Securities & Futures Institute of the Republic of China allegedly restricted the resale price of its books in violation of the Fair Trade Law
Case:
Securities & Futures Institute of the Republic of China allegedly restricted the resale price of its books in violation of the Fair Trade Law
Key Words:
market position, sample test questions, undertaking
Reference:
Fair Trade Commission Decision on May 2, 2002 (the 547th Commissioners' Meeting); Disposition (91) Kung Ch'u Tzu No. 091080
Industry:
Other Securities (6319)
Relevant Law:
Article 18 of the Fair Trade Law
Summary:
1. This case originated with consumer complaints e-mailed to the online public-service "Prime Minister's Mailbox" and transferred to the Fair Trade Commission (FTC). In summary, the complaints alleged that the Securities and Futures Commission, the Ministry of Finance (SFC) authorized the Securities & Futures Institute (SFI) to conduct examinations for securities and futures brokers' certificates. The SFI printed and published reference books of sample test questions and asked booksellers who distribute the above books to sign undertakings in which the booksellers promise to sell individual volumes at no less than the SFI's published retail price and the complete set at no less than the SFI's discount retail price. If they failed to adhere to the published resale prices, the SFI would stop supplying such books to them. 2. Upon investigating the case, the FTC discovered the SFI demanded six booksellers to sign undertakings not to sell any single volume or complete set of the Study Guide and Sample Test Series published by the SFI at prices below the SFI's prescribed prices. The SFI would cease offering preferential prices to booksellers violating these stipulations. FTC personnel conducting on-site investigations of the business places of booksellers also discovered that the sellers who had signed the undertaking posted the undertaking on the wall above the counter in their stores to inform consumers thereof. The sellers also acknowledged the SFI did impose limitations on the resale prices of the sample test books. The SFI claimed that the prices prescribed in the contested undertaking were only in the nature of recommendations and had no binding force, and produced as evidence statements signed by the booksellers that had signed the undertaking. Nevertheless, the FTC's investigation results revealed that, of the six booksellers that had signed the undertaking, one did not sell the books and the other five were unable to produce any evidence showing that they did not sell the books to general consumers at the prescribed prices. Furthermore, the FTC also discovered that the contested undertaking contained a penalty provision that the SFI would no longer offer preferential prices to booksellers violating the set pricing. Therefore, the assertion that the prices prescribed in the contested undertaking were simply in the nature of recommendation and had no binding force was found untenable. Consequently, the SFI violated Article 18 of the Fair Trade Law by preventing booksellers from freely decide their resale prices for the books at issue. 3. The SFI demanded the six booksellers to sign an undertaking in which they promise not to sell any single volume or complete set of the Study Guide and Sample Test Series published by the SFI at prices lower than the SFI's fixed prices. The SFI also expressly stated that it would no longer offer preferential prices to the booksellers violating such pricing. These acts violated Article 18 of the Fair Trade Law. Weighing such factors as the SFI's position as an examiner in securities and futures broker's certificates, its market position, the degree to which the violations damaged trading order, the duration of the violations, and the evidence of repentance, the FTC ordered the SFI to immediately cease its resale price limitations on its trading counterparts as of the day next following the date of service of the disposition and imposed an administrative fine of NT$200,000 pursuant to the fore part of Article 41 of the Fair Trade Law.Appendix: Securities & Futures Institute, Republic of China's Uniform Invoice Number: 21101644 Summarized by Wu, Pi-Ju; Supervised by Wu Te-Sheng