Complaints alleging a concerted action taken by asphalt concrete businesses in the Ilan area
Chinese Taipei
Case:
Complaints alleging a concerted action taken by asphalt concrete businesses in the Ilan area
Key Words:
asphalt concrete, price fixing, concerted action
Reference:
Fair Trade Commission Decision of April 23, 1997 (286th Commission Meeting); Letter of (86) Kung Er Tsu 8407984-011
Industry:
Non-categorized Manufacturers of Other Non-metal Mineral Products (2699)
Relevant Laws:
Article 14 of Fair Trade Law
Summary:
1. Certain relevant units filed complaints to the Fair Trade Commission (FTC) alleging the some ten asphalt concrete businesses in the Ilan area have engaged in a concerted action. Among the accused, only five have been in the business of manufacture: (in English transliteration) Yiyang, Fugu, Hsinglong, Yihsiang and Yiding. The others of the accused, though not undertaking manufacturing, have shared a certain portion of profit. Price of asphalt concrete in Ilan County was around NT$1,600 per metric ton, about twice as much as the price offered by asphalt businesses in neighboring counties and cities. The alleged concerted action was suspected to have been led by the local asphalt concrete business association.
2. Subject to its nature and use, asphalt concrete is classified into three types: (1) hot asphalt concrete: i.e., the asphalt normally used for road pavement; temperature thereof is heated up to over 100℃ when applied; (2) constant temperature asphalt concrete: temperature thereof is the same as room temperature when in use, which is suitable for long-distance transportation. However, this type of asphalt concrete is used only for mending pits or holes, not for road pavement; (3) emulsified asphalt: it is used as a binding agent for road pavement. In addition, according to the size of the asphalt concrete grain, asphalt concrete is also classified into coarse grains and fine grains, which are used respectively for different layers of road pavement.
The major raw materials of asphalt concrete are bitumen and sandstone. Bitumen has been supplied by the Taoyuan Refinery and the Kaohsiung Refinery of China Petroleum Corporation (CPC) at the CPC factory price. Therefore, the cost of bitumen varies by the cost of transportation. The price for asphalt concrete is determined by the cost of materials, transportation, and manpower. Because there lacks constant temperature transportation equipment for asphalt concrete in Chinese Taipei area, long-distance transportation can cause lower temperatures for asphalt concrete and subsequently result in poor quality for road pavement. In order to ensure the quality of the road pavement, the Asphalt Manufacturers' Association stipulates in its business ethic code to require its members to limit their supply to buyers within a distance of 60 kilometers.
Given the nature of asphalt concrete and the regulation by the manufacturers' association, the market of asphalt concrete is segmented. Any factory to manufacture asphalt concrete is required to be built on a piece of land zoned for industrial use only and its establishment must comply with environmental standards. Because of the stringent conditions mentioned above, there exists quite a number of illegal asphalt concrete manufacturers and the prices offered by these manufacturers are comparatively lower.
3. The Fourth Construction Division of the Taiwan Highway Bureau and Ilan County Government provided a name list of contractors for road construction, overlaying, and retreating, volume of asphalt concrete used in each work, budget and contract price of asphalt concrete per metric ton. These statistics showed that among the 131 contracted construction, overlaying and retreating works from 1994 to 1996, contract prices of the asphalt concrete per metric ton were as follows:
lower than NT$800 8 contracts
NT$800 ~ NT$1,200 105 contracts
NT$1,200 ~ NT$1,600 17 contracts
Higher than NT$1,600 1 contract
Only under the construction Contract Tai-Er Line (130K+400--132K+050) did the asphalt concrete used for overlaying exceed NT$1,600 per metric ton.
No facts substantiated that asphalt concrete was sold in Ilan County at around NT$1,600 per metric ton as alleged. According to the statistics above, there had been 105 contracts, or 77% of the total contracts at the period, in which asphalt concrete were sold at a price ranging from NT$800 to NT$1,200 per metric ton for construction, overlaying and retreating works.
4. Pricing of asphalt concrete is determined by cost of materials, transportation and manpower. Given the fact that the Ilan area is distant from the supplying factories and that the weather is rainy which results in the reduction of the number of working days for road pavement, the higher price of asphalt concrete in the Ilan area cannot be judged to have been caused by a concerted action taken by asphalt concrete businesses in the Ilan area or by the local manufacturers' association monopoly in pricing.
In addition, according to the information provided by the Fourth Construction Division of the Taiwan Highway Bureau and Ilan County Government, prices of asphalt concrete used in contracted road pavement varied in great range. There was no rigid pricing and there is no physical evidence to sustain the accusation that the asphalt concrete businesses were engaged in a concerted action or that the local asphalt concrete business association led the alleged monopolizing pricing.
Summarized by Wang, Hong-hsuen
Supervised by Li, Yien-hsi
＃: For information of translation, click here
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