Violation of the Fair Trade Law by the rust removal of water treatment plant project at the Lin Yuan petrochemical factory of Chinese Petroleum Corporation
Chinese Taipei
Case:
Violation of the Fair Trade Law by the rust removal of water treatment plant project at the Lin Yuan petrochemical factory of Chinese Petroleum Corporation
Key Words:
designated brand, Hypalon, salt spray test, statutory number of bidding participants
Reference:
Fair Trade Commission Decision of February 10, 1999 (380th Commissioners' Meeting); Disposition (88) Kung Er Tzu No. 8706006-010
Industry:
Petroleum and Coal Manufactured Products (2112)
Relevant Law:
Article 24 of the Fair Trade Law
Summary:
The Chinese Petroleum Corporation (CPC) at its Lin Yuan petrochemical plant in May 1998 conducted a bidding for anti-rust painting of eleven water tanks for the T-201 and other water treatment plants. " HYPALON surface paint", the content of which is based on flexible filler material, was required as water tanks located adjacent to a water tower had become severely rusted after years of being sprayed by water. The tanks were previously protected and maintained with a standard domestic paint but the production was generally not effective. In discussions between responsible departments at the Lin Yuan Plant it was recommended that SOLADEX paint made by LPL in the UK be tried. This bidding was based on actual maintenance and repair needs of the equipment. Because designating SOLADEX paint would hinder bidding participation, the requirement was changed to paint primarily containing, EPOXY + HYPALON.
The investigations of the Fair Trade Commission found that HYPALON is a Dupont product and registered trademark. Although any paint could be added to this material to meet the company' s bidding specifications, it was also required that paint containing HYPALON be tested with salt spray requiring over 4,500 hours (187.5 days) to complete. During the period of time from bidding announcement, no other companies could complete the experiment and participate in the bidding. Requiring that the paint contains HYPALON essentially designated the brand name and caused participating companies to mistakenly trust that the bidding was open to many companies. It could have hindered transaction opportunities of other substitute products and affected trading order. The act was punished pursuant to Article 24 of the Fair Trade Law regarding " deceptive or obviously unfair acts that are sufficient to affect trading order."
Summarized by Lin Hsiao-hung
Supervised by Li Yen-hsi
Appendix:
Chinese Petroleum Corporation' s Uniform Invoice No.: 03707901