Taiwan Provincial Meat Merchants' Association made a decision to close for five consecutive days following the “Ghost Festival”

Chinese Taipei

Case:

Taiwan Provincial Meat Merchants' Association made a decision to close for five consecutive days following the “Ghost Festival”

Key Words:

meat merchants' association, consecutive days closure

Reference:

Fair Trade Commission Decision of August 7, 2003 (the 613th Commissioners' Meeting); Letter (92) Kung Yi Tzu No. 0920007664

Industry:

Wholesale of Livestock (4414)

Relevant Law:

Articles 14(1) of the Fair Trade Law

Summary:

1. This case originated with a Taiwan Provincial Government letter received by the Fair Trade Commission (FTC) attaching the minutes of the 2nd session of the 16th general members meeting of the Taiwan Provincial Meat Merchants' Association (the Association). The fourth motion for discussion is summarized as “How to deal with the substantial loss for large-scale member producers, resulting from the recent successive jumps in prices for live pork and thus the increased cost for material procurement, while the retail prices are not raised”. These issues were raised and a resolution passed at this meeting, concluding that five consecutive days of closure following Ghost Festival, which falls on the 15th day of the 7th lunar month (i.e., for closure from the 16th to the 20th of the lunar month) be implemented. Furthermore, in order to synchronize the implementation, the closure was coordinated with the Taipei and Kaoshiung Associations and letters sent out to national Association branches. Moreover, the signatures of city and county chairmen were obtained in support of the proposal. In light of the fact that the intent of this proposal was a market closure in response to increasing hog prices and, thus, would impact on market function, an investigation into the matter was initiated.

2. In the course of this investigation, the FTC found that due to the continuous surge in the prices for live pork, and also due to trading relationships that had been built up over the long term, Association members had difficulty in reflecting the new costs in their retail trade. Thus a proposal was raised and a resolution approved by members at the 2nd session of the 16 general members meeting to use a five-day market closure after the Ghost festival (which would fall on 8-13 August) to allow the trade price for live pork to stabilize.

3. Grounds for disposition:

(1) This general members meeting resolution for market closure, involving collective restriction of enterprise activity during normal trading periods, constituted horizontal concerted action according to the provisions of Article 7(4) of the Fair Trade Law. Due to the fact that the Association purchases approximately 80 to 90 % of live pork nationwide, the general members meeting resolution for a common market closure for the five days following Ghost Festival was sufficient to impact on the supply and demand functions of the national market for trade in live pork, thereby violating the provision prohibiting concerted action in Article 14(1) of the Fair Trade Law.

(2) After taking into consideration that this resolution was for market closure of only five days, and that the closure days were mainly an adjustment to the routine two-day closure by linking the normal three-day closure following Ghost Festival, the FTC found that this was not a substantial increase in the number of days of closure. Although there was intent to impact on the market supply and demand for that period of time it was, however, only a temporary measure. The FTC therefore resolved not to impose an administrative fine in the case and ordered the Association to immediately cease its illegal actions, to revoke the aforementioned resolution before the 2003 Ghost Festival, and to notify all relevant members.

Appendix:

Taiwan Provincial Meat Merchants' Association's Uniform Invoice Number: 77598152

Summarized by Chen, Chun-Ting; Supervised by Cheng, Chia-Lin