The import and tender of Japanese apples and Korean pears involves joint monopoly and price manipulations

Chinese Taipei

Case:

The import and tender of Japanese apples and Korean pears involves joint monopoly and price manipulations

Key Words:

quotas, sales by tender

Reference:

Fair Trade Commission Decision of 11 November 1992 (the 58th Commission Meeting); Disposition (81) Kung Yi Tzu No. 09001 and No. 09002

Industry:

wholesale industry (5123), international trade industry (5601)

Relevant Laws:

Article 19(2) of the Fair Trade Law

Summary:

1. The import of apples into Taiwan faces quantity restrictions except those from Canada and the United States. The restrictions on the import of apples from other countries may be divided into three categories: (1) Apples from Japan: the Central Bureau of Trust of the Ministry of Finance ["CBT"]is commissioned by the Board of Foreign Trade ["BOFT"] as a dealer to sell Japanese apples by tender. (2) Apples and pears from Korea: the Taiwan Provincial Cooperative for Fruits ["the Cooperative"], a private organization, is in charge of selling this produce by tender. (3) Apples from the southern hemisphere: quotas are imposed on this produce and controlled by the exporting country, while importers must present export documents approved and issued by the competent authority in the exporting country. However, it should be noted that for years such export permits have been mostly obtained by only a few importers.

As commissioned by the Board of Foreign Trade, the CBT's act of importing apples from Japan should be deemed an administrative act of the BOFT under the public law to implement the government policy whereas its act of selling these apples by tender should in nature be tantamount to an act under the private law, to which the Fair Trade Law applies. In this case, the CBT holds open tender, which in form causes no obstacle to fair trade. Nonetheless, the "single tender" approach leads to one single successful bidder. In addition, the value of one single tender is up to NT$ 150 million, which general small to medium size importers can hardly afford, thus creating a de facto entry barrier in the market, which contravenes the spirit of fair competition.

As for the import and tender sale of apples and pears from Korea, the Cooperative adopts a two-stage open tender approach for the Korean apples, but the quantity is huge, i.e., 200,000 cartons in the first tender, and 500,000 cartons in the second tender, whose combined value is about NT$ 1 billion. Again this has become a de facto entry barrier in the market as in the CBT case.

2. Taiwan prohibited any import of apples from the southern hemisphere starting in 1987, but since 1989 it has allowed such imports under a quota system whereby the quotas on these countries exports are determined by the average of the historical import records of 1984, 1985 and 1986. As the trading counterparts of exporters in these countries are those Taiwanese importers with whom a long term relationship has been established, it is difficult to declare that such a situation constitutes a violation of the Fair Trade Law.

3. The Fair Trade Commission thus decided to notify the CBT stressing that the act of an outright tender constitutes a de facto entry barrier in the market, and without proper or justifiable cause, such acts may contravene Article 19(2) of the Fair Trade Law, which states that enterprises shall not give discriminatory treatment to another enterprise without proper or justifiable cause. The Commission also suggested the Board of Foreign Trade invite the CBT, the Cooperative and the Council of Agriculture to seek possible alternatives to improve the aforesaid circumstances.

Summarized by Wu Ting-hung
Supervised by Chang Fen-fen

＊: For information of translation, click here

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