Yi Pang Industrial Co., Ltd. restrained distributors from freely deciding resale prices for its Q8 line of oil products
Chinese Taipei
Case:
Yi Pang Industrial Co., Ltd. restrained distributors from freely deciding resale prices for its Q8 line of oil products
Key Words:
sole agent, resale price maintenance
Reference:
Fair Trade Commission Decision of August 21, 2003 (the 615th Commissioners' Meeting); Disposition (92) Kung Chu Tzu No. 092150
Industry:
Other Oil and Coal Products Manufacturing（1990）
Relevant Law:
Articles 18 of the Fair Trade Law
Summary:
1. Jin Hong Sheng Industrial Co., Ltd. (Jin Hong Sheng) filed a complaint letter with the Fair Trade Commission (FTC) alleging, in summary, as follows:
Jin Hong Sheng had made many purchases of the Q8 line of oil products from Yi Pang Industrial Co., Ltd. (Yi Pang, respondent) for resale purposes, and the two companies had been trading counterparts for many years. Early in this distributorship relationship, Yi Pang asked all of its distributors, including Jin Hong Sheng, to sign an “Undertaking for Q8 Oil Line Distributorship”. The Undertaking specified that actual sales prices of Q8 oil products may not be lower than NT$199 per can, they may not be resold to other distributors, and may not be bundled for sale in sets. Many of the distributors had complained about these unreasonable restrictive covenants, and a complaint was filed with the FTC alleging the respondent violated the Fair Trade Law.
2. The FTC investigated and found that the Q8 oil product line is produced by Kuwait Petroleum International Lubricants. Yi Pang became sole agent for all the Q8 products in 1993. In November 1999, Yi Pang signed an Agreement for Distributorship of the Q8 Product Line in the Taiwan Region with its distributors, stipulating that the prices for both the Q8 F1 10/50 and the Q8 Excell 5W/40 products in any advertising or promotion, poster, DM, and at the point of sale must be set at no lower than NT$199. In September 2002, Yi Pang subsequently further signed an “Yi Pang Industrial Co., Ltd. and Distributor----Distributorship Cooperation and Agreement” with the distributors, stipulating that “the promotional price range is from NT$260 to NT$199” and “no price lower than NT$199 may be published in any advertisement, DM, magazine, or medium.” That is, NT$199 was set as a minimum restrictive resale price for the Q8 oil product line. In addition, to ensure compliance with the minimum resale price, the Agreement for Distributorship of the Q8 Product Line in the Taiwan Region also stipulated that “Party A shall cease supplying goods [to a violator] for three months, and the price-to-distributor to Party B shall thenceforth be raised by 20%”; “Party B, if discovered to have breached stipulations where there is clear evidence of such breach, agrees to accept a fine of NT$30,000.” “The Yi Pang Industrial Co., Ltd. and Distributor----Distributorship Cooperation and Agreement” also stipulated that “If Party A discovers that Party B has breached pricing standards, Party B will unconditionally accept the sanction of ceased provision of the goods.”
The respondent's acts of resale price maintenance violated the prohibitive provisions of Article 18 of the Fair Trade Law.
Appendix:
Yi Pang Industrial Co., Ltd.'s Uniform Invoice Number: 23591695
Summarized by Lin, Hsiao-Hung; Supervised by Lin, Gin-Lan