Nantou Liquid Gas Fuel Association [hereinafter referred to as "the Association"] collaborated with local packaging sites in refusing to accept commission from new distributors to package and transport liquid gas fuel
Chinese Taipei
Case:
Nantou Liquid Gas Fuel Association [hereinafter referred to as "the Association"] collaborated with local packaging sites in refusing to accept commission from new distributors to package and transport liquid gas fuel
Key Words:
Undue refusal to supply goods; boycott; trade association.
Reference:
Fair Trade Commission Decision of December 21, 1994 (the 167th Commission Meeting); Disposition (84) Kung Chu Tzu No. 013
Industry:
Gas fuel supply industry (4200)
Relevant Laws:
Article 19(1) of the Fair Trade Law
Summary:
1. Mr. Hung, a member of the public from Ts'aot'un township of Nantou County, complained to the Commission that the Association at its board meeting decided to inform the three packaging sites located in Nantou County by mail that they shall not accept commission for packaging and transportation from new distributors. The Commission's investigation showed that: On May 25, 1994 the Association held its 6th joint meeting of board of directors and supervisors during its 10th year of operation at Golden Times Restaurant located in Puli. A managing director of the Association at this meeting made an extraordinary motion and a resolution was reached accordingly: In order to keep the stability of the market, packaging sites were urged not to arbitrarily accept commission from new distributors for packaging and transportation of liquid gas fuel. The Association informed three packaging sites in Nantou County by mail of the aforesaid resolution and notified its members as well. The Association tried to defend itself by claiming that the letters it had sent in accordance with the joint meeting resolution were meant to serve as reference and did not have practical effect. In the meantime, the packaging sites also claimed that the letter sent by the Association was not binding and each packaging site had every right to decide whether to accept commissions from new distributors.
2. Applicability analysis: Pursuant to the theory of potential competitive market in economics, the Commission has to review whether potential competitors,(which could also be called potentially available specific enterprises) exist and take into account their impact. A competitor's status as an "enterprise" as set forth in the Fair Trade Law shall not be denied simply because it has not started actual operations. Accordingly, though the complainant in this case was still applying for a business permit, his commitment to being a new distributor was quite obvious, which made him a potential competitor and thus an "enterprise" referred to the Fair Trade Law. The letter sent by the Association to the packaging sites did not specify which new distributors should be rejected, but the complainant and other new distributors, i.e., the potential competitors or other identifiable enterprises, may well be prevented from entering into the market and thus lose trade opportunities because of this very letter. The Association's act of sending letters about its board meeting decisions to cause other enterprises, the three packaging sites in this case, to refuse trading with the specific enterprises, i.e., the complainant and other new distributors, involved the following factors which are likely to impede fair competition:
(1) Containerized gas is bulky and difficult to carry long distances, therefore it in nature caters to a specific geographic market.
(2) There were only three packaging sites in the Nantou County and all distributors would entrust the packaging of their products to one of the three packaging sites in the near-by vicinity. If the packaging sites unduly rejected the commission of new distributors, the operation cost of new distributors would be raised, which would be detrimental to fair competition in the market.
(3) As the market of household liquid gas was recently opened up, it was natural for the existing manufacturers to be inclined to reject new competitors in the market. However, if this case were not properly handled, it might play a negative exemplary role, thus adversely affecting fair competition in the market and the Commission's efforts to follow through its decision of fully opening up the market of household liquid gas.
3. Based on the aforesaid reasons, the Commission decided to prevent a negative occurrence by invoking Article 41 of the Fair Trade Law to impose sanctions against the Association for violation of the provisions of Article 19(i) of the same Law. In addition, the three packaging sites in question were also notified by this Commission that they shall not engage in any acts of undue rejection of commissions given by distributors established pursuant to relevant laws.
Summarized by Huang, Chung-chieh
Supervised by You, Su-su
＊＊: For information of translation, click here
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