He Wei Broadcasting Co., Ltd. violated the Fair Trade Law for withholding price information of programs
Chinese Taipei
Case:
He Wei Broadcasting Co., Ltd. violated the Fair Trade Law for withholding price information of programs
Key words:
obviously unfair act, withholding information of transactions
Reference:
Fair Trade Commission Decision of the 323rd Commission Meeting; Disposition (87) Kung Ch'u Tzu No. 014 (323rd Commission Meeting)
Industry:
Broadcasting Television Industry (8050)
Relevant Laws:
Article 24 of the Fair Trade Law (hereinafter the “Law”)
Summary:
In December 1997, disputes arose between upstream and downstream cable TV-related businesses due to annual contract renewal. The disputes had major impact on the order of trade and the consumer's rights and interests. In view of the influence of the dispute on the public interest, this Commission started to investigate and called related businesses to hearings. During the 30 December 1997 hearing, the respondent's representative stated that, although they did not rule out the possibility of selling individual programs, disclosure of program prices and discount terms would be subject to negotiations between the two parties. Such manner of disclosing price information is alleged to constitute withholding important information of transactions.
The respondent's representative made the following statement in a hearing held by this Commission: the respondent was a distributor of eleven channels provided by Wei Lai and the average price was NT$60. However, in actual negotiation with system operators, the price varied based on the number of subscribers. In other words, the respondent first identified the number of possible subscribers, on which the price was then set for negotiation.
The respondent submitted to this Commission copies of the " White Paper on Wei Lai TV Network Channels" (the White Paper) and the “Price and Discount Schedule for Individual Channels" (the Schedule). However, the investigation showed that the White Paper released to system operators contained only the introduction to programs on the channels without giving the price of each program and an explanation of the terms of discount. The Schedule provided was treated as classified information and an intra-company notice was circulated to alert the staff as to the confidentiality. In addition, according to the minutes of the meeting between He Wei and system operators relating to the Tung Sen Group on 26 December 1997, some of the system operators demanded to know the unit price quote on each individual channel. In response, some channel providers expressed that they could work it out, but the respondent instead stated: "...we would first like to see your sincerity, for example, provide us your number of subscribers...."
Programs on cable TV channels are works protected by the Copyright Law. Unless a deal is made and authorization is signed, system operators will have no legal rights to broadcast the channels and programs. Whether or not programs can be steadily and reasonably provided is of significant concern to public interest. In the course of negotiation for distribution contracts, price-related information is a key to the deal. Given price information, the system operators will be able to make their own judgment based on their financial resources and evaluation of their market. On the contrary, if the price information is withheld from the system operators, not only will they be unable to determine their policy regarding the purchase, but also they will be highly uncertain of the trading terms. Clear and proper disclosure of the price information should be a matter of course in the dealings of cable TV programs. Notwithstanding the facts that the respondent disclosed to its staff the price of individual channels and the terms of discount and that it did not preclude the possibility of individual-channel sale, the respondent kept the price information confidential and available only to its sales staff and notified its staff to disclose the same to the system operator based on the conditions of the negotiations. Such act was apparently a deliberate act of withholding important information of transactions from the trading counterparts. Furthermore, it entailed a high likelihood of unfair competition in that it involved tying and discriminatory treatment. In addition, the respondent's demand that the system operators accurately disclose their subscribership as a pre-condition to negotiation was an act of exploiting its advantageous position and was apparently an attempt to raise the price at will. The respondent‘s acts were obviously unfair to its downstream system operators. The respondent is found to have violated Article 24 of the Fair Trade Law, and this disposition is hereby rendered in accordance with Article 41 of the Fair Trade Law.
Summarized by Liao, Hsien-chou
Supervised by Hsin, Chih-chung
Appendix:
He Wei Broadcasting Co., Ltd.'s Uniform Invoice No.: 93718989