Companies participating in bidding for road-widening project in Kuangping Li and Kuanghua Li, Hsihu Town, Changhua County used licenses and other documentation from other companies to inflate the number of bidders for the project in violation of the Fair Trade Law
Case:
Companies participating in bidding for road-widening project in Kuangping Li and Kuanghua Li, Hsihu Town, Changhua County used licenses and other documentation from other companies to inflate the number of bidders for the project in violation of the Fair Trade Law
Key Words:
inflating number of bidders, renting a business license, deceptive practices
Reference:
Fair Trade Commission Decision of March 15, 2001 (the 488th Commissioners' Meeting); Disposition (90) Kung Ch'u Tzu No. 050
Industry:
General Civil Engineering Construction Industry (4501)
Relevant Law:
Article 24 of the Fair Trade Law
Summary:
1. This case centers around the 30 January 1996 bid tendering process for a project to widen roads in Kuangping Li and Kuanghua Li in Hsihu Town, Changhua County; specifically sections 3-18, 3-20 and 3-30 of the road widening project. Interested bidders were required to post an NT$400,000 bid bond. Companies bidding for the project were Pai Chun Construction Co., Chen You Construction Co., Hung Ta Construction Co., and Pai Chun Construction Co. was awarded the project with a bid of NT$4.8 million. Mr. Chu Pao-chang provided funds for the three bidding companies' bid bonds. Mr. Chu is the son-in-law of Mr. Chen Fu-t'ien, the responsible person or Yuan Jung Construction Co., the project guarantor for the road-widening project. The funds for the bid bonds were transferred through the bank accounts of Mr. Kao Shih-min and Ms. Lin Chi Hsiu-ying, both friends of Mr. Chu, and Ms. Chen Ku Shun-mei, the mother of Mr. Chen Fu-t'ien. Also, on 21 October 1996 the Hsihu Town municipal office issues public treasu ry check No. CF853208 for NT$4.79 million to cover project expenses. Mr. Chu then deposited this check in his savings account with the Hsihu Town Farmers Association. These actions were suspected to be in violation of Article 24 of the Fair Trade Law (FTL). 2. Notes from the Ministry of Justice Investigation Bureau's Central Taiwan Mobile Task Force indicate that during questioning on 16 June 2000 Chu Pao-chang admitted approaching Mr. Hsu Tzu-wang of Pai Chun Construction, Ms. Chang Su-ju, wife of Chen You Construction's Mr. Hsu Yi-chen, and Mr. Yang Sen-hsiung of Hung Ta Construction to discuss use of the aforementioned companies' licenses and names in the bidding process for the road-widening project. The notes also indicate that Mr. Hsu Tzu-wang, Ms. Chang Su-ju, and Mr. Yang Sen-hsiung all confirmed the details of Mr. Chu's use of the licenses during the bidding process. 3. The Fair Trade Commission made decisions as follows on it 488th Commissioners' Meeting: Mr. Chu Pao-chang approached Pai Chun Construction, Chen You Construction, and Hung Ta Construction to borrow their licenses to bid on the road-widening project because the company to which he is a party, Yuan Jung Construction, does not have the proper license. This created the illusion that at least three separate companies were bidding for the project, depriving any potential competing bidders of a level competitive playing field, violating the principles of fair competition, and hindering the function of market mechanisms in setting a fair price for the project, thus violating the provisions of Article 24 of the FTL. But because the violations occurred before the partial amendment to the FTL took effect on 5 February 1998, Mr. Chu was ordered to refrain from deceptive acts sufficient to affect trading order pursuant to the fore part of Article 41 of the same Law in force at the time of the acts. Summarized by Lin, Hsiao-Hung; Supervised by Lin, Gin-Lan