Five contractors came to a mutual agreement on the winning bidders, the token bidders, and the prearranged bid amounts in a tendering in violation of prohibitions against concerted actions pursuant to article 14 of the Fair Trade Law
Case:
Five contractors came to a mutual agreement on the winning bidders, the token bidders, and the prearranged bid amounts in a tendering in violation of prohibitions against concerted actions pursuant to article 14 of the Fair Trade Law
Key Words:
winning bidders, token bidders, prearranged bid amounts, concerted action
Reference:
Fair Trade Commission Decision of May 3, 2000 (the 443rd Commissioners' Meeting); Disposition (89) Kong Ch'u Tzu No. 086
Industry:
Electricity Generation, Transmission, and Allocation Machinery Production, Repair and Allocation Industry (311)
Relevant Laws:
Summary:
1. The Southern Region Mobile Taskforce under the Ministry of Justices' Investigation Bureau transferred the depositions, files, and evidence regarding a complaint against five contractors to the Fair Trade Commission (the Commission) and asked the Commission to handle the case. In the complaint, it was alleged that in the first and second days of a tendering for three streetlamp engineering contracts contracted by the Kaohsiung City Government's Bureau of Public Works in 1996 and 1997, Shang Kuan Mechanical and Electrical Engineering Ltd., Sheng Ju Engineering Ltd., Ch'uan Shun Engineering Ltd., K'ai Li Engineering Enterprise Co., Ltd. and Ta Sheng Water and Electrical Engineering Ltd. came to a mutual agreement on the winning bidders, the token bidders, and the prearranged bid amounts (the date of the award was 20 September 1996). The complaint alleged that the contractors engaged in the acts to avoid price-cutting competition among them. The agreement was as follows: For the Improvement streetla mp engineering contract, Ch'uan Shun tendered the winning bid and Shang Kuan, Sheng Ju, and K'ai Li tendered token bids. For the "Yi-Hsin Yi Road" streetlamp engineering contract, Shang Kuan tendered the winning bid and Sheng Ju and K'ai Li tendered token bids. For the "south of San Tuo Road" streetlamp engineering contract, Sheng Ju tendered the winning bid and Shang Kuan, Chuan Shun, and Ta Sheng tendered token bids. Under the first two schemes, the token bidders had to tender higher bids in accordance with the agreement. According to the minutes of award for the three streetlamp engineering contracts, the only parties to tender bids were the five contractors, and among them, Ch'uan Shun, Shang Kuan, and Sheng Ju tendered the winning bids. K'ai Li professed that it had not participated in the schemes, but the testimony in the depositions of Ch'uan Shun and Shang Kuan taken by the Task Force with respect to K'ai Li's participation in the acts told a different story; in the deposition, they [Ch'uan Shun and Shang Kuan] said, "As part of the collusive tendering, the participating party [K'ai Li] paid other contractors to suppress their bids." When K'ai Li (or its responsible person), Ch'uan Shun, and Shang Kuan appeared before the Commission, they said there were no professional or personal grievances between them. The Commission found that K'ai Li should not be excused from responsibility merely on the basis of its one-sided profession of innocence. 2. Before the Commission, the contractors insisted they had never committed the acts of bid rigging, but rather than provide specific objective factual evidence, they relied on subjective contextual factors (for example, they argued that the testimony in the deposition was given under duress). They also argued that some of the content in the disposition was false, however the Commission found otherwise after reviewing the content. The Commission found that the explanations given in the contractors' testimony were unreasonable. 3. The five contractors (horizontal competitors) came to a mutual agreement on the winning bidders, the token bidders, and the prearranged bid amounts in the streetlamp engineering contracts. Their acts violated prohibitions against concerted acts pursuant to article 14 of the Fair Trade Law. Given that the acts occurred before an amendment to the Fair Trade Law took effect on 5 February 1999, the contractors were disposed pursuant to the forepart of article 41 of the Fair Trade Law in force at the time of the acts. Appendix: Shang Kuan Mechanical and Electrical Engineering Ltd.'s Uniform Invoice Number: 86462000 Sheng Ju Engineering Ltd.'s Uniform Invoice Number: 23660073 Ch'uan Shun Engineering Ltd.'s Uniform Invoice Number: 84624135 K'ai Li Engineering Enterprise Co., Ltd.'s Uniform Invoice Number: 86439310 Ta Sheng Water and Electrical Engineering Ltd.'s Uniform Invoice Number: 81138482 Summarized by Yeh T'ien-fu; Supervised by Shih Chin-ts'un