Alleged violation of the Fair Trade Law regarding Directorate General of Posts of the Ministry of Transportation and Communications's purchase tender for postal counter computer system equipment
Chinese Taipei
Case:
Alleged violation of the Fair Trade Law regarding Directorate General of Posts of the Ministry of Transportation and Communications's purchase tender for postal counter computer system equipment
Key Words:
invitation to bid, proper reason, boycott
Reference:
Fair Trade Commission Decision of 23 December 1998 (372nd Commission Meeting); Letters (88) Kung Erh Tzu No. 8703783--012, 013
Industry:
Data Processing Equipment Manufacturing Industry (3141)
Relevant Law:
Article 19 of the Fair Trade Law
Summary:
This case originated in an urgent inquisition by legislator Ker Chien-ming regarding the alleged bidding favoritism with respect to the invitation to bid for the purchase of postal counter computer system equipment by the Directorate General of Posts (DGP) of the Ministry of Transportation and Communications and the alleged unfair competition by International Business Machine Taiwan Corporation (IBM Chinese Taipei) in violation of the Fair Trade Law (FTL). The allegations were as follows: (1) the DGP restricted bidders' qualifications by requiring documentation such as a license from the original manufacturer, and by restricting the essential peripheral hardware and software for the system; (2) the DGP excluded prospective bidders with the condition that programs currently in use not be altered; (3) all the firms that passed the testing required for the qualification to bid in this case are affiliated with IBM; (4) IBM acknowledged that it has exclusive right over the bidding specifications in this case.
The bids were originally scheduled to be opened on April 3, 1998. Because of the aforementioned allegations, the date was postponed in accordance with the provisions of the Bidding Instructions, and the content of the invitation to bids was revised. The bids were opened on June 30, 1998. Acer won the bidding and the procurement was completed. Considering the significance of the case, however, the Fair Trade Commission (FTC) continued its investigation.
As far as the alleged favoritism by the DGP with respect to the requirement of an original manufacturer license and IBM's control over the hardware equipment are concerned, the "original manufacturer license" was found to refer to a license issued by the manufacturer of the equipment the bidding firm intended to use -- not necessarily that of IBM. Also, IBM does not produce relevant hardware equipment. Therefore, the "discriminatory treatment" requirement under Article 19(i) of the FTL is not met. With respect to the qualifying condition that there be no alternation to the program code and the allegations of favoritism with respect to system software, that condition was found to have been imposed for the reasons that the adherence to a single program could save the human resources required for program maintenance and facilitate consistency in the appointments of system operator personnel. This can be considered as justificable reasons under the FTL. Furthermore, developing programs compatible with current versions should not be technically unfeasible. Since the DGP has abandoned the use of a single software as one of its principal bidding requirements, has revised its bidding specifications accordingly, and has successfully concluded the bidding procedures, in the absence of any further allegations by other firms or individuals, no violation of Article 19 (ii) of the FTL is found.
As for the allegations of unfair competition by IBM, it was found that in order to expand its marketing channels, IBM always follows specific review and approval procedures regarding the issuance of manufacturer's licensing. And in fact all of the bidding firms in this case who contacted IBM about licensing were indeed issued licenses and after sale service certificates. Furthermore, although IBM has exclusive right over the design involved in this case, the bidding specifications were not determined by IBM. Moreover, what any bidding firm needs in order to be included in the price bidding procedure is to furnish products meeting the bidding specifications and have them pass the testing; whether it obtains a license from IBM or not is irrelevant. Thus, there is no concrete evidence showing that IBM boycotted any other enterprises in such a way as to violate Article 19(i). Nor is there any concrete evidence indicating that IBM had any form of agreement with any bidding firm to refrain the latter from competing on price, not to mention that the bidding procedures in this case were successfully concluded. It would be hard to conclude that IBM had violated Article 19(vi) of the FTL.
Summarized by Hung Hsuan
Supervised by Li Yen-hsi
Appendix:
Directorate General of Posts's Uniform Invoice No.: 11917900
International Business Machine Taiwan Corporation's Uniform Invoice No.: 03741302