Wei Hsing Industrial Ltd., Kang Hsin Industrial Ltd., and Ting Cheng Ltd. were alleged to improperly participate in a bidding held by Po Chia Primary School in Taipei's Wenshan District in violation of the Fair Trade Law

Chinese Taipei



Case:

Wei Hsing Industrial Ltd., Kang Hsin Industrial Ltd., and Ting Cheng Ltd. were alleged to improperly participate in a bidding held by Po Chia Primary School in Taipei's Wenshan District in violation of the Fair Trade Law

Key Words:

call for bidding

Reference:

Fair Trade Commission Decision of June 12, 2003 (the 605th Commissioners’ Meeting); Disposition Kung Ch'u Tzu No. 092096

Industry:

Mechanics, Electricity, and Pipe Lines Construction (4001)

Relevant Law:

Article 24 of the Fair Trade Law

Summary:

1. This case originated with a letter to the Fair Trade Commission (FTC) from the Seafarers Investigation Office of the Ministry of Justice Investigation Bureau. The letter indicated that when Po Chia Primary School in Taipei's Wenshan District conducted a call for bidding on a “centralized surveillance system and alarm and rescue system” in January 1999, the principle of the school, a Mr. Lin Tu-sheng, had reached an agreement in advance with a Mr. Chang Ch’ang-shou, a shareholder of Wei Hsing Industrial Ltd. (Wei Hsing), that Wei Hsing would get the contract for the project. To meet the requirements of the bidding concerning the minimum number of participants, Wei Hsing borrowed licenses from Kang Hsin Industrial Ltd. (Kang Hsin) and Ting Cheng Ltd. (Ting Cheng) and entered them in the bidding. Wei Hsing subsequently was awarded the contract for the project. The Seafarers’ Investigation Office referred the matter by letter to the FTC for investigation of a possible violation of Article 24 of the Fair Trade Law, and submitted its investigation records and relevant materials along with the letter.

2. In it investigation the FTC found as followings:
(1) Wei Hsing’s shareholder Mr. Chang Chang-shou admitted that he was acquainted with Po Chia Primary School Principal Lin Tu-sheng, and that Principal Lin Tu-sheng had promised that Wei Hsing would be given the contract at issue. However, the contracting procedures had to conform to regulations concerning the minimum number of participating bidders, so Wei Hsing borrowed licenses from Kang Hsin and Ting Cheng to give the appearance of conformance with the regulations.
(2) Kang Hsin and Ting Cheng loaned the licenses to Wei Hsing out of trust or the intention of helping out a friend, and did not obtain any compensation or benefit for doing so. All of the matters involved in the bidding, including filling out the bidding documents, mailing the bidding envelopes, paying the bidding bonds, and attending the opening of bids, were handled in full by Wei Hsing of its own discretion.

3. Reasons for disposition:
(1) The collaborating participants Kang Hsin and Ting Cheng each indicated that they loaned the licenses solely out of friendship and did not obtain any benefit for doing so, and that at the time they loaned the licenses they did not know what project Wei Hsing would be bidding on or what its chances of winning were. So, although the two companies acted improperly, the FTC would not issue a disposition against them because their behavior was not highly pernicious, and the acts were committed before the 5 February 1999 amendment to the Fair Trade Law.
(2) As for Wei Hsing's use of borrowed licenses to create the false appearance that a certain number of competitive bidders were taking part in the bidding, thus depriving real competitors of trading opportunities, Wei Hsing’s conduct impaired ethical business competition and impeded the operation of market price mechanisms. It constituted obviously unfair act sufficient to affect trading order, in violation of Article 24 of the Fair Trade Law in effect at the time of the violation. Because the conduct took place before the amendment to the Fair Trade Law that took effect on 5 February 1999, Wei Hsing was ordered to cease the violations under the forepart of Article 41 of the Fair Trade Law in effect at the time of the violations.

Appendix:
Wei Hsing Industrial Ltd.’s Uniform Invoice Number: 96957451

Summarized by Lin, Chia-Hua; Supervised by Wu, Bi-Ju