Paosheng Pharmaceutical Company Limited and Paohsiang Company Limited were complained for inappropriately low bids for hepatitis B vaccine tender

Chinese Taipei

Case:

Paosheng Pharmaceutical Company Limited and Paohsiang Company Limited were complained for inappropriately low bids for hepatitis B vaccine tender

Key Words:

tender bidding, bid price, hepatitis B vaccine

Reference:

Fair Trade Commission Decision of 18 May 1992 (the 31st Commission Meeting); Disposition (81) Kung Ch'u Tzu No. 004

Industry:

Pharmaceutical Retail Industry (5381)

Relevant Laws:

Article 19(iii) of the Fair Trade Law

Summary:

1. The Taiwan Supply Bureau [hereinafter referred to as "the Bureau"] was previously commissioned by the Department of Health of Taiwan Provincial Government ["the Department of Health"] to invite tenders for the procurement of 40,000 dosages of gene-re engineered hepatitis B vaccine. On 18 December 1991 the second tender opening took place, and there were six tenderers. The result of the tender opening was that Paosheng Pharmaceutics Company Limited ["Paosheng"] submitted a tender price of zero NT Dollar while Paohsiang Company Limited's tender price was NT$ 0.1. As the tender situation was quite unique, the final decision was postponed. The Bureau appraised the Department of Health of the situation in writing. The Department of Health made the following determinations:

(1) Paosheng's tender was not acceptable because no value was stated in the tender. While the tender price of NT$ 0.1 submitted by Paohsiang was obviously unreasonable, the company offered an explanation and in its letter of undertaking it pledged its willingness to supply at the original tender price the needed quantity of dosages administered to newborns throughout Chinese Taipei area by 30 June 1992.

(2) Because all the dosages of vaccine must be inspected by National Laboratories of Foods and Drugs under the Department of Health in Chinese Taipei, there should be no likelihood that the quality of the vaccine will be compromised.

(3) Part of the same batch of vaccine have been sold to private clinics with no negative comments to date. Accordingly, the contract was authorized to be awarded on 5 March 1992 and on 25 March of the same year the contract with Paohsiang were executed.

2. The sanctioned party submitted a tender price of NT$ 0.1 and offered to donate NT$ 20,000 as relief fund so as to participate in the bidding. The reason for submitting such an insubstantial price was to acquire the right to supply for the first time the gene-re engineered hepatitis B vaccine. The sanctioned party asserted that its intended donation was based on information that the complainant in this case also intended to donate the product as part of its attempt to win the tender. However, in this connection Paohsiang was unable to provide any concrete evidence to support its assertions other than a document which stated that its parent company, Paosheng planned to give away 40,000 dosages of "Mo k'e" gene-re engineered hepatitis B vaccine. On the other hand, in regard to the question whether or not different types of vaccine are fungible, some medical reports state that both the first and second generations of hepatitis B vaccine and different brands are fungible.

However, in terms of the psychological aversion against mixed usage on the part of general consumers, there is still no definite conclusion on this issue. There are very special characteristics of the product in question. A newborn needs to take three administrations: when it is just born, at one month, and at six months, in order to complete the immunization cycle of the second generation hepatitis B vaccine. The sanctioned party managed to win the first-time supply right with an unrealistic price of NT$ 0.1. Clearly the sanctioned party's objective was to use the inappropriately low price to cut out the competition and obtain an advantageous position for future sales. Such acts of "using improper means to cause the trading counterpart of a competitor to deal with itself" constitutes a violation of the provisions of Article 19(iii). Therefore, in accordance with the provisions of Article 41 of this Law, the sanctioned party shall be ordered not to use its advantageous position derived from the contract it was awarded on 5 March 1992. The sanctioned party is also ordered to refrain from engaging in the future in the same or similar improper tendering activities.

　

Summarized by Wu, Ts'ui-feng

Appendix:
Paosheng Co.'s Uniform Invoice Number: 23421849

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