Adjustment in the price of domestic liquid gas led to an overall hike in the retail price of containerized gas
Chinese Taipei
Case:
Adjustment in the price of domestic liquid gas led to an overall hike in the retail price of containerized gas
Key Words:
liquid gas, containerized gas, concerted action
Reference:
Fair Trade Commission Decision of June 18, 1997 (the 295th Commission Meeting); Letter (86) Kung Erh Tzu No. 8600060-020, 021, 022, 023, 024, 025.
Industry:
Liquid gas supply industry (3020)
Relevant Laws:
Summary:
1. On 1 January 1998, Chinese Petroleum Corporation [hereinafter referred to as "CPC"] raised upwards the wholesale price of household liquid gas by NT$ 1.09 per kilogram from NT$ 9.07 to NT$ 10.77 per kilogram, which was tantamount to an increase of 11.03%. Had the said increased wholesale cost of liquid gas been reflected in the retail price of a 20-kilogram containerized gas, it would be a hike of NT$ 21.4. However, the retail price of containerized gas sold throughout Chinese Taipei grew greater than an amount attributable to this cost increase. The rise was especially precipitous in Chiayi and Tainan, which was even over 20%, far more than the increase imposed by the CPC.
2. According to the results of the investigation conducted by the Commission, the said rise in areas such as Tainan County, Tainan City, Chiayi County and Chiayi City had much to do with a meeting called jointly by Liquid Gas Fuel Industry Associations ["the Associations"] in Tainan City and County and Chiayi City and County on 4 December 1996, where the directors of the said associations and representatives of gas packaging sites all participated and reached a consensus to reflect the increased cost in the retail price of liquid gas. The Associations also calculated the price of containerized gas for different cities and counties by taking into account the analysis items incorporated in the "Table of Gas Distributors' Profit Analysis" and the price formula devised by the Tainan City Association, and revised the price of containerized gas from 1 January 1997 when the CPC adjusted the price. The four Associations then negotiated with their respective members or board directors along with supervisors over the said consensus on price adjustment. As a result, the retail price of containerized gas sold in the said two cities and two counties was simultaneously raised to NT$ 25 per kilogram starting 1 January 1997, which constituted a concerted action prohibited by Article 14 of the Fair Trade Law.
3. The rise of price in Hualien was an aftermath of the 16th provisional meeting of directors held by the Hualien Liquid Gas Fuel Association on 30 December 1996, where the directors authorized the executive director to determine the new price list and then printed the list in the first page of the Keng Sheng Daily News on 2 January 1997. The price of containerized gas in Hualien thus simultaneously rose by the same percentage. Therefore, the authorization of the executive director by other directors to determine the price and their compliance with such a decision represented a form of consensus in a uniform price, which constituted a concerted action.
4. With respect to Kinmen County, the distributors proceeded the rise of the price of containerized gas in concert. The price of containerized gas changed concurrently on January 1, 1997. A 20-kilogram household containerized gas started to be sold at NT$ 440 at the same date. Members of the Kinmen County Association of Liquid Gas Fuel said unanimously that the said price was determined by the Association. The investigation result was no difference from what the local authority reported. Therefore, the Kinmen County Association also jointly determined the price of containerized gas, which constituted a concerted action.
5. As for the Kaohsiung area, the executive director of the local association determined the new price and asked the staff of the association to inform or suggest to its members who made inquiries into the new price, if there were any, that the retail price of one kilogram of gas be revised upwards to be NT$ 22 starting 1 January 1997 and NT$ 23 starting 5 April of the same year. Since 1 January 1997, the members followed the decision made by the executive director and altered the sale price. As far as the Taitung area was concerned, the executive director of the local association telephoned its members advising them to raise the price of one-kilogram containerized gas by NT$ 1 starting 1 January 1997, thus revising the sale price of the said gas to NT$ 23.5 per kilogram. All of these acts caused other enterprises to refrain from price competition, thus constituting a violation of the provisions of Article 19(iv) of the Fair Trade Law.
Summarized by Hung, Te-chang
Supervised by You, Su-su
＊＊: For information of translation, click here
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