Kwechen Corporation allegedly violated the Fair Trade Law by tying in rice wine with the sale of other products
Case:
Kwechen Corporation allegedly violated the Fair Trade Law by tying in rice wine with the sale of other products
Key Words:
tie-in sale, rice wine, Monopolized Sales Statute, obviously unfair
Reference:
Fair Trade Commission Decision of February 16, 2000 (432nd Commissioners' Meeting); Disposition (89) Kung Ch'u Tzu No. 021
Industry:
Tobacco Production Industry (1200)
Relevant Laws:
Article 24 of the Fair Trade Law
Summary:
1. A complaint was filed by a member of the public alleging, in brief, as follows: While shopping at the Ta Ch'un Ai Chia Mall on 6 January 2000, the complainant noticed retailer leaflets captioned "Rice Wine Update." The leaflets said that since the Taiwan Tobacco and Wine Board (TTWB, former the Taiwan Tobacco and Wine Monopoly Bureau) supplied only a limited amount of rice wine for sale by the store, the rice wine would be tied in to the sale of other products as follows: (1) shoppers who made purchases of at least NT$300 (excluding tobacco and alcohol) in one day could purchase one bottle of rice wine; (2) shoppers who made purchases of at least NT$500 (excluding tobacco and alcohol) in one day could purchase two bottles of rice wine. 2. Kwechen Corporation, which operated the store, had been granted a tobacco and alcohol retailer permit in 1993. Short supply of rice wine was often a source of friction between Kwechen and its customers, so it decided to make the sale of scarce rice wine more "fair" by tying it in with other purchases, noting that this practice was already used by some other tobacco and alcohol retailers. It printed "Rice Wine Update" fliers and product pick-up certificates, 500 each, through the services of a friend in Changhua County in December 1999 and placed them in the store for customers to take. On 10 January 2000, however, Kwechen questioned the TTWB about the matter by telephone, and were instructed against the tie-in sale of alcohol products. Therefore, it never implemented the sales offer described on the fliers. 3. Article 29 of the Interim Statute for the Monopolized Sale of Tobacco and Alcohol provides that, "Tobacco and alcohol may be sold only by Monopoly agencies or retailers authorized by them." Under the current monopoly system, legally authorized tobacco and alcohol retailers are charged with preserving the adequate and unobstructed supply of rice wine. The respondent in this case was a tobacco and alcohol retailer who was unable to supply an adequate quantity of rice wine to its customers because of the TTWB's rice wine rationing policy. To make the sale of scarce rice wine more "fair" and to reduce friction with its customers, the store printed up the fliers and product pick-up certificates on 27 December 1999. Given the exclusive status of alcohol retailers under the monopoly system and the tight market demand for rice wine, tying in the sale of rice wine to other purchases and forcing trading counterparts to accept demands unrelated to the subject matter of the transaction constituted an unfair act capable of affecting the trading order in violation of Article 24 of the Fair Trade Law. Taking into consideration that the respondent's unfair act was motivated by its desire to reduce friction with its customers resulting from the under-supply of alcohol by the TTWB, the Fair Trade Commission ordered it to cease the act pursuant to Article 41 of the Fair Trade Law. Appendix: Kwechen Corporation's Uniform Invoice Number: 84262528 Summarized by Hung Hsiu-hsing; Supervised by Shih Chin-ts'un