A complaint was filed by Colden Bookstore Co. against Bookman Books, Wen Yuan, Chin Lin, and Hui Yang T'ang publishing companies and bookstores for violating the Fair Trade Law
Chinese Taipei
Case:
A complaint was filed by Colden Bookstore Co. against Bookman Books, Wen Yuan, Chin Lin, and Hui Yang T'ang publishing companies and bookstores for violating the Fair Trade Law
Key Words:
resale price maintenance; discriminatory treatment
Reference:
Fair Trade Commission Decision of May 28, 1999 (the 390th Commission Meeting)
Industry:
Publishing and Related Services (1940)
Relevant Laws:
Summary:
Golden Bookstore Co. filed a complaint against Bookman Books, Wen-yuan, Chin-lin, and Huiyang-tang publishing companies and bookstores for allegedly engaging in resale price maintenance and in discriminatory acts against Golden Bookstore, in violation of Articles 18 and 19(ii) of the Fair Trade Law (FTL).
The complainant claimed that the accused enterprises restricted re-sale prices of products in violation of Article 18 of the FTL. However, the complainant was unable to provide relevant evidence in the written complaint and during interviews at the Fair Trade Commission (this Commission). Although the accused enterprises complained against the marketing methods of the complainant, claiming that competition by price cuts was contrary to the company's pricing policy, the accused enterprises did not restrict re-sale prices. They continued to accept purchase orders from the complainant and did not take any punitive measures. Without relevant evidence, it could not be determined that the complaints were valid or that Article 18 of the FTL had been violated.
According to the accused parties, Mr. Wang, the de facto responsible person of Golden Bookstore, had issued bad checks and incurred outstanding debts while operating Kuo-pao Bookstore, his previous business venture. Due to the complainant's poor credit, the accused enterprises, who were also the complainant's previous victims, had reservations about the complainant purchasing books on credit. They did not supply books directly to the complainant; instead, the complainant had to purchase books from their distributors, which resulted in less profit. As a result, the complainant felt that discrimination existed since he was unable to purchase books directly from the suppliers. It is the Commission's view that the book suppliers' selection of trading counterparts and gave different prices or discounts based on different trade conditions such as the credit status of the purchaser, volume of trade, and conditions of transaction was the results of market transactions and price mechanisms. Unless there was a monopoly in the supply of the goods, such actions are not to be challenged by the Commission. Because the complainant and the accused enterprises did not have a distributorship agreement, it was reasonable for the accused enterprises to require the complainant to purchase books from their local distributors. In addition, the complainant also stated that seven other book suppliers, including Tai Chih, could also provide the reference books in question. Thus there was no monopoly and the incident did not constitute a discriminatory act as provided in Article 19(ii) of the FTL.
However, the goods in question had special characteristics. The import of specific titles of English textbooks or other relevant books was often conducted through a single channel where foreign book suppliers only recognized a single domestic bookstore as its general distributor (or agent). Under such circumstances of exclusive arrangement, the agent or the distributor should refrain from using unfair methods to restrain, either directly or indirectly, other enterprises from competing in the market, or to abuse its market position. Although the revenue and the market share of the accused enterprises in this case did not meet the criteria for a “monopolistic enterprise” under Article 5 of the FTL or Articles 3 and 4 of the Inplementing Regulations of the FTL, the accused enterprises sold goods under exclusive distributorship. With their own sales department transacting business, it was possible for them to “suppress prices” or “limit supply” to competing distributors or trading counterparts. Such acts may constitute in form and in substance “acts that cause a competitor's trading counterparts to deal with itself by coercion, inducement with profit, or other improper means,” as provided in Article 19(iii). Thus this Commission sent a letter to these companies requesting them to abide by the legislative intent of the FTL.
Appendix:
Golden Bookstore Co.'s Uniform Invoice Number: 16056161
Summarized by Hou, Wen-hsien
Supervised by Shih, Chin-ts'un