Far Eastern Air Transport Corp., TransAsia Airway Corp., and Uni Airways Corp. accused of violating the Fair Trade Law by offering lower prices for domestic route tickets to Cheng Hsin Travel Service
Chinese Taipei
Case:
Far Eastern Air Transport Corp., TransAsia Airway Corp., and Uni Airways Corp. accused of violating the Fair Trade Law by offering lower prices for domestic route tickets to Cheng Hsin Travel Service
Key Words:
discriminatory treatment
Reference:
Fair Trade Commission Decision of June 20, 2002 (the 554th Commissioners' Meeting); Letters Kung Yi Tzu No. 0910005933, 0910005934
Industry:
Civil Air Transportation (5510)
Relevant Law:
Article 19(ii) of the Fair Trade Law
Summary:
1. The Fair Trade Commission received a complaint alleging that Far Eastern Air Transport Corp., TransAsia Airway Corp., and Uni Airways Corp. jointly established Cheng Hsin Travel Service and subsequently offered lower priced tickets for domestic routes to that agency. Cheng Hsin Travel sold tickets through the “ezyfly.com” website established by EZYFLY.COM Corporation (EZYFLY Corp.). In contrast, the above-mentioned three Airlines offered higher priced tickets to conventional travel agencies, resulting in the loss of their customer base. In addition, when other on-line ticket sales and reservation agents sought ticket distribution partnerships with Far Eastern, TransAsia and Uni Airways, all were refused, thus violating the Fair Trade Law's provisions against acts of discriminatory treatment.
2. Through investigation it was discovered that Far Eastern, Goldsun Development and Construction Co., Ltd. (the parent company of TransAsia), and Uni Airways indirectly invested in and established EZYFLY.COM Corporation and Cheng Hsin Travel through British Cayman Islands companies EZYFLY.COM Investment Corp. and EZYFLY.COM Holding Corp. Through the “easyfly.com” website platform established by EZYFLY Corp. and Cheng Hsin Travel, Far Eastern, TransAsia, and Uni Airways sold tickets offering advanced booking discounts and favorable ticket prices for specific flights on domestic routes. Far Eastern, TransAsia and Uni Airways separately gave 5% commission on ticket sales (based on total sales volume) as well as 3% of system utilization charges to Cheng Hsin Travel and EZYFLY Corp.
3. According to Article 19(ii) of the Fair Trade Law, an enterprise shall not “treat another enterprise disciminatively without justification” where such act is likely to restrict competition or impede fair competition. Article 24 of the Enforcement Rules of the Fair Trade Law further provides as follows:
The following factors shall be taken into consideration when determining whether a justification exists as referred to in Article 19(ii) of the Law:
Although discounts and favorable rates for tickets sold through EZYFLY Corp.'s “ezyfly.com” website were obviously different from those offered to conventional travel services, the ticket prices on the “ezyfly.com” website were not all cheaper than those sold by conventional travel services or airline ticket counters. Furthermore, the discounts and favorable rates only applied to tickets with advanced reservation, guaranteed seating, more stringent refund restrictions or other similar conditions. For the airlines, if these conditions indeed help in lowering management and transaction costs, raise passenger rates and therefore give more favorable ticket prices to passengers willing to accept the aforementioned transaction conditions, it should fall under the “reasonable grounds” in Article 24(ii) of the Enforcement Rules of the Fair Trade Law.
Regarding agents of on-line ticket sales and reservation services who sought ticket distribution partnerships with Far Eastern, TransAsia and Uni Airways and were refused, the three above-mentioned airlines all denied previously receiving “formal requests” for such partnerships. Furthermore they stated that they were willing to establish, under the premises of compatibility and security, contractual partnerships with other on-line ticket sales and reservation platforms for the expansion and development of ticket distribution.
Without further evidence to support the accusation that the aforementioned three airlines refused transactions for improper reasons or engaged in discriminatory treatment, it could not be concluded that the airlines engaged in discriminatory treatment in violation of Article 19(ii) of the Fair Trade Law.
4. However, to avoid price discrimination or continued refusal of requests by other online ticket sales and reservation agents for ticket distribution partnerships, and to ensure fair market competition, the Fair Trade Commission resolved to issue a letter warning Far Eastern, TransAsia, and Uni Airways to avoid refusing, without justification, requests by other online ticketing agents to sell tickets for those airlines and to avoid price discrimination in tickets offered to such other online agents, so as to avoid violating Fair Trade Law provisions against discriminatory treatment.
Appendix:
Far Eastern Air Transportation Corp.'s Uniform Invoice Number: 03522003
TransAsia Airway Corp.'s Uniform Invoice Number: 11719802
Uni Airways Corp.'s Uniform Invoice Number: 22958771
EZYFLY.COM Corporation's Uniform Invoice Number: 70464468
Cheng Hsin Travel Service's Uniform Invoice Number: 23050826
Summarized by: Liao, Hsien Chou; Supervised by Lee, Wen Hsiu