The Chiayi City Trade Association of Eyewear and Timepiece Dealers demanded that all local eyewear dealers cooperate in a price cartel, in violation of the Fair Trade Law
Case:
The Chiayi City Trade Association of Eyewear and Timepiece Dealers demanded that all local eyewear dealers cooperate in a price cartel, in violation of the Fair Trade Law
Key Words:
trade association, price competition, affect trading order
Reference:
Fair Trade Commission Decision of October 18, 2001 (the 519th Commissioners' Meeting); Disposition (90) Kung Ch'u Tzu No. 177
Industry:
Eyewear and Timepiece Manufacturing (3040)
Relevant Law:
Article 14 of the Fair Trade Law
Summary:
1. This case arises from a complaint of an eyewear dealer, alleging that the Chiayi City Trade Association of Eyewear and Timepiece Dealers had sent out letters requiring all eyewear dealers in Chiayi City to: (1) refrain from price competition involving the offer of special NT$0 or NT$1 prices for their products; and (2) stop distributing printed materials, advertising on media, or giving out free gifts intended to publicize such discount offers. According to the complaint, the letter stated that should any dealers refuse to cooperate with the resolution reached by the Chiayi City Trade Association of Eyewear and Timepiece Dealers, the Chiayi City Trade Association of Eyewear and Timepiece Dealers would join forces with other trade associations in the same industry at the provincial, county, and city levels to mete out punishment. The complaint further alleged that the letter required all eyewear dealers to adopt uniform retail prices and participate in a market monopoly, which would be a possible violation of the principle of free market competition.2. The Fair Trade Commission's investigation found that the Chiayi City Trade Association of Eyewear and Timepiece Dealers, in an effort to put an end to malicious competition, had called a meeting of eyewear dealers on 27 October 2000. A resolution was adopted at the meeting requiring eyewear dealers to refrain from mentioning specific prices in their advertising, and from offering special NT$1 or NT$0 prices for their products. The investigation further showed that the same trade association called a second meeting on 13 November, at which it adopted another resolution requiring eyewear dealers not to offer NT$1 or NT$0 prices for their products. The trade association sent out letters to association members requiring them to abide by the terms of the resolutions. These letters stated that any eyewear dealers who refused to abide by the resolutions would be boycotted by fellow dealers, and that the Taiwan Federation of Trade Associations of Eyewear and Timepiece Dealers would take punitive action.3. At internal meetings called on 27 October 2000 and 13 November 2000, the Chiayi City Trade Association of Eyewear and Timepiece Dealers established a strongly worded requirement that eyewear dealers "should never again specify actual prices in their advertising for any products whatsoever," and sent out letters to all association members to request that "any dealer who discovers that another dealer has violated the resolutions should immediately inform the trade association so that other dealers and the association can jointly deal with uncooperative bad apples who destroy solidarity." These practices restricted market competition among the eyewear dealers of Chiayi City, and constituted concerted action affecting supply and demand in the spheres of production, commerce, and services. The Chiayi City Trade Association of Eyewear and Timepiece Dealers was thus found in violation of Article 14 of the Fair Trade Law, and was fined NT$50,000 in accordance with Article 41 of this same Law.Summarized by Chou, Yu-Wei; Supervised by Shih, Chin-Tsun