Niko Mart violated the Fair Trade Law for exploiting its advantageous market position to collect improper additional fees from a supplier
Case:
Niko Mart violated the Fair Trade Law for exploiting its advantageous market position to collect improper additional fees from a supplier
Key Words:
advantageous market position, additional fees
Reference:
Fair Trade Commission Decision of June 7, 2001 (the 500th Commissioners' Meeting); Disposition (90) Kung Ch'u Tzu No. 087
Industry:
Convenience Store Chain Industry (4753)
Relevant Law:
Article 24 of the Fair Trade Law
Summary:
1. The complainant is a supplier of Niko Mart and engaged in the business of tobacco and alcohol purchasing and sales. It alleged that Niko Mart exploited its advantageous market position to collect improper additional fees from its suppliers.2. According to the "Trading Agreement" between Niko Mart and the complainant, the complainant was required to pay three "Sponsorship Fees" - a "New Store Opening Sponsorship Fee," "Annual Founding Anniversary Sponsorship Fee," and "Thanksgiving Anniversary Sponsorship Fee" - in a certain amount for each new store opening for each June founding anniversary, and for each 100th store opening celebration, respectively. Account and invoice information concerning Niko Mart and the complainant was sufficient to prove that Niko Mart had in fact collected a new store opening sponsorship fee and 100th store opening sponsorship fee from the complainant. The amount of sales between the complainant and Niko Mart during the transaction period was NT$1.83 million, in which the additional fees collected accounted for 17% of those sales.3. Decision and Reasons for Disposition:(1) Niko Mart had only a 4.1% share of the convenience store market as of the end of 1998. However it had 206 stores nationwide at that time and expanded to 261 stores as of the end of 2000. Its operational scale was growing steadily. If Niko Mart agreed to carry a supplier's products, those products could at once be displayed for sale on the shelves of more than 200 Niko Mart stores in Chinese Taipei. As consumers of tobacco products in Chinese Taipei customarily make their purchases from retail vendors, Niko Mart was obviously an important trading counterpart of the complainant due to its control over the terminal distribution market, which is equivalent to a control over the retail market. In addition, the amount of sales between the complainant and Niko Mart during the transaction period was NT$1.83 million, in which the collected additional fees accounted for 17% of those sales. Hence Niko Mart's advantageous market position must have been one of the important reasons why the complainant was willing to accept those trade terms. It is evident that Niko Mart possessed an advantageous market position vis-a-vis the complainant.(2) In the "Trading Agreement," the "New Store Opening Assistance and Sponsorship Fee" and a "Thanksgiving (100th Store) Celebration Sponsorship Fee" were stipulated. Under these clauses, for each new store opening or 100th store opening, a "New Store Opening" fee and a "100th Store" fee would be collected, respectively. There was no direct connection between the collection of those fees and product promotion. The collection of the additional fees had violated general commercial ethics to the extent that it had improperly suppressed the trading counterpart of Niko Mart. Niko Mart improperly exploited its advantageous market position to force its trading counterparts into accepting unfair trade terms. Such a conduct had harmed fair and efficient competition and undermined legitimate and reasonable market trading order. Therefore Article 24 of the Fair Trade Law is applicable in this case. (3) After weighing Niko Mart's motives for its unlawful conduct, its purposes, the degree of harm caused to trading order, its business scale and operational condition, market position, the record of any past violation, and its attitude after violation etc., pursuant to the forepart of Article 41 of the Fair Trade Law, the Fair Trade Commission ordered Niko Mart to immediately cease the conduct in question and imposed an administrative fine of NT$600,000.Appendix:Niko Mart's Uniform Invoice Number: 22853777Summarized by Tai, Pei-Yi;Supervised by Chen, Yuhn-Shan