Consumer cooperatives' failure to inspect membership IDs as provided for in relevant laws led to unfair competition in the market
Chinese Taipei
Case:
Consumer cooperatives' failure to inspect membership IDs as provided for in relevant laws led to unfair competition in the market
Key Words:
deceptive and obviously unfair conduct, consumer cooperatives, negligent in inspection of membership ID
Reference:
Fair Trade Commission Decision of 7 September 1994 (the 152nd Commission Meeting); Disposition (83) Kung Ch'u Tzu No. 106
Industry:
Consumer Cooperatives (5319)
Relevant Laws:
Article 24 of the Fair Trade Law
Summary:
1. The Cooperatives Union, was commissioned by Central Personnel Administration, and the Ministry of Education to be in charge of the procurement and supply of daily necessities provided specifically for government employees and teachers of public schools. Pursuant to the provisions of the Cooperative Law, cooperatives which aim to meet their members' needs by engaging in the procurement and supply of produce and manufactured goods to members shall not sell their goods to non-members, or have their facilities available to non-members. The Cooperatives Union, which has enjoyed tax exemption in accordance with relevant laws, must comply with the aforementioned provision. Therefore, the Cooperatives Union has established Implementing Regulations Governing the Prevention of Commissary Goods from Being Sold Outside Cooperatives so as to stop the commissary goods from entering the ordinary retail market, or being resold for profits.
2. Nonetheless, it has been alleged from time to time that the Cooperatives Union did not check membership IDs as relevant regulations require and thus allowed nearly anyone admission to the cooperatives. Given the fact that the Cooperatives Union has the competitive edges of tax exemption on procurement and supply of goods, and large purchase quantity, the aforesaid act by the Cooperatives Union has reduced the ordinary retail stores' ability to survive in the market. The investigation conducted by the Commission shows that only nine cooperatives (accounting for 30% of the cooperatives inspected in this case) did thoroughly inspect membership cards by having inspection personnel at the entrance request shoppers to show their membership cards and inspect them. The majority of the cooperatives investigated had inspection personnel but there were defects in the execution [of their duties], i.e., though there was inspection personnel at the entrance responsible for the inspection of membership IDs, some entering consumers still failed to show their membership cards for inspection, and in other cases the consumers might just show an invalid membership card. Therefore, it can be concluded that the suppliers of commissary goods generally did not thoroughly carry out the inspection of membership IDs as required.
3. Sales to non-members such as the suppliers of commissary goods for government employees, teachers veterans and retired servicemen by branch stores directly run by the Cooperatives Union, cooperatives run by city and county agencies, cooperatives operated by township bodies, and the suppliers of commissary goods for government employees, teachers veterans and retired servicemen not only is be condemnable in terms of commercial ethics, but also impedes fair competition, which in essence is efficiency competition because of exemption. In other words, the aforesaid cooperatives have issued membership cards in the first place, and then made it a rule that one must hold a membership card to gain admission into these cooperatives, but have failed to thoroughly carry out inspection of membership IDs, which has resulted in the admission of non-members and thus adversely affected fair competition among retailers of daily necessities. As a conclusion, the Cooperatives Union's act of not inspecting membership cards thoroughly and selling goods to the general public who are non-members was obviously unfair to other ordinary retailers, and could influence the order of trade, which constituted a violation of the provisions of Article 24 of the Fair Trade Law.
Summarized by Lin, Yi-chao
Supervised by Pai, Yu-chuang
＊: For information of translation, click here
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