Fei Pao Co. Ltd. was complained for impeding fair competition by sending letters to urge other enterprises to discontinue buying goods from a specific enterprise with the intent to causes harm to such particular enterprise
Chinese Taipei
Case:
Fei Pao Co. Ltd. was complained for impeding fair competition by sending letters to urge other enterprises to discontinue buying goods from a specific enterprise with the intent to causes harm to such particular enterprise
Key Words:
Boycott; likelihood of impeding fair competition
Reference:
Fair Trade Commission Decisions of 9 October 1996 and 13 November 1996 (the 258th and 263rd Commission Meetings); Letter (85) Kung Yi Tzu No. 8506356-004; Disposition (85) Kung Ch'u Tzu No. 181
Industry:
Rental industry (7832)
Relevant Laws:
Article 19(i) of the Fair Trade Law
Summary:
1. The Fair Trade Commission received a complaint from a citizen alleging that Fei Pao Co., Ltd. [hereinafter referred to as the "FP Company"] sent letters to video stores located in the Taichung area stating that if the recipients bought videos of Chinese puppet shows released by the "Glistening Thunderbolt Buddha" Company, the FP Company shall not supply them the videos of Chinese puppet shows and other videos distributed by it. Such an act is tantamount to boycott action, which is a violation of the Fair Trade Law.
2. The FP Company is the exclusive agent in the Taichung area of the Chinese puppet show videos produced by Grand Thunderbolt Company. Though admitting that it had sent aforesaid letter, the FP Company claimed that the reason for sending the letter to the agents of Chinese puppet show videos produced by the Grand Thunderbolt Company was to prevent the recipients from being swindled as another member of the same trade, Lin Yuan-shan, tried to sell Chinese puppet show videos produced by the Glistening Thunderbolt Buddha Company with posters he had printed in the name of Huang Chun-hsung [a famous Chinese puppeteer in Chinese Taipei] which were identical to the video stills provided by the Grand Thunderbolt Company for its series of videos.
3. The FP Company also claimed that currently there were no products produced by the Glistening Thunderbolt Buddha Company in the video market, so the letter sent by it only served to indicate the authenticity of its products so that none of its agents would be conned. It also claimed that it had never dispatched salesmen to various video stores to inform them that the business relationship would be terminated and paid money for goods refunded if they purchased Chinese puppet show videos distributed by other companies. In addition, no video stores terminated the business relationship with it because of the letter. Besides, it had later issued a public apology.
4. Notwithstanding the fact that most video stores claimed that no actual restrictions were imposed on their decisions of buying videos as a result of the letter by the FP Company, Article 19 of the Fair Trade Law states that "no enterprise shall undertake any of the following, which is likely to impede fair competition: 1. With the intent to cause harm to a specific enterprise, causing another enterprise to discontinue supplying, purchase or other business transactions with a particular enterprise...." The so-called "likely to impede fair competition" does not mean that actual restrictions on market competition must result from a certain act. Rather as long as the implementation of the specific act may bring about the "possibility of impeding fair competition" or "abstract risks." Therefore, the judgment in this regard shall be made based on whether the competitive means adopted by the enterprise in question are fair or whether the results of such competition would jeopardize the free competition mechanism in the market.
5. The FP Company is the exclusive agent in the Taichung area of Chinese puppet show videos produced by the Grand Thunderbolt Company. The FP Company's release volume of Chinese puppet show videos in the Taichung area accounted for about 33% to 36% of the total release volume in that specific area, and its rental volume throughout the video stores was up to 80%, which were both manifestations of its potential influence on the market. On the other hand, the aforesaid letter presented a possibility of restricting and damaging the agents of Chinese puppet show videos of the Glistening Thunderbolt Buddha Company as well as video stores that intended to purchase other Chinese puppet show videos. So the letter was unfair or capable of obstructing free competition in the market, preventing video stores from entering into a trade with the said parties.
6. The investigation conducted by the Commission showed that there are products of the Glistening Thunderbolt Buddha Company available in the market, and there are agents of such products as well. So the FP Company's claim that the letter it had sent was meant to indicate the authenticity of its products and to prevent its agents from being conned was unconvincing, and its intent was to protect its own market share by obstructing the entry of new products into the market.
7. Therefore, the letter sent by the FP Company was a violation of the provisions of Article 19(i) of the Fair Trade Law, which prohibits enterprise to cause another enterprise to discontinue supply, purchase, or other business transactions a particular enterprise with the intent to harm such particular enterprise. The public apology issued by the FP Company did not change the nature of the said act which violates the Fair Trade Law. Therefore, pursuant to the first half of the provisions of Article 41 of the Fair Trade Law, the FP Company shall be ordered to cease its act of causing another enterprises to discontinue buying goods from a specific enterprise with the intent to cause harm to the said enterprise, which constituted a violation of the Fair Trade Law.
Summarized by Chan, Li-ling
Supervised by Lin Yu-ching
Appendix:
The Fei Pao Co., Ltd.'s Uniform Invoice No. 86842282
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