The Hualien County Office of the Ministry of Justice Investigation Bureau requested an investigation into violations of the Fair Trade Law by companies bidding for public works projects being undertaken by Fenglin Chen (Township)
Case:
The Hualien County Office of the Ministry of Justice Investigation Bureau requested an investigation into violations of the Fair Trade Law by companies bidding for public works projects being undertaken by Fenglin Chen (Township)
Key Words:
public construction projects, invitation to tender, collusive bidding
Reference:
Fair Trade Commission Decision of July 19, 2001 (the 506th Commissioners' Meeting); Disposition (90) Kung Ch'u Tzu No. 095
Industry:
General Civil Engineering (4501)
Relevant Law:
Article 24 of the Fair Trade Law
Summary:
1. The Hualien County Office of the Ministry of Justice Investigation Bureau submitted relevant evidence in requesting that the Fair Trade Commission (FTC) investigate suspected violations of the Fair Trade Law in small-scale public construction projects for which the township offices of Fenglin Chen (Township), Hualien County, issued invitations to tender in November 1996. The respondent companies were suspected of using borrowed licenses to participate in the bidding. 2. The FTC's investigation found that Chia Ching Landscaping won the bid for Fenglin Chen Township's landscaping and beautification project. The actual responsible person for Chia Ching Landscaping, Mr.Lu Chung-Sung, acknowledged borrowing the business license and official seals (chops) of Wei Sung Landscape Construction for the purpose of bidding for the projects under the names of Chia Ching Landscaping and Sung Ya Landscaping. Lu eventually was awarded the bid in the name of Chia Ching Landscaping. The bid for a roadway drainage ditch improvement project in the Linjung Neighborhood (Shuiche Road agricultural road) and a drainage ditch construction project along Lane 18, Tachih Road in the Tajung Neighborhood was later awarded to Teng Shan Civil Engineering Contractors (Teng Shan). Teng Shan later confirmed that it had borrowed business licenses to secure the bid. Companies that were represented in the bidding, Sheng Hsiung Civil Engineering Contractors (Sheng Hsiung) and Hua Chou Civil Engineering Contractors (Hua Chou), later also confirmed lending their licenses out for use in the bidding. Hua Chou won the bidding for a drainage culvert construction project along Shuiyuan Road in No. 13 Lin of the Feng Yi Neighborhood and a slope revetment restoration project along Shanying Road in No. 13 Lin of the Shanhsing Neighborhood. Hua Chou later conceded that it had borrowed licenses to participate in the bidding and the other companies involved in the bidding, Teng Shan and Sheng Hsiung, acknowledged that they had lent Hua Chou their licenses for use in the bidding process. Also, the bid for a disaster damage repair project on the phase four agricultural roads in the Shanhsing Neighborhood was awarded to Fukien Civil Engineering Contractors (Fukien). Fukien, however, had lent its license to the actual participant in the bidding, Mr. Yang Ah-Chao. Mr. Yang admitted that a municipal employee had informed him that there was a project the Fenglin Township office would like him to undertake. Mr. Yang subsequently borrowed licenses from Fukien, Sheng Hsiung, and Hua Chou to participate in the bidding and was eventually awarded the project under the Fukien license. The other companies involved have all acknowledged lending their licenses to Yang. Hua Chou won the bidding for a disaster damage road repair project along Chung Hsin Road in the No. 13 Lin of the Shanhsing Neighborhood. Hua Chou admitted that it too had borrowed licenses to submit bids using Sheng Hsiung's and Fukien's names to secure the bid for the project. Sheng Hsiung admitted that it had lent its license to Hua Chou and Yang Ah-Chao said he had lent Fukien's license for Hua Chou's use in the bidding. 3. The borrowing of other companies' licenses by Mr. Lu Chung-Sung, Teng Shan Civil Engineering Contractors, Hua Chou Civil Engineering Contractors, Mr. Yang Ah-Chao and others for use in bidding on the Fenglin Township public construction projects created the false impression that three companies were bidding on each project when in fact there was only one, depriving competitors of the chance to engage in competitive bidding for trading opportunities, harming the ethics of free competition, and impeding the operation of market pricing mechanisms. These acts were obviously unfair practices sufficient to disrupt the trading order and constituted a violation of Article 24 of the Fair Trade Law. Appendix: Lu Chung-Sung's Uniform Invoice Number: U100914249 Teng Shan Civil Engineering Contractors's Uniform Invoice Number: 94822275 Hua Chou Civil Engineering Contractors's Uniform Invoice Number: 94808956 Yang Ah-Chao's Uniform Invoice Number: U100821632 Summarized by Wu Pi-Ju; Supervised by Wu, Te-Sheng