Tai Ta Gas Station Co., Ltd. was complained for improperly hoarding rice wine, an obviously unfair practice sufficient to affect trading order, in violation of Article 24 of the Fair Trade Law

Chinese Taipei

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1. This case was initiated on 30 November 2001 when agents of the Taichung office of the Department of Marine Industry and Personnel Investigations, under the Ministry of Justice Investigation Bureau, removed 34,504 bottles (30,144 PET bottles, 4360 glass bottles) of improperly hoarded rice wine from the Lungching Township place of business of the Tai Ta Gas Station Co. Ltd. (the respondent), at No. 212 Linkang Road, Section 1, in Lungching, Taichung County. The case, believed to involve violations of the Fair Trade Law, was turned over to the Fair Trade Commission (FTC) for investigation.

2. Based upon the results of the FTC's investigation, the respondent, operator of five gas stations in Hsinying, Fengyuan, Huatan, Lungching and Shenkang, hoarded four to five thousand cases of rice wine without first applying for a tobacco and alcoholic beverage retail sales permit from the Taiwan Tobacco and Wine Monopoly Bureau, the competent authority for tobacco and alcoholic beverage control at the time. The major sources of the rice wine purchased by the respondent were Hsieh Tong Ching Ltd. and Western Tobacco and Spirits, Ltd., though the respondent made its purchases elsewhere as well. The bottles of hoarded rice wine were to serve as free giveaways to lure customers in a promotion. As part of the respondent's free giveaway promotion, during the special offer period, those holding preferred customer cards who accrued 986 points from gasoline fill-ups on those cards would receive two free bottles of rice wine while ordinary customers accruing 1988 points from fill-ups would receive one bottle of free rice wine. At the Lungching station, 1,486 points would earn a free bottle of rice wine while at Huatan, only 886 points were needed. Details of the promotion's content were left to each individual station to decide upon based on the competitive circumstances at their location. The respondent had been conducting similar free giveaway promotions for two or three years.

3. The respondent in this case procured large amounts of rice wine for use in promoting sales of its core product; however, given that demand had outstripped supply in the rice wine market since March 1999, and given also the relatively irreplaceable nature of rice wine as an everyday consumer staple, the respondent's improper acts of hoarding led to an even more serious imbalance in supply and demand in the rice wine market, making it even more difficult for ordinary consumers to easily obtain through normal market channels. Further, the respondent itself became a market force through its purchases of such considerable quantities of rice wine, leading to further imbalance in supply and demand in the market. With the rice wine market already in a state of supply and demand imbalance at the time, the offering of rice wine at that time as a free giveaway to promote sales of its own core products acted as an economic inducement to potential trading partners, encouraging them to elect to trade with the respondent and constituting obviously unfair competition with those enterprises that had not offered free rice wine giveaways. As such, the respondent's acts were obviously unfair and condemnable under normal business ethics, detrimental to the public interest and sufficient to affect trading order, in violation of Article 24 of the Fair Trade Law. The FTC considered the respondent's motives, the purpose of the unlawful acts and the anticipated inappropriate profits derived from the said acts, the degree of disruption to trading order caused by the unlawful acts, the time period lasted, evidence of remorse, the impact upon society and the economy, the quantity of rice wine confiscated and the degree of cooperation following said seizure, and in accordance with the provisions of the fore part of Article 41 of the Fair Trade Law, ordered the respondent to immediately cease all aforementioned unlawful practices on the day following the receipt of the formal disposition notice.

Appendix:

Tai Ta Gas Station Co. Ltd.'s Uniform Invoice Number: 97001624

Summarized by Wu, Pi-Ju; Supervised by Tsai Shing-Daw