Shih Yi Road Machinery Co., Ltd. and nine other enterprises engaged in concerted action to raise the price of street excavation in violation of the Fair Trade Act

Chinese Taipei

Shih Yi Road Machinery Co., Ltd. and nine other enterprises engaged in concerted action to raise the price of street excavation in violation of the Fair Trade Act

Key Words:

asphalt excavation, association

Reference:

Fair Trade Commission Decision of August 7, 2003 (the 613th Commissioners’ Meeting); Disposition Kung Chu Tzu No. 092143

Industry:

Highway and Street Construction (3802)

Relevant Law:

Articles 14 of the Fair Trade Law

Summary:

1. This case was initiated through a letter from the Kaohsiung Office of the Ministry of Justice Investigation Bureau that stated in summary as follows:
Guo Ming-Huei and the responsible person of Shih Yi Road Machinery Co., Ltd. (Shih Yi), Zhang Shih-Jie, sought to monopolize asphalt street excavation projects in central Taiwan by forming the non-registered Central Taiwan Asphalt Excavation Industry Association from June to July of 2000, and demanding that future projects taken on by members shall charge a minimum of NT$25 per square meter, with NT$3 per square meter of every project collected by the association, an alleged act of concerted action in the raising of street excavation prices.

2. Road maintenance projects are awarded through bidding by builders or asphalt companies, which then subcontract preparatory asphalt excavation work out to downstream excavation enterprises. Prior to 1998, the average price of street excavation in central Taiwan stood at about NT$30 per square meter (to a depth of 5 cm). Competition within the industry subsequently drove prices down to around NT$15 per square meter. In August 2000, following the establishment of the Central Taiwan Asphalt Excavation Industry Association, the price of street excavation in central Taiwan again rose to around NT$20 per square meter.

3. The Fair Trade Commission’s investigation determined that Shih Yi, Guang Tai Road Machinery Co., Ltd. (Guang Tai), Cyuan Ji Road Machinery Co., Ltd. (Cyuan Ji), Heng Tong Road Machinery Co., Ltd. (Heng Tong) and Yong Sheng Road Machinery Co., Ltd. (Yong Sheng) convened a meeting attended by central Taiwan street excavation contractors in mid-August 2000, during which the Central Taiwan Asphalt Excavation Industry Association was formed. The members came to a mutual understanding to raise the price of street excavation to NT$25 or higher per square meter and prescribed non-compliance penalties and the scope of the business covered. Sin Chuang Engineering Co., Ltd. (Sin Chuang) and Jih Ping Enterprise Ltd. (Jih Ping) joined the association soon thereafter. On 11 October of the same year, the above seven enterprises agreed on a geographical area of operations for each, with relatively major construction projects in each area going to the association member in that area. Peng Si Building Contractor Enterprise, Ltd., Sia Shih Road Machinery Co., Ltd. and Sin Sheng Engineering did not join the association until after the year’s end. Association members further agreed on 26 March 2001 to fine those members who performed street excavation work for less than NT$20 per square meter. The above 10 enterprises therefore did indeed establish and or participate in the Central Taiwan Asphalt Excavation Industry Association and did indeed act in concert to raise the price of asphalt street excavation work in violation of the provisions of Article 14(1) of the Fair Trade Act prohibiting concerted action. The Fair Trade Commission therefore rendered a disposition under the fore part of Article 41 ordering the 10 enterprises to immediately cease the concerted action, and imposed an administrative fine of NT$200,000 on Shih Yi and of NT$100,000 each on Cyuan Ji, Heng Tong, Guang Tai, Sin Chuang, Jih Ping and Yong Sheng.

Appendix:
Shih Yi Road Machinery Co., Ltd.’s Uniform Invoice Number: 16191504
Cyuan Ji Road Machinery Co., Ltd.’s Uniform Invoice Number: 84162106
Heng Tong Road Machinery Co., Ltd.’s Uniform Invoice Number: 89880680
Guang Tai Road Machinery Co., Ltd.’s Uniform Invoice Number: 16648222
Sin Chuang Engineering Co., Ltd.’s Uniform Invoice Number: 89731401
Jhih Ping Enterprise Ltd.’s Uniform Invoice Number: 89211295
Yong Sheng Road Machinery Co., Ltd.’s Uniform Invoice Number: 67870358
Sin Sheng Engineering’s Uniform Invoice Number: 18196575
Peng Si Building Contractor Enterprise, Ltd.’s Uniform Invoice Number: 16680828
Sia Shih Road Machinery Co., Ltd.’s Uniform Invoive Number:89227058

Summarized by Huang, Chung-Chieh; Supervised by Tso, Tien-Liang