Department of Health within the Taiwan Provincial Government was reported to have violated the Fair Trade Law in its procurement of the second-phase OA office facilities through competitive bidding
Chinese Taipei
Case:
Department of Health within the Taiwan Provincial Government was reported to have violated the Fair Trade Law in its procurement of the second-phase OA office facilities through competitive bidding
Key Words:
bidding for projects
Reference:
Fair Trade Commission Decisions of the 301st Commission Meetings; Disposition (86) Kung Ch'u Tzu No. 150
Industry:
Metal Furniture (1720)
Relevant Laws:
Article 24 of the Fair Trade Law
Summary:
1. Department of Health ["DOH"] in 1994 started a renovation project of its office building which involved two phases of open bidding for OA office facilities. The first-phase bidding project was commissioned to an architect, Mr. Yang Ming-hsiung, for design and supervision work, who re-commissioned Wei-An Enterprise Co.[the "WA co."] to do illustrated designs. The investigation results revealed that during the first-phase design WA co. designated three manufacturers, i.e., Techihmei, Ch'uanhsing, and Fuhsing, in its illustrated drawings for screen furniture work without special instructions given by the procurement agency. However, as Techihmei Company testified, Fuhsing Company did not manufacture the liftable separate-piece screens, which were exclusively manufactured by Ch'uanhsing Company and Techihmei Company was one of its distributors.
The exclusive manufacturing was affirmed by other members of the industry and by the review of catalogues of various manufacturers. The four height sizes designed by the procurement agency and listed in the illustrated drawing for the work of combined screens could only be found in the Ch'uanhsing Company's catalogue among all ready-made product catalogues available in the market whereas during the second-phase open bidding the catalogues of the designated proposed by Matrix Company, Fuhsing Company and other manufacturers such as UB Office Systems Inc. also showed no screens of such sizes. Therefore, based on the aforesaid evidence, it can be concluded that the WA co. had de facto designated one single manufacturer for screen work design during the first-phase project.
2. When it came to the second-phase bidding for the OA office facilities, the DOH verbally commissioned another architect, Mr. Lee Meng-hsiung, who had originally been a contractor of air conditioning project, for design and supervision. Mr. Lee also re-commissioned the WA co. in that case. So the WA co. was in charge of devising the illustrated designs as well as the notice to bidders for the second-phase bidding and sent the latter to the DOH.
In spite of the instructions given by the DOH for an overall planning, the first bidding announcement was criticized by manufacturers as placing unreasonable restrictions on specifications and thus was annulled. The second bidding announcement agreed to allow equivalent products to be sent for examination. Nonetheless, the WA co. still applied the pattern used for the first-phase bidding by requiring certain specifications on the part of the procurement products and strictly examining the submitted products in accordance with the original drawing and de facto designated one single manufacturer.
The investigation showed that the items for which specific manufacturers had been designated were as follows: (1) screen combinations,(2) cupboards and cabinets, and (3) office chairs, which went obviously beyond the instructions regarding the opening up of equivalent products for examination. Such an act was in violation of the explanatory rule set forth in the Letter (74) Tai Ying Tzu No. 357438 dated 19 December 1985 issued by the Ministry of the Interior, which stated that "no manufacturers shall be designated for products for which national standards exist." The aforesaid party placed restrictions on designs by appointing specific brand names and patented fittings, thus causing other competitors in the market to be excluded de facto out of the competition, which not only damaged the interests of its competitors, but also infringed on efficiency competition, the essence of fair trade. Such an censurable act under commercial ethics was thus found to be a violation of Article 24 of the Fair Trade Law.
Summarized by Hou, Wen-hsien
Supervised by Shih, Chin-tsun
Appendix:
The Wei-An enterprise co.'s Uniform Invoice No. 86286099
＊＊: For information of translation, click here
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