Li Ying Construction and several other construction companies borrowed and lent business licenses to participate in bidding on a construction project in Shanhua Town, Tainan County, constituting deceptive practices that disrupted the trading order and violated the Fair Trade Law
Case:
Li Ying Construction and several other construction companies borrowed and lent business licenses to participate in bidding on a construction project in Shanhua Town, Tainan County, constituting deceptive practices that disrupted the trading order and violated the Fair Trade Law
Key Words:
borrowing licenses, collusive bidding, creating an illusion of competition
Reference:
Fair Trade Commission Decision of November 16, 2000 (the 471st Commissioners' Meeting); Disposition (89) Kung Ch'u Tzu No. 190
Industry:
Road Construction Industry (4502)
Relevant Law:
Article 24 of the Fair Trade Law
Summary:
1. This case was initiated after the Tainan branch office of the Ministry of Justice Investigation Bureau notified the Fair Trade Commission by letter that between March 1994 and February 1998, Li Ying Construction and a number of other construction companies lent their licenses to Mr. Hsu Fu-jen (unlicensed, unregistered), Fan Kuang-tse (unlicensed, unregistered), Su Chun-ming (the responsible person for Chia Feng Construction), Ts'ai Ming-che (responsible person for Lung Hao Construction), Wang Chuan-tsung (responsible person for Chia Hsing Construction and Ho Yi Construction), Teng Ming-yao (unlicensed, unregistered), and Hsu Tso-chou (responsible person for Wan Ko Lung Construction) engaged in bid rigging for contracts associated with the Shanhua municipal offices project. The companies were involved in the use of borrowing licenses for the purpose of rigging bids, constituting a violation of the Fair Trade Law (FTL). 2. According to the investigation by the Commission, the Commission found as follows: An inquiry determined that Hsu Fu-jen used licenses issued to Wan Ko Lung Construction, Pin Hua Construction, Lung Hao Construction, Jui Yi Construction, San Fang Construction, Li Ying, Lin Hung, Chia Pin, Wan Shun, Chia Feng, Chiu Yuan and Hsiang Ta construction companies; Fan Kuang-tse used licenses issued to Li Ying, Jih Yu, San Hsing, Chung Shih, Tien Hung, Lin Hung, Chia Pin, Kuo En, Chiu Yuan, Sheng Feng and Chia Feng construction companies; Su Chun-ming used licenses issued to Wan Shun, Lien Hsiang, Chia Pin, and Chia Feng construction companies; Wang Chuan-tsung used licenses issued to Ho Yi, Chia Hsing, Hsieh Ho, and Pin Hua construction companies; and Teng Ming-yao used licenses issued to Chien Shu, Chun Hua, Cheng Ming, Pin Hua, Wan Ko Long, Li Ying and Sheng Hung construction companies, Hsu Tso-chou used licenses issued to Wan Ko Lung, Ho Yi, and Tsai Te construction to separately bid on contracts for the Shanhua municipal offices project. In addition, Ts'ai Ming-che, the responsible perso n for Lung Hao Construction, has fled abroad after coming under suspicion of involvement with a fraud case surrounding the construction of a garbage dump in Ta Nei Hsiang (Village). Ts'ai Cheng-hsien (Ts'ai Ming-che's son) is now the responsible person for Lung Hao Construction. The younger Mr. Ts'ai testified that he was not clear on the details of the case. Yi Hsing Construction testified that the company submitted its own bid for the project. Yu Ta Construction testified that it submitted a bid in conjunction with a partner for the project. Tien Hung Construction testified that it did not participate in bidding for the project. Consequently, there is no specific evidence of violations of the FTL by the above-mentioned three companies. The relevant regulatory agency has already cancelled the business registrations of Ta Hsing, Chia Feng, Li Ying, Lin Hung, Sheng Feng, Jih Yu, Hsiang Ta, San Hsing, Kuo En, Chiu Yuan, Chung Shih, Lien Hsiang and Wan Shun construction companies. Since these companies no longe r exist as legal entities, no punitive action can be taken against them. 3. Reasons for disposition: The respondents Hsu Fu-jen, Fan Kuang-tse, Teng Ming-yao, Chia Hsing Construction, Ho Yi Construction, Wan Ko Lung Construction, Pin Hua Construction, Chien Shu Construction, Li Ying Construction, Tsai Te Construction, Chu Hua Construction, Cheng Ming Construction, San Fang Construction, Jui Yi Construction, Hsieh Ho Construction, Sheng Hung Construction, and Chia Pin Construction colluded to borrow or lend business licenses for the purpose of participating in the bidding process. The manner of their participation in the bidding falsely created the appearance that three separate companies were participating in the bidding, causing competing companies to lose an opportunity to compete fairly for the project, undermining the ethical principles of commercial competition, and hindering the function of market mechanisms in setting a fair price for the project. These were obviously unfair acts sufficient to affect trading order, and thus constituted a violation of Article 24 of the FTL. Because these violat ions occurred before the amended Law took effect on 5 February 1999, the case was disposed pursuant to the fore part of Article 41 of the FTL in effect at the time of the acts. Appendix: Hsu Fu-jen's Uniform Invoice Number: S121163491 Fan Kuang-tse's Uniform Invoice Number: R120001580 Teng Ming-yao's Uniform Invoice Number: E120955083 Chia Hsing Construction's Uniform Invoice Number: 75917855 Ho Yi Construction's Uniform Invoice Number: 86542779 Wan Ko Lung Construction's Uniform Invoice Number: 84406378 Pin Hua Construction's Uniform Invoice Number: 84996389 Jui Yi Construction's Uniform Invoice Number: 89641582 San Fang Construction's Uniform Invoice Number: 89813281 Chien Shu Construction's Uniform Invoice Number: 86652070 Li Ying Construction's Uniform Invoice Number: 89842048 Tsai Te Construction's Uniform Invoice Number: 73732072 Chun Hua Construction's Uniform Invoice Number: 69647736 Cheng Ming Construction's Uniform Invoice Number: 14071504 Hsieh Ho Construction's Uniform Invoice Number: 85695473 Sheng Hung Construction's Uniform Invoice Number: 74700464 Chia Pin Construction's Uniform Invoice Number: 91961998 Summarized by Wu, Min-Show; Supervised by Tso, Tien Liang