Civil engineering contractor Yen Ch'eng-hsu used documents of other businesses to create an illusion of competitive bidding on Luo Ts'u Public Cemetery facility construction projects, depriving competitors of a fair chance to compete for trading opportunities, contravening competitive ethics and obstructing the function of market pricing mechanisms, which had constituted unfair acts sufficient to affect trading order
Case:
Civil engineering contractor Yen Ch'eng-hsu used documents of other businesses to create an illusion of competitive bidding on Luo Ts'u Public Cemetery facility construction projects, depriving competitors of a fair chance to compete for trading opportunities, contravening competitive ethics and obstructing the function of market pricing mechanisms, which had constituted unfair acts sufficient to affect trading order
Key Words:
creating an illusion of competitive bidding; bidding with borrowed licenses
Reference:
Fair Trade Commission Decision of December 21, 2000 (the 476th Commissioners' Meeting); Disposition (90) Kung Ch'u Tzu No. 003
Industry:
General Civil Engineering (4501)
Relevant Laws:
Article 24 of the Fair Trade Law
Summary:
1. Unlicensed civil engineering contractor Yen Ch'eng-hsu arranged to borrow the permits and licenses of other firms including Ming Sheng, Sheng Ta, Yun Hsiang, T'ai Lung, Chu Chu, and T'ai Fu to create an illusion of compliance with the regulatory requirement that "bids may not be opened unless at least three firms had joined the bidding" when bidding on three public construction projects handled by the local government office of Lunpei Hsiang (Village) in Yunlin County in 1984 and 1985. (The three projects were for construction of a temple, management office, restrooms, and a ceremonial arch and pavilion for the Luo Ts'u Public Cemetery; phase one beautification and greenification of the cemetery, and phase two beautification and greenification of the cemetery.) Yen Ch'eng-hsu used the borrowed documents to prepare all of the bid prices and bid bonds. These facts are attested to in the Investigation Bureau's case notes, the public prosecutor's indictment, the criminal court judgment, and the Fair Trade Commission's records of statements made by the parties involved in the case. Of the various companies involved, T'ai Lung, Chu Chu, Sheng Ta, and T'ai Fu all admitted to having loaned their licenses. Yun Hsiang did not loan its license to anyone to participate in the bidding; its license was used without authorization.
2. It was the finding of the Fair Trade Commission (the Commission) that the head of the government agency that made the call for bids and its staffs who were in charge of the bidding had colluded with Yen Ch'eng-hsu by disclosing the baseline prices in advance. This enabled the unlicensed contractor Yen Ch'eng-hsu to successfully win the bid on the various projects in the names of the companies who loaned their licenses to him, and at prices NT$5,000 to NT$55,000 lower than the approved baseline prices. According to the Yunlin County Government Price Guidelines for Bidding and Price Negotiation on Public Construction Projects and Purchasing of Custom Ordered and Realizable Property, in bidding for projects worth no more than NT$3.5 million, the head of the agency calling for bids may select a minimum of three firms to participate in price bidding. In this case, the agency making the call for bids had relied on the firms indeed proffered by Yen Ch'eng-hsu as the real bidders to stage a fake competitive bidding.
3. Disposition and Grounds: The unlicensed contractor Yen Ch'eng-hsu borrowed licenses of other enterprises to create the illusion that at least three firms had participated in the bidding. By so doing, he deprived competitors of a fair chance to compete for trading opportunities, contravening competitive ethics and obstructing the function of market pricing mechanism, which had violated Article 24 of the Fair Trade Law. Because the violation occurred before February 5, 1999 partial amendment to the Fair Trade Law took effect, the Commission disposed of the case under the fore part of Article 41 of the Law in effect at the time of the violation, ordering Yeng Ch'eng-hsu to immediately cease his obviously unfair acts that were sufficient to affect trading order. Summarized by Lin Shaw Hong; Supervised by Lin Gin-Lan