Formosa Petrochemical Corporation reported that the Council of Agriculture Fisheries Administration's application and approval procedures for bunker fuel subsidies violated the Fair Trade Law
Case:
Formosa Petrochemical Corporation reported that the Council of Agriculture Fisheries Administration's application and approval procedures for bunker fuel subsidies violated the Fair Trade Law
Key Words:
bunker fuel subsidies, Regulations Governing the Allocation of Bunker Fuel in the Taiwan Area
Reference:
Fair Trade Commission Decision of October 30, 2003 (the 625th Commissioners' Meeting)
Industry:
Gasoline Stations (4721)
Relevant Law:
Article 19 of the Fair Trade Law
Summary:
1. In a letter, Formosa Petrochemical Corporation (hereinafter “the Complainant”), noting that fishing boats are eligible for bunker fuel subsidies from the Council of Agriculture’s Fisheries Administration (hereinafter “the Respondent), reported that the Respondent adopted a different set of subsidy application procedures than those used for bunker fuel purchases from the Chinese Petroleum Corporation (CPC) when processing bunker fuel subsidy applications on bunker fuel purchases from the Complainant. Agricultural associations purchasing fuel from CPC need only present the bunker fuel subsidy application to CPC, which then submits the application to the Respondent for approval. Those purchasing fishing boat fuel from the Complainant, however, are required to submit their subsidy applications to the relevant city or county government authority for approval, before submitting it to the Respondent. These procedures not only increase the administrative workload of city and county governments but also make fishermen’s associations in various areas reluctant to source their fuel from the Complainant, a violation of the prohibition against acts likely to restrain competition or to impede fair competition under Article 19 of the Fair Trade Law.
2. Article 17(1) of the Regulations Governing the Allocation of Bunker Fuel in the Taiwan Area states: “Fishermen’s associations acting as bunker fuel purchasing agents shall report a detailed table of the previous month’s bunker fuel purchases and deliveries, and the circumstances of those transactions, to the relevant county (city) or special municipality and central government competent authority for fisheries by the fifth day of the following month.” Consequently, in accordance with the provisions of the preceding law, requiring the review and approval of the local government competent authority for fisheries is within the administrative competency of the Respondent, and the Fair Trade Law is not applicable.
3. Given that CPC is a state enterprise, it is subject to managerial supervision by the Ministry of Economic Affairs’ Commission of National Corporations and its budget allocations subject to relevant government budget auditing regulations. Consequently, the Fisheries Administration concluded that since the reporting procedures for CPC applications for bunker fuel subsidies were already subject to auditing via internal mechanisms such as relevant budget screening procedures for state enterprises, there was no need to report for further review by the local government’s competent authority for fisheries. As this represents a division of responsibilities by the central competent authority for fisheries in dispensing bunker fuel subsidies, the provisions of the Fair Trade Law are not relevant. However, the domestic petroleum market was fully liberalized at the end of 2001, and given the discrepancy in procedures for applying for bunker fuel subsidies as the Complainant reported to the Fair Trade Commission, there do seem to be inconsistencies with Fair Trade Law. In the interest of promoting fair competition in the domestic bunker fuel market, the Fair Trade Commission has asked the Fisheries Administration to take its suggestions into consideration in its carrying out of bunker fuel subsidy processing operations.
Appendix:
Formosa Petrochemical Corporation’s Uniform Invoice Number: 86522210
Summarized by Chiu, Chia-Yun; Supervised by Lin, Gin-Lan