The National Institute for Compilation and Translation allegedly placed improper restrictions on the qualifications for printers of elementary school textbooks, in violation of the Fair Trade Law
Case:
The National Institute for Compilation and Translation allegedly placed improper restrictions on the qualifications for printers of elementary school textbooks, in violation of the Fair Trade Law
Key Words:
advantageous position, invitation to tender, copyright, specific markets
Reference:
Fair Trade Commission Decision of August 2, 2001 (the 508th Commissioners' Meeting) and August 23, 2001 (the 511th Commissioners' Meeting); Disposition (90) Kung Ch'u Tzu No. 118
Industry:
Public Administration (9111)
Relevant Law:
Article 19(ii) of the Fair Trade Law
Summary:
1. A complaint alleged that the National Institute for Compilation and Translation (the Institute) organized the printing of textbooks for five academic courses by direct award to specific "Printing Outlets for Ministry of Education-Published Textbooks for Elementary School Instruction" ("Printing Outlets") instead of by open tender. The complaint further alleged that the conduct in question was in violation of the Fair Trade Law. The Taipei District Court Prosecutors' Office referred the Control Yuan's opinion and related materials to the Fair Trade Commission (FTC), and requested that the FTC investigate whether the Fair Trade Law (FTL) had been violated. 2. The Institute is a government agency under the executive branch, while it signed two licensing contracts for the compilation and printing of Ministry of Education (MOE)-approved textbooks for the 1996~1998 and 1999 academic years. Furthermore, the Institute had licensed others to use the copyrighted works of the approved textbooks, received considerations, and required, in the position of a copyright owner, the licensees to perform their contractual obligations. Its conduct conformed to the criteria for an "Enterprise" under Article 2(iv) of the FTL, so it was subject to regulation. In the 1996~1999 academic years, the Institute had a 20% share of the elementary school textbook market, and a 33.8% share of the math textbook segment of that market. It acknowledged that its average market share was 30%. Hence the Institute had an obviously advantageous position in the approved textbook market. 3. Beginning in the 1996 academic year, the local elementary school textbook market was gradually opened year by year to approved textbooks. Yet the Institute failed to recognize that textbooks had already become a commodity, and that the MOE-published approved textbooks were already in competition with private sector-published approved textbooks. Given that the Institute licensed others to use the copyrighted works of approved textbooks and received considerations, the Institute was ipso facto obligated to pay attention to the functioning of free and efficient competition in the market. The FTC explained in a 1 April 1994 letter that "the qualifications related to Printers were likely to exclude competition." Despite this, on 1 August 1995, the Institute signed a three-year contract with the Printing Outlets for the compilation and printing of the textbooks. However, from the explanations given by the Institute, the FTC found the following with respect to the Printing Outlets: According to the Criteria for Textbooks Used in Public Schools promulgated in 1962, qualified Printing Outlets were confined to earlier established bookstores providing textbooks for individual courses offered in public schools, whose textbooks and teacher's manuals and pricing were approved and promulgated by the Institute in the 1967 academic year, and who were holders of certificates for operating registration, publisher registration, and tax filing for the most recent period. This precluded bookstores established after market deregulation (on 1 August 1996) (i.e. the recipients of the discriminatory treatment) from participating in trading opportunities in the market, even though they possessed the aforesaid certificates as well as compilation and printing capabilities. This conduct harmed fair competition among publishers in the local market and constituted an act of discriminatory treatment. Appendix: National Institute for Compilation and Translation's Uniform Invoice Number: 03735408 Summarized by Hou, Vh-Hsien; Supervised by Wu, Te-Sheng