Primary furniture exhibitors at the Taipei World Trade Center and the furniture industry associations of Kaohsiung City and County interfered with and restrained furniture-selling methods of individual enterprises by organizational manipulation and impaired market competition in violation of prohibition against concerted action in Article 14 of the Fair Trade Law
Case:
Primary furniture exhibitors at the Taipei World Trade Center and the furniture industry associations of Kaohsiung City and County interfered with and restrained furniture-selling methods of individual enterprises by organizational manipulation and impaired market competition in violation of prohibition against concerted action in Article 14 of the Fair Trade Law
Key Words:
furniture show, exhibition, participating in exhibitions
Reference:
Fair Trade Commission Decisions of November 16, 2000 (the 471st Commissioners' Meeting), January 18, 2001 (the 481st Commissioners' Meeting); Dispositions (90) Kung Ch'u No. 029 and 030
Industry:
Wood Furniture and Fixtures Manufacturing (1411)
Relevant Laws:
Summary:
1. A complaint was filed against primary furniture exhibitors at the Taipei World Trade Center alleging that they established the "Taiwan Association for Furniture Exhibitors" during 1999 and 2000, demanded a reduction in the number of furniture shows, and further restrained their members from participating in furniture exhibitions, in violation of the Fair Trade Law (FTL). During its investigation of the case, the Fair Trade Commission (FTC) received another complaint alleging that the furniture industry associations of Kaohsiung City and County also barred their members from participating in exhibitions that they had not recognized, in violation of the FTL. 2. Investigations and findings by the FTC are as follows: Article 21 of Bylaws and Internal Operational Regulations of the "Taiwan Association for Furniture Exhibitors" specifies that when any of its members joins the association, in addition to the entry fee and annual membership fee, it must write a check dated 31 December of the current year and with a face amount of NT$300,000 as a security deposit. If any member participates in exhibitions the association has not recognized, the security deposit will be confiscated by the association. Moreover, the association also issued a letter on 26 January 2000 reminding its members that participating in furniture shows not recognized by the association would lead to confiscation of the security deposit. In that letter, the schedules of the shows they had recognized were enumerated. The association admitted that it did take an NT$300,000 security deposit from all of its members (but did not confiscate any), and 24 of its members also confessed to having paid the association NT$300,000. The above fact is sufficient to prove that members of the association did engage in mutual restriction of business activities pursuant to the Association's Bylaws and Internal Operational Regulations. The Kaohsiung City Furniture Industry Association organized an "Association for Furniture Exhibitor Friendship," through which it convened two meetings (one of them was a directors and supervisors meeting of the Industry Association). At the meetings, it decided the schedules of furniture shows at the Greater-Kaohsiung World Trade Center Exhibition Hall. It also sent a letter to all of its members, warning them against participating in furniture shows unrecognized by the association to avoid protests by its members or other furniture manufacturers. The Kaohsiung County Furniture Industry Association also informed its directors and supervisors about the resolution of the meetings and the details of the declaration. The association indicated that it had expressed its position clearly in this way, and if any of its members still intended to participate in unrecognized shows, they would suffer on their own if they met with any protest or egg-throwing. 3. During the past three years, the members of the Taiwan Association for Furniture Exhibitors have always rented up 52 to 59 % of the exhibition booths available in the specified market of the furniture shows. It is obvious that they have always been the primary exhibitors participating in furniture shows. Their concerted action had a substantive effect on the market supply and demand for the services offered by the Taipei World Trade Center Exhibition Hall. In addition, the association used the NT$300,000 security deposit as a tool to restrict and interfere with the furniture-selling methods of individual members of the association (that is, if any of its members participate in furniture shows unrecognized by the association, their security deposit will be confiscated by the association). This conduct undermined the individual enterprises' rights to freely participate in commercial activities and constituted a concerted action taking the form of "mutual restraint of business activities" as stated in Article 7 of the FTL. A trade association is a type of enterprise as defined and regulated in Article 2 of the FTL. If any conduct of a trade association restrains competition in particular goods or services and thus impedes market functions, it violates the provisions prohibiting concerted action. The furniture industry association of Kaohsiung City and County jointly decided at two meetings to restrict the number of furniture shows in which their members could participate, and the Kaohsiung County Furniture Industry Association even issued this decision to its members. These Associations' acts of interfering with and restraining furniture-selling methods of individual enterprises through organizational manipulation were sufficient to adversely affect competitive mechanisms in the greater-Kaohsiung market for furniture exhibition services, in violation of the prohibitive provisions of Article 14 of the FTL. Summarized by Ma, Ming-Ling; Supervised by Wu, Te-Sheng