A complaint was filed by citizens of Tainan City against Yohwa Co., Ltd., an agent of Carotani sheep milk powder for babies, for alleged monopoly as indicated by the exorbitant selling prices for the sheep milk powder it distributes and by the uniform selling prices charged by all distributors

Chinese Taipei

Case:

A complaint was filed by citizens of Tainan City against Yohwa Co., Ltd., an agent of Carotani sheep milk powder for babies, for alleged monopoly as indicated by the exorbitant selling prices for the sheep milk powder it distributes and by the uniform selling prices charged by all distributors

Key Words:

restriction on resale prices

Reference:

Fair Trade Commission Decision of February 19, 1997 (the 227th Commission Meeting); Disposition (86) Kung Ch'u Tzu No. 044

Industry:

Diary Manufacturing Industry (1120)

Relevant Laws:

Article 18 of the Fair Trade Law

Summary:

1.The defendant was complained to set up distributorships in various counties and cities for the distribution of Carotina sheep milk powder for babies selling for at least twice as much as the prices for ordinary milk powder available in the market. The distributors are required by Yohwa to sell the 400 mg canned powder for NT$450 and 900 mg canned powder for NT$800, and violators of such requirement will be penalized by Yohwa. The consumers cannot freely purchase the products by comparing the prices offered by different distributors. In addition, a drugstore which is not a distributor of Yohwa sold the products for lower prices through inventory arrangement. Tien Chih Chiao Ying Fang, a general distributor of Yohwa in Tainan, learned about this. From then on, the drugstore could no longer obtain such products from Yohwa's distributors, and it was informed that it would not be able to obtain such products without signing a franchise agreement and abiding by the fixed selling prices. Pursuant to Article 2 of the Carotani Franchise Agreement (“Agreement”) executed between Yohwa and its franchisees, "the Franchisee agrees to sell the products for the agreed-upon suggested prices, and violators shall be subject to provisions governing penalties for breach of contract." In addition, Article 1 of the Agreement contains punishment whereby all future transactions with the violators will be terminated. Although Yohwa once amended such Agreement, suggested resale prices are still expressly listed in such Agreement.

2.Article 18(1) of the Fair Trade Law stipulates that "an enterprise which supplies goods to its trading counterpart shall allow its trading counterpart to freely decide the prices at which such goods will be resold by the said third party. Any agreement contrary to this provision shall be null and void." In addition to the suggested resale prices and penalty provisions expressly stipulated by the Carotina Franchise Agreement, A Baby Supplies Co. and B Co., both franchisees of Yohwa, admitted that there were subject to restrictions on resale prices. Moreover, appearing before this Commission, Yohwa admitted to its attempt to persuade price-reducing franchisees not to cut prices and to its termination of business relations therewith in the event of noncompliance. Thus, Yohwa's restriction on resale prices indubitably violates Article 18(1) of the Fair Trade Law. A decision was made at the 277th Commission Meeting to sanction Yohwa. Yohwa shall, upon the next day of receipt of this Disposition, desist from any act of restricting resale prices through franchise agreements or other restrictive methods.

　

Summarized by Hu, Jishyan
Supervised by Shih Chin-ch'un

Appendix:
Yohwa Co. Ltd’s Uniform Invoice Number: 12397982

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