Four asphalt excavation enterprises in
the Kaohsiung-Pingtung area allegedly violated the Fair Trade Law by collusively
stipulating project prices through a networking association
Chinese Taipei
Case:
Four asphalt excavation enterprises in the Kaohsiung-Pingtung area allegedly violated the Fair Trade Law by collusively stipulating project prices through a networking association
Key Words:
networking association, asphalt pavement excavation
Reference:
Fair Trade Commission Decision of July 11, 2002 (the 557th Commissioners' Meeting); Disposition (91) Kung Ch'u Tzu No. 091112
Industry:
Other Petroleum and Coal Products (1990)
Relevant Law:
Article 14 of the Fair Trade Law
Summary:
1. The Fair Trade Commission (FTC) received a complaint that four asphalt pavement excavation enterprises (respondents) in the Kaohsiung-Pingtung area, namely Feng Hua Engineering Co., Ltd., Hong Sung Road Engineering Ltd., Tui Lung Engineering Co., Ltd., and Ho Hua Engineering Co., Ltd., reached an agreement to form a networking association and determined collusively to increase their prices for undertaking asphalt pavement excavation projects by NT$6 per square meter to avoid price competitions and exploitation by construction companies. NT$2 of the increase in price would serve as membership dues for the purpose of settling disputes and the remaining NT$4 was to be allocated to the three companies not undertaking a given construction project. This agreement was suspected to be a violation of the Fair Trade Law.
2. Upon investigating the case, the FTC discovered that the respondents were the only four asphalt pavement excavation enterprises remaining in the Kaohsiung-Pingtung area that provided asphalt excavation services for construction companies awarded the bids for road construction projects. The four companies first formed a networking association in Kaohsiung City on 1 August 1996, and stipulated among themselves proportions and prices for undertaking construction projects. The networking association operated continuously until early 1998 when it was temporarily suspended. In October 1999, the association resumed operation, which continued until 7 September 2000. During the periods of its operation, the association in question caused an overall price increase in the Kaohsiung-Pingtung asphalt excavation market and thus had a significant impact. The four enterprises consequently earned huge improper benefits.
3. During the FTC's investigation, the respondent Tui Lung Engineering Co., Ltd. still held on to its affirmation of the functions of the networking association. Furthermore, its de facto responsible person actively participated in the establishment and operation of the association. Therefore, Tui Lung Engineering Co., Ltd. is found to have a relatively malicious motive for the violation. Another respondent, Hong Sung Road Engineering Ltd., took part in the operation of the association, but only insofar as to follow the requirements of the association. It did not take any initiative in promoting the formation of the association and afterward showed repentance for the violations of the association. The third respondent, Feng Hua Engineering Co., Ltd., expressed unwillingness to participate in the joint conduct of the association. As a result of its refusal to follow the requirements of the association regarding project allocation, Feng Hua personnel were violently assaulted by a crowd led by a member of the association staff, Chen Feng-lung. It was thus found that the enterprise, regardless of its membership in the association, did not cooperate in the association's operations or take the initiative in promoting its formation. As for the other respondent, Ho Hua Engineering Co., Ltd., no disposition was rendered because it was registered as dissolved on 9 July 2002.
In summary, Feng Hua Engineering Co. Ltd., Hong Sung Road Engineering Ltd., and Tui Lung Engineering Co., Ltd were deemed to have violated Article 14 of the Fair Trade Law. Weighing the severity of the individual violations, the FTC ordered the respondents to immediately cease the violations and imposed an administrative fine of NT$3 million on Tui Lung Engineering Co., Ltd. and another NT$1.5 million on Hong Sung Road Engineering Ltd.
Appendix:
Tui Lung Engineering Co., Ltd.'s Uniform Invoice Number: 89275071
Hong Sung Road Engineering Ltd.'s Uniform Invoice Number: 23661853
Feng Hua Engineering Co., Ltd.'s Uniform Invoice Number: 89435345
Summarized by Wu, Pi-Ju; Supervised by Wu, Te-Sheng