HP furnished the MIC with warranty certificates (bearing HP company name, address, and telephone number) containing warranty information completely different from information contained in warranty certificates HP furnished previously. The certificates read: To the MOTC Management Information Center: The HPLJF5Si/5SiMX and LF4V/4MV laser printers should use the C3900A and C3909A toner cartridges, respectively. These printers will not be serviced if they are damaged as a result of using non-HP toner cartridges. This prompted the MIC to send a written notification to Ch'ang Heng advising that Ch'ang Heng to take back the aforesaid shipment and promptly send a new shipment meeting specifications in the contract with MIC. 2. If an enterprise uses improper methods to cause trading counterparts of its competitors to trade with itself (i.e., the enterprise), such acts would be culpable, and would damage competitive mechanism of the market. In the present case, HP used improper methods to cause trading counterparts of its competitors to trade with itself (i.e., HP), and HP's share of the market for toner cartridges of the type in question exceeded 70%. So, HP's conduct in furnishing the warranty certificates in question was likely to impair fair competition. 3. The HP warranty certificates' substantive content and timing of issuance infringed [the rights and interests of] the certificate's recipient (i.e., the MIC) and HP's competitors. In addition, the certificates directly encouraged a reduction in the business opportunities of HP's competitors, and indirectly encouraged winner of MIC contract to trade with itself (i.e., HP). After weighing the HP's relative strength in the toner cartridge market, and the culpability of its acts, which were in violation of Article 19(iii) of the Fair Trade Law, and after taking into account that it did not repeat the act after 27 November 1998, the FTC ordered HP to stop the unlawful practice in accordance with Article 41 of the Fair Trade Law. Appendix: Hewlett-Packard Taiwan, Ltd.'s Uniform Invoice Number: 20946791 Summarized by Ch'en Ying-ju; Supervised by Shih Chin-ts'un