| 1. |
This case was initiated by the Fair Trade Commission (FTC). Due to
the disputes that easily occur between cable television channel providers
(including production and agencies) and system operators at the end of
each year when re-negotiating their contracts and the cutoff of signal
caused therefrom, the general public's audio and visual rights are damaged.
According to the media coverage, till May 2004, most business operators
had not yet signed the cable television channel program licensing contracts.
Some of the channel providers might cut off their signals in accordance
with the terms stipulated in the contracts. Since the domestic cable television
popularity has reached over 80%, consumers' rights might become massively
affected, if a massive signal cutoff results from unsuccessful negotiation
between upstream and downstream enterprises. Therefore, the FTC initiated
the investigation. |
| 2. |
Upon the investigation, the FTC found that: In 2004, among all of the
channel providers, there were eleven companies that are powerful enough
to collect channel program licensing fees: Easter Broadband Telecommunications
Co., Ltd., He Wei Company (transliteration), Best News Entertainment Corp.,
Tai Hsun Company (transliteration), Gala TV Corp., TVBS, Era Company, Lien
Hsun Company (transliteration), Yung Tung Company (transliteration), Satellite
Television Asian Region Ltd. Taiwan Branch, and Zchannel. In total 63 channels
were provided on the cable television market. Best News Entertainment Corp.
was able to control the internal operation of Tai Hsun Company. The two
companies were actually the so-called "affiliate enterprises" prescribed
in Article 369-1 of the Company Law. Therefore, Best News Entertainment
Corp. controlled the license of 22 channels, 1/3 of the 63 channels mentioned
above. Best News Entertainment Corp. had a rather advantageous position
on the channel providing market. |
| 3. |
Grounds for the disposition:
| (1) |
Best News Entertainment Corp. (Tai Hsun Company), Era Company,
and TVBS are horizontal competitors. They do not have any agency relationship
to conclude a licensing contract. However, they separately signed an "assistance
agreement of business promotions" and a "marketing promotion agreement".
In addition to assisting Era Company and TVBS with top frequency, constant
frequency, and eliminating interrupting commercials and marquee advertisements,
Best News Entertainment Corp. (Tai Hsun) also stipulated the price of promotion
assistance for each subscribing household every month and the minimum amount
of total subscribing contracts with Era Company, and on the total profit
amount with TVBS. The said terms of guaranteed profits shall be treated
as an improper conduct of inducement, used to reach joint interests through
restraining business competition activities. Besides causing the enterprises
assisted in promotions to refrain from competing in "price," such terms
also form a joint sales of channels on the market by the five companies,
Best News Entertainment Corp., Tai Hsun Company, Gala Company, TVBS, and
Era Company. The above fact can be evidenced by the dispute occurred from
the cannel licensing contract between Era Company and Wei Ta Company during
May 2004. |
| (2) |
Article 153 of the Civil Code provides that "when the parties
have reciprocally declared their concordant intent, either expressly or
impliedly, a contract shall be constituted. " Therefore, the negotiation
of "the channel sales price" or "the amount of subscribing households"
may affect the aggregate value of channel licensing, which was also the
main dispute of both parties to the trade. If the channel sales price and
the amount of subscribing households are both agreed, the consent to the
contract is actually formed. Upon the investigation, it was found that
Era Company and Wei Ta Company had already had consent to the channel sales
price and the amount of subscribing households. However, Best News Entertainment
Corp. expressed its disagreement on the original terms agreed by Era Company
and Wei Ta Company by reason of the "assistance agreement of business promotions"
signed with Era Company. Best News Entertainment Corp. also requested a
term for negotiation stating that "Wei Ta Company shall pay NT$ 99 every
month for each subscribing household, total 25,000 subscribing households,
for the 22 channels provided by Best News Entertainment Corp., Tai Hsun
(including Gala), TVBS, and Era Company, with a 90-day promissory note."
The original licensing contract concluded between Era and Wei Ta was therefore
altered. Although Era and Wei Ta completed the licensing contract with
the original agreement as a result of the investigation initiated by the
FTC, the aforementioned inducement terms that stipulated the price of assistance
in promotions, that guaranteed total subscribing households, that guaranteed
annual licensing income, that insufficient amount would be subsidized by
the assistant party, and that requested Era to joint sell channels with
Best News Entertainment Corp., Tai Hsun (including Gala), and TVBS, already
had already "caused another enterprise to refrain from competing in price,
or to take part in a merger or a concerted action" in violation of Article
19 (iv) of the Fair Trade Law. |
| (3) |
After considering the motivation, purpose, and expected improper
benefit of the conduct in issue, the degree and duration of the harm to
trading order, benefits derived on account of the unlawful conduct, scale
and market position of the enterprise, and its attitude of cooperation
in the investigation, the FTC, in accordance with the fore part of Article
41 of the Fair Trade Law, ordered Best News Entertainment Corp. to immediately
cease such an unlawful act on the day following the receipt of the formal
disposition notice and imposed an administrative fine of NT$ 2,500,000. |
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