The Provincial Gas Station Association violated the Fair Trade Law for the collusive bidding procedures on its "Private Gas Station Use Cash Registers Capable of Issuing Duplicate Receipts"
Chinese Taipei
Case:
The Provincial Gas Station Association violated the Fair Trade Law for the collusive bidding procedures on its "Private Gas Station Use Cash Registers Capable of Issuing Duplicate Receipts"
Key Words:
Provincial Gas Station Association, cash registers capable of issuing duplicate receipts, air pollution control fee
Reference:
Fair Trade Commission Decision of April 16, 1997 ( the 285th Commission Meeting); Letter of (86) Kung Er Tsu 8508316-051
Industry:
Gas station industry (5541)
Relevant Law:
Summary:
1. In order to solve the technical problem of collecting the air pollution control fee at the time of oil sale, the Environmental Protection Administration ("EPA"), after negotiating with gas station businesses, resolved to subsidize gas station businesses, in modifying or replacing their existing cash registers. The Provincial Gas Station Association was then commissioned to handle the modification or replacement of private gas stations' cash registers. On March 25, 1996, the Provincial Gas Station Association opened the bids for the Procurement Contract for Cash Registers Capable of Issuing Duplicate Receipts to Be Used by Private Gas Stations. However, a losing bidder filed a complaint with the EPA against the Provincial Gas Station Association alleging that the Association had begun inviting bidders before its proposed bidding procedure was approved by the EPA; therefore, the bidding procedure was a procurement procedure conducted without the authorization from any competent authority. He also alleged that certain bidders and the Provincial Gas Station Association had been involved in collusive bidding or in bidding with forged proprietary specifications--a probable violation of the Fair Trade Law. The EPA then referred the complaint at issue to the Fair Trade Commission (FTC) for review on August 6, 1996.
2. This case involves economic subsidies granted in a non-public law form by the EPA in order to achieve the above-mentioned administrative mission. In addition, to simplify the administrative procedure, the Provincial Gas Station Association was commissioned by the EPA to handle the modification or replacement of private gas stations' cash registers. With respect to the administrative subsidies, the Provincial Gas Station Association was an organization commissioned by the EPA to handle the subsidies rather than an "applicant for the subsidies on behalf of the gas stations which would receive the subsidies" as alleged by the EPA. EPA decided to entrust the the Association at its meeting held on February 28, 1996. Therefore, the EPA's declaration that the invitation to bid was unilaterally initiated and carried out by the Provincial Gas Station Association is false.
3. The Complaint indicates that "on the bid opening date, Wan-Da, Ku-Bun, Yung-Fon, and Huan-Tun bid for the Contract by offering WT-2000 cash registers manufactured by Wan-Da and that during the demonstration, the offered cash registers were all operated by Wan-Da's personnel." The Complaint also alleged that "Yung-Fon, Huan-Tun, and Ging-Yeh were affiliated with Yuen Foong Yu Paper Manufacturing Co., Ltd., while Ku-Bun was one of Wan-Da's subsidiaries; therefore, they might have colluded in the bidding." According to the prevailing bidding operations in the domestic market, it is very common for original manufacturers, OEM businesses, agents, and distributions to simultaneously participate in bidding while the original manufacturers provide technical support at the time of bidding.
According to the statistics provided by the Provincial Gas Station Association, on the brands of cash registers capable of issuing duplicate receipts used by private gas stations in Taiwan area, Wan-Da occupies the largest share (35%) in the market of cash registers for private gas stations. Moreover, Wan-Da's professional capacity in the market of cash registers for gas stations and ability to print Chinese Characters, are commonly known in the gas station industry. The voltage of cash registers produced by Wan-Da ranges from 80 to 200 volts, making them compatible with various types of oil fillers and competitive in the market. The cash registers which Ging-Ye produces were not offered in the bids submitted by Yung-Fon and Hun-Tun (2 bidders) despite their affiliation with Ging-Ye. If Yung-Fon, Hun-Tun, and Ging-Ye colluded in bidding for the Contract, Yung-Fon and Hun-Tun should have offered cash registers produced by Ging-Ye rather than Wan-Da's products in the bidding. With regard to the allegation that "Ku-Bun, a company affiliated with Wan-Da, also participated in bidding for the Contract," since Ku-Bun failed to pass the product specification test, Ku-Bun cannot be said to have colluded with Wan-Da in the bidding.
4. The Complaint also alleged that two of the four Product Specifications (No. 2 and No. 3) set forth in the Bidding Requirements were in fact the proprietary specifications of the products of Wan-Da (winner of the bidding); therefore, Wan-Da and the bid inviter might have involved in bidding with forged proprietary specifications. However, an investigation into this matter reveals that before the bid reviewing procedure, no bidder raised any objection to any of the four specifications for cash registers required by the bidding. Moreover, because some bidding companies might be prevented from participating in the bidding due to some defects in their products, the Provincial Gas Station Association declared before it opened the bids that "bidding companies are allowed to modify the hardware or software of their sample machines without removing those machines from the bidding place for an unlimited time. In this way, bidders can compete fairly." The declared condition was unanimously accepted by all the present bidders.
At that time, Ging-Ye (a losing bidder) also stated that "domestic bidding companies have no technical difficulty in performing the condition based on the required functions of the sample cash registers offered by them." Nevertheless, in response to the complaint against the said bidding, the EPA refused to recognize the bidding and conducted the procurement of cash registers on its own. The EPA also promulgated the "Key Points for the Granting of Subsidies by the Environmental Protection Administration to Public-owned and Private Gas Stations for Purchase of Cash Registers Capable of Issuing Duplicate Receipts," and the "Key Points for the Review of the Performance of New Cash Registers Capable of Issuing Duplicate Receipts Purchased by State-owned and Private Gas Stations with Subsidies Granted by the Environmental Protection Administration." The functions of cash registers specified in those promulgated Key Points are approximately the same as those set forth in the Bidding Requirements at issue. Therefore, it can hardly be established that the Provincial Gas Station Association was involved in bidding with forged proprietary specifications when it was commissioned to handle the bidding of cash registers capable of issuing duplicate receipts.
Summarized by Wang, H. H.
Supervised by Li, Y. H.
＄: For information of translation, click here
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