Bidders were allegedly in violation of the Fair Trade Law in bidding for the "Environmental Protection Detecting System" construction tendered by the Refinery Institute of the China Petroleum Corp.
Chinese Taipei
Case:
Bidders were allegedly in violation of the Fair Trade Law in bidding for the "Environmental Protection Detecting System" construction tendered by the Refinery Institute of the China Petroleum Corp.
Key words:
network equipment, subcontract, accompanied bidding
Reference:
Fair Trade Commission Decision of 19 August 1998 (354th Commission Meeting); Disposition (87) Kung Ch'u Tzu No. 8700205
Industry:
Electrical and Electronic Mechanical Equipment Manufacture/Assembly (2190)
Relevant Laws:
Summary:
According to the letter from the Investigation Bureau of the Justice Department:
For the contract of the "Environmental Protection Detecting System" (the subject contract) tendered by the Refinery Institute of China Petroleum Corp. (the Institute) in 1993, Syscom Computer Engineering Co. (Syscom), Hauman Enterprises Co., Ltd. (Hauman) and Ring Line Corporation (Ring Line) joined the bidding with the product licensing or maintenance warranties by Synoptics Company and Sun Company. The contract bid was awarded to Syscom for NT$13 million. However, during the implementation of the work, the main hardware equipment was imported and installed by Hauman. Yu Ta and Ring Line shared the piping and fiber optic connection work. Syscom, the bid winner, only handled the coordination. These companies were thus allegedly engaged in concerted action for bid rigging on the subject contract in violation of Articles 19(1)(iv) of the Fair Trade Law (FTL).
The value of the subject contract is only NT$13 million. It is considered that the alleged action is not sufficient to reduce the efficiency of competition in the market. Therefore, we cannot find that there is likelihood of impediment to fair competition in violation of Articles 19(1)(iv) of the FTL. According to the Institute’s bidding requirements, "the bid winner is not allowed to subcontract the entire subject contract" and "the bid winner shall not subcontract the main construction and integration of the system without this Institute's prior consent." Syscom won with a bid of NT$13 million and was only handled the coordination. Ring Line took charge of the importation, connection of the fiber optic and the production of fiber optic cable head. The importation of the network equipment, installation, testing and training of operations was handled by Hauman. There were indeed subcontracts among these companies. Syscom claimed that the fiber optic layout was subcontracted to Chih Hau and a part of the network equipment was subcontracted to Hsin Ta, which was responsible for implementing the work and training. However, Ring Line people admitted that the fiber optic layout was contracted to them by Syscom at NT$2 million. Furthermore, since the Synoptics products required by the Institute were distributed in Chinese Taipei by Hsin Ta, it was not possible for Hsin Ta to subcontract with Hauman who was its competitor. Syscom's claim was obviously untrue.
In addition, the Synoptics product licensing and the maintenance warranties provided by Hauman, Syscom, and Ring Line for the bidding were not dated. Sheng Yang (Chinese Taipei’s branch) had a product licensing and maintenance warranty dated 15 June 1993. Alleging that they did not know how the other companies obtained the documents, or that the employee who was responsible for obtaining the documents had already left the company, the respondents, Hauman and Ring Line, were unable to clarify whether one of them had won the subject contract with the intention to subcontract with the others so that every company might take part.
Synoptics Company in the United States licensed Hauman as its distributor in Chinese Taipei on 8 January 1992. Hauman thus represents Synoptics Company in Chinese Taipei, handling distribution, installation, testing, customer service and the execution of other duties required by Synoptics Company. Clearly, Hauman is Synoptics Company’s sales representative. It was unreasonable for Hauman to obtain additional product licensing and the maintenance warranties from Synoptics Company's branch in Hong Kong. The product licensing and the maintenance warranties that the bidders provided for the bidding were uniformly processed because the bidders collaborated in the bid rigging.
In conclusion, Syscom and the other bidders' collaboration in joining and accompanying bidding is clear. Syscom, Hauman and Ring Line improperly obtained through deception the trading opportunity. Their actions were found to be sufficient to adversely affect the trading order in violation of Article 24 of the FTL.
Summarized by Wang Hung-hsuan
Supervised by Li Yen-hsi
Appendix:
Syscom Computer Engineering Co.’s Uniform Invoice No.:
04967550
Hauman Enterprises Co., Ltd.’s Uniform Invoice No.: 12223097
Ring Line Corporation’s Uniform Invoice No.: 20758811