The Taichung Poultry Shipping and Marketing Cooperative was accused of violating the Fair Trade Law by sending faxes to downstream enterprises warning them not to supply goods to the Complainant
Case:
The Taichung Poultry Shipping and Marketing Cooperative was accused of violating the Fair Trade Law by sending faxes to downstream enterprises warning them not to supply goods to the Complainant
Key Words:
boycott, marketing cooperative
Reference:
Fair Trade Commission Decision of August 21, 2003 (the 615th Commissioners' Meeting); Disposition (92) Kung Chu Tzu No. 092152
Industry:
Chickens (0123)
Relevant Law:
Article 19(i) of the Fair Trade Law
Summary:
1. The Taichung Poultry Shipping and Marketing Cooperative (the Respondent) allegedly refused to supply goods to a specific enterprise (the Complainant) and beginning August 2002 sent written warnings to downstream enterprises advising them to cease supplying goods to the Complainant.
2. The Fair Trade Commission’s (FTC’s) investigation found the following: The Respondent and the Complainant had previously had a trading relationship but the Respondent believed that the Complainant was selling its well-known goods for an exceedingly low price and ended the trading relationship. The Complainant subsequently enlisted a third party supplier to indirectly source the Respondent’s goods. Upon learning of this situation, the Respondent in August 2002 sent faxes to downstream wholesalers containing the following message:
Beginning in January 2000, we ceased supplying and since have had no relationship with [the Complainant]. However, [the Complainant] has continued to directly sell our goods and create instability in the market. At this time we would like to warn those distributors of our “Premium” series of goods to please not distribute any goods of this company to [the Complainant]. We will cut off trading with any wholesaler that we ascertain it has failed to comply.
The related parties involved, compelled by the Respondent’s pressure and market position, have reduced or cut off their supply of goods to the Complainant, causing the Complainant’s sales to decline.
3. Grounds of disposition:
In the investigation, the Respondent freely admitted sending faxes to downstream
companies (boycotting parties) warning them to cease supplying the Complainant
(boycotted party) with the “Premium” series of goods or face termination of
their trading relationship. The Respondent’s actions have diminished free competition
mechanisms in the market and breached commercial ethics. Furthermore, the reliance
of the related parties on the Respondent to conduct their business operations
led them to cut off or reduce their supplies of goods to the Complainant, causing
a decline in the Complainant’s sales and further restricting the Complainant
from competing. Additionally, the constraints placed by the Respondent upon
its trading partners and its impeding of their free choice of trading partners
damaged free competition mechanisms in the market, which obviously restricted
free competition in violation of the provisions of Article 19(i) of the Fair
Trade Law. After considering such factors as the Respondent's motivation and
purpose, the degree of damage to trading order, its scope, operational status,
and market position, record of any prior violations, and its attitude following
the offense, the FTC imposed an administrative fine of NT$150,000 on the Respondent
under the fore part of Article 41 of the Fair Trade Law.
Appendix:
Taichung Poultry Shipping and Marketing Cooperative’s Uniform Invoice Number:
52658456
Summarized by Mai, Huei-Li; Supervised by Cheng, Chia-Lin