Case:
Lien-Hung Pumped Liquefied Gas Co., Ltd. violated the Fair Trade Law by employing improper means to put restrictions on price competition on the liquefied petroleum gas market in Kinmen area
Keywords:
Kinmen County, Kinmen Daily News, liquefied petroleum gas
Reference:
Fair Trade Commission Decision of December 30, 2004 (the 686th Commissioners' Meeting); Disposition (93) Kung Ch'u Tzu No. 093134
Industry:
Gas Supply (3400)
Relevant Law:
Article 19 (iv) of the Fair Trade Law
Summary:
| 1. | The Kinmen County Government reported that the sales price of 20 kg liquefied petroleum gas was raised from NT$ 580 per barrel to NT$ 600 per barrel on September 12, 2002. The sales price was again raised to NT$ 630 per barrel on October 2, 2002, and to NT $650 per barrel on November 13 of the same year. The sales price of each store was almost identical, and it was NT$ 124 (23.8%) higher than the average price, NT$ 525.04, in the Chinese Taipei area. It is conspicuously unreasonable and a possible violation of the relevant provisions of the Fair Trade Law governing concerted action. | ||||
| 2. | Upon the investigation, the Fair Trade Commission (FTC) found that: Lien-Hung Pumped Liquefied Gas Co., Ltd. (hereinafter referred to as "Lien-Hung") has 13 gas stores under its system, which owns nearly 70% of the market in the Kinmen area. Also, the Kinmen County Liquefied Gas Fuel Business Association (hereinafter referred to as the "Association") has always been chaired by the responsible person of the said system. Ever since the chairman and supervisors were re-elected in June 2002, the Association has never convened any meetings to discuss this case in terms of relevant affairs of the Association, collection of the Association fees, adjustment of the retail price, cost calculation, and to run advertisement in the newspapers for hiring attorneys. All of the relevant affairs are handled by Lien-Hung's responsible person, Yang Chen Tian, or the accountants subordinate to its system. Thus, Yang Chen Tian has a leading position in this case. Furthermore, before CPC raised its list price on January 9, 2003, the sales price of many gas stores in Kinmen was NT$ 650 per barrel. After CPC raised its list price on January 9, 2003, the sales price per barrel was raised to NT$ 670 uniformly. After CPC raised its list price again on February 24, 2003, the sales price per barrel was also raised to NT$ 690 uniformly, with no difference in the price. Many gas stores stated that Lien-Hung's responsible person, Yang Chen Tian, would notify the business operators in the Kinmen area to adjust their prices according to CPC's floating list price. Yang Chen Tian also employed the marquee advertisement on the cable television channels and ran advertisements on Kinmen Daily News to give the notice of raising the price. Yang Chen Tian also accused some competitor about whether the competitor wished to entice customers by setting its sales price NT$ 80 lower than the others. It was obvious to see that Yang Chen Tian relied on his superior market position in the Kinmen area and tried to affect the business operators'free will to make operational decisions and to restrain the business operator from deciding the retail price, which caused the uniformity of the gas price in the Kinmen area. Yang Chen Tian also published false analysis information concerning the operating cost of the Association's members in the name of the Association, which was obviously an excuse for him to maintain a higher retail price. The said cost analysis alleged that various expenses should be paid annually, such as the purchase, depreciation, maintenance, and safety inspection of container type of conveying troughs and tanks. The said information also alleged that the ocean shipping cost was NT $9.079 per kilogram, and with the subsidy of the petroleum funds for the ocean shipping cost of off-shore islands NT$ 6.08 per kilogram and none for land transportation, the business operators in Kinmen shall pay NT$ 5.919 per kilogram more than those in Chinese Taipei; and therefore, one barrel of 20 kilograms shall cost NT$ 114.38 more. However, based on the FTC's investigation, it was found that many gas stores did not purchase tanks. Also, the ocean shipping cost after the discount shall be NT$ 3.34 per kilogram, and the land transportation in Chinese Taipei for empty tanks and liquefied petroleum gas shall be NT$ 0.8 and NT$ 1 per kilogram respectively. Even with the land transportation cost of NT$ 0.5 per kilogram in Kinmen as claimed by the business operators, and the subsidy of NT$ 0.25 per kilogram given from the operators in Big Kinmen to those in Small Kinmen, the subsidy for the ocean shipping cost of the petroleum funds shall still have surplus. Furthermore, the offshore areas already have preference of 5% exemption from taxes, and the cost of purchasing gas from CPC was lower than the list price. Thus, the subsidy of NT$ 6.08 per kilogram is sufficient to pay for the actual ocean shipping costs. Yang Chen Tian obviously exaggerated the ocean shipping costs. | ||||
| 3. | Grounds for the disposition:
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Summarized by Huang, Chung-Chieh
Supervised by Shih, Chin-Tsun
Appendix:
Lien Hung's Uniform Invoice Number: 97178875