Makro Taiwan Ltd. violated the Fair Trade Law by taking advantage of its superiority in business operation
Chinese Taipei
Case:
Makro Taiwan Ltd. violated the Fair Trade Law by taking advantage of its superiority in business operation
Key Words:
Obvious Unconscionable; trading order; operating retail business in a disguised way
References:
Fair Trade Commission Decisions of December 1, 1993 (the 113th Commission Meeting), August 24, 1994 (the 150th Commission Meeting), November 30, 1994 (the 164th Commission Meeting) and May 8, 1996 (the 238th Commission Meeting); Dispositions of (83) Ku Chi Tsu 101, (83) Kung Chu Tsu 139 and (85) Kung Chu Tsu 067
Industry:
Retail Business (5319)
Relevant Laws:
Summary:
1. Makro Taiwan Ltd. is a new rising large-sealed shopping center characterized in mass sale, at cheaper price, of household goods such as electronic appliances, clothing, and large-packaged foods and household necessities. A business place of the said Company usually locates in an industrial zones or on industrial land, operates in the same manner as a warehouse, and uses forklifts to pile up and pick up commodities. The goods placed on the display shelves are its entire stocks. Its market place is large in space and stocked with all kinds of commodities in sufficient quantities aimed at facilitating its customers to purchase whatever they need in a single trip. Generally speaking, it is designed as a warehouse typed wholesale facility where the goods are sold at wholesale prices to the holders of corporate membership cards issued by it. As the mode of its operation combines the features of conventional wholesale and retail businesses, it improves the efficiency of commodity flow.
2. Makro's abuse of its superiority in business operation has incurred criticisms and blame from all sectors in the society as a whole. After receiving complaints from government agencies and relevant business operators, FTC initiated the investigation and carefully handle the issues pertaining to the market mechanism, trading order and fair competition in this particular case. Various invaluable opinions and relevant information were gathered through public hearings attended by representatives of central and local government agencies, experts, scholars and representatives from the same trade; on-site visits and investigation of the management and sales operations of the said Company, and a series of interviews and verification procedures. After reviewing and discussing this case at the 113th and 150th FTC Commission Meetings, a decision was reached that while the said Company was approved to operate wholesale and warehouse business within industrial zones, but it failed to enforce strict control over the issuance and verification of membership cards. Such failure not only violated the management rules which it established, but also extended the scope of its buyers to ordinary consumers, which in turn resulted in an expansion of the scope of the business beyond its originally authorized and registered. As a result, it became a company which engaged in an unauthorized retail business within industrial zones. Its conduct of enjoying lower operating costs on the one hand, while operating retailing business without prior authorization on the other hand had not only constituted unfair competition to ordinary retail traders but also affected the trading order on the market in the manner prohibited by Article 24 of Fair Trade Law. Pursuant to the provisions of Article 41 of the same Law, FTC thus ordered the said company to cease its obviously unfair act which is sufficient to affect the trading order.
3. Subsequently, FTC's personnel reinvestigated the membership card issuing and verification operations of the said Company and found that the loose control of membership card verification operation still exists. FTC then imposed, pursuant to the resolution adopted at its 164th meeting, upon the said Company a fine in the amount of NT$500,000. Thereafter, based on the information that the said Company was issuing temporary shopping cards to persons not carrying membership cards, FTC further imposed, after having substantiated such information, upon the said Company a fine in the amount of NT$1,000,000. FTC also decided to keep conducting non-periodic spot-check to verify whether the unlawful act of the said Company has ceased or not.
Summarized by Yang, Hsiu-yun
Supervised by Liu, Chien-hsun
＠: For information of translation, click here
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