China Maritime Corp. was investigated if its renewal of the lease of Piers No. 65 and 66 from the Kaohsiung Harbor Bureau engaged in any differential treatment
Chinese Taipei
Case:
China Maritime Corp. was investigated if its renewal of the lease of Piers No. 65 and 66 from the Kaohsiung Harbor Bureau engaged in any differential treatment
Key Words:
Kaohsiung Harbor Bureau, differential treatment
Reference:
Fair Trade Commission Decision of April 16, 1997 (the 285th Commission Meeting)
Industry:
Harbor Industry (6123)
Relevant Laws:
Article 19(ii) of the Fair Trade Law
Summary:
1. On January 1, 1992, the Kaohsiung Harbor Bureau ("KHB") renewed its lease of Piers No. 65 and 66 of Kaohsiung Harbor to China Maritime Corp ("CMC") for a term of eight years and stipulated, following a precedent that the lessee might, subject to the approval of the KHB, jointly use the above piers with others under the previous lease agreement. However, due to KHB's subsequent policy change, the clauses authorizing joint use by the lessee and others in the new agreement were abolished. For old agreements, such clauses would expire with expiration of the agreements. Because of the different treatments, under the new and old lease agreements, the Control Yuan send the Fair Trade Commission (FTC) a written request for investigation of whether this case involves differential treatment and unfair competition.
2 According to Article 19(ii) of the Fair Trade Law states that no enterprise may, without justified cause, give differential treatment to another enterprise to the detriment of fair competition. Prior to 1993, the KHB allowed its lessee to jointly use the piers leased to it with its joint users when leasing container piers to shipping operators. As far as the shipping operators leasing container piers at that time are concerned, the KHB gave no differential treatment. Later, the KHB, which had been questioned by the Audit Department (executing a directive relating to improvement of financial revenues for FY1992) for the negative impact of above joint-use clauses on the operations of public piers, abolished clauses authorizing joint use by the lessee and others from new lease agreements. According to the FTC's investigation, the KHB's new lease is applicable to all new lessees; therefore, there is no differential treatment given to any party. As for shipping operators under previous lease agreements, they can still use the piers with their joint users during the term of the lease pursuant to the agreement in effect. After such agreement expires, such clause will expire as well. There is no contradiction in such act of the KHB, as far as its lessees are concerned. Therefore, the KHB does not give any differential treatment to pier lessees over the same period. In addition, adjustment of the above joint use clauses was made in consideration of the opinion of the Audit Department. Moreover, such was taken as part of the policy concern for maintaining revenues of the national treasury, was hardly inappropriate. Furthermore, all relevant lease agreements of the KHB were submitted to its competent authority, Transportation Department of the Provincial Government, for approval and all such agreements were reported to the Department for reference after they were executed. Therefore, such act was not groundless. Therefore, the KHB is not in violation of Article 19(ii) of the Fair Trade Law, governing differential treatment.
(1)The KHB did not give differential treatment to lessees for the same period, and its reason for engaging in such action is not unjustified. Lessees of different periods may be subject to different treatment in terms of the lease terms or conditions due to different timing for the execution of the lease agreements. The existence of differential treatment should be assessed only when critical identical circumstances in terms of time and place exist. Due to the difference in the premises of timing for the execution of the lease, whether such act constitutes differential treatment seems to open to question. Therefore, it seems that the KHB has given no differential treatment within the meaning of Article 19 (ii) of the Fair Trade Law. In addition, pursuant to the prior finding of the Ministry of Transportation and Communications, the KHB has not violated of Article 68 of the original Administrative Regulation for International Commercial Harbors and Piers and of other requirements. It is for this reason that the KHB has not committed any questionable act. However, the KHB is a monopoly announced by the Commission, and has the authority and responsibility with respect to supervision and administration of maritime transportation and harbor affairs. If the market position and administrative responsibilities of the KHB are considered altogether, the KHB should, in addition to general business operations, be obligated to properly resolve the controversy issues arising from its action at issue.
(2)In conclusion, the KHB adjusted the terms and contents of the lease agreement in consideration of the opinion of the Audit Department, supply and demand of the container piers, international competition and harbor operating conditions. The reason for such adjustment is hardly unjustified. However, most lease agreements on the use of container piers are long term, renewable agreements, and difference in agreement terms will have certain impact on the long term operating cost of the lessees and will directly affect the competitive relationship between the lessees. Therefore, although the action at issue undertaken by the KHB is not considered as differential treatment and is well-grounded, such act has raised questions regarding competition between shipping operators. In view of the above-mentioned authority and responsibility of the KHB, it is necessary to reconsider this matter. Therefore, recommendation should be preferably made to the Ministry of Transportation and Communications, the competent authority for this matter, to demand comprehensive review of this case by the KHB to protect the interest of all shipping operators and to obviate operators' concern about unfair competition arising from policy adjustment.
3.The FTC has issued a letter to the Ministry of Transportation and Communications to request the KHB to comply with the above decision.
Summarized by Cheng, P'eng-chi
Supervised by Ch'en, Ming-huang
＠: For information of translation, click here
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