Violation of the Fair Trade Law by several government agencies for requiring the type of vehicles that could be used to bid for a contract to supply compactor-style waste disposal vehicles be imported and fully pre-packaged
Chinese Taipei
Case:
Violation of the Fair Trade Law by several government agencies for requiring the type of vehicles that could be used to bid for a contract to supply compactor-style waste disposal vehicles be imported and fully pre-packaged
Key Words:
waste disposal vehicle, patently unfair
Reference:
Fair Trade Commission Decision of October 28, 1998 (364th Commission Meeting); Dispositions (87) Kung Chu Tzu No. 232, 233, 234 and 235
Industry:
Other Transport Vehicles and Parts Manufacture and Repair and Distribution Industry (3290)
Relevant Laws:
Article 24 of the Fair Trade Law
Summary:
Local manufacturers of waste disposal vehicles (local companies) claimed that they have been engaging in the R&D of compactor-style waste disposal vehicles with both local and foreign R&D departments and companies. Their abilities to manufacture compactor-style waste disposal vehicles could be further evidenced by the sale records. Several government agencies (agencies), however, required the vehicles that could be used to bid for a contract to supply waste disposal vehicles (waste vehicles) be imported and fully pre-packaged. Such a requirement has excluded local companies from participating in the bidding.
The agencies that adopted the aforementioned bidding requirement include the Department of Environmental Protection (Kaohsiung City), Fengshan City Government (Kaohsiung County), Taoyuan City Government (Taoyuan County) and Chiating Hsiang Government (Kaohsiung County). As the vehicles were purchased to collect and dispose wastes and fees were levied and collected by the agencies for waste disposal under the Regulations Governing the Levying and Collection of Fees for the Disposal of General Waste Items, the agencies are "enterprises" under the definition of the Fair Trade Law (FTL) and should thereby be governed.
It was defended by the agencies that due to the lack of professional personnel or market information, or the poorer quality of locally manufactured compactor-style waste disposal vehicles experienced from past purchases or subjectively determined, the purpose of such a bidding requirement was to ensure the quality of the vehicles.
The information gathered by the Fair Trade Commission from investigation and numerous meetings with related agencies, trade associations and companies have shown that government agencies are currently the major buyers of compactor-style disposal vehicles, accounting for more than 95% of the sales at the market. Due to the bidding requirement, however, local companies have been excluded from market competition even though they have the ability to manufacture waste disposal vehicles. Except in some petty procurement contracts at the county or town level, it is rare for local companies to participate in the bidding for government procurement contracts, leaving the local industry of waste disposal vehicle with no opportunity to expand.
Some agencies have substituted the setting of functional specifications of waste disposal vehicle for the bidding requirement to ensure the quality of the vehicles purchased. The compactor-style waste disposal vehicles supplied by local companies have also met the needs of the agencies. Therefore, government agencies should set clear and reasonable functional specifications in their tendering procedures or rely on the warranty clauses to ensure the quality of the vehicles purchased and to allow market competitors the pportunity?to compete on a fair and open ground.
In conclusion, taken into consideration of local industrial structure of waste disposal vehicles, the bidding requirement at issue has deterred local companies from participating in market competition. The justifications proposed by government agencies for the use of the bidding requirement are not necessarily required procedures to ensure the quality of the vehicles and are not sufficiently reasonable. The setting of the bidding requirement has constituted a patently unfair act which in effect has suppressed local companies from engaging in market competition. It has violated Article 24 of the FTL stating that "an enterprise may not commit a patently unfair act influencing market order," and is punishable under Article 41 of the FTL.
Summarized by Liu Hsi-rong
Superviced by You Su-su