The Independence Evening Post was complained for impeding fair competition by inducing its competitors' trading counterpart to form trading relationship with it in violation of the Fair Trade Law

Chinese Taipei

Case:

The Independence Evening Post was complained for impeding fair competition by inducing its competitors' trading counterpart to form trading relationship with it in violation of the Fair Trade Law

Key Words:

inducement with profit, independent to fair competition, complimentary gifts or awards

Reference:

Fair Trade Commission Decision of 11 October 1995 (the 209th Commission Meeting); Disposition (84) Kung Ch'u Tzu No. 166

Industry:

Journalism (8020)

Relevant Laws:

Article 19(iii) of the Fair Trade Law

Summary:

1. The term "competition" as used in the Fair Trade Law refers to the act or activity of enterprises competing with more favorable price, quantity, quality, service or any other term in an endeavor to acquire trade opportunities. More and more local enterprises are engaged in such promotional activities as giving away complimentary gifts and the price of such giveaways has been escalating. This on the one hand has placed a heavy burden on the rest of the industry as they follow suit. On the other hand, these varied promotional activities also bewilder consumers. If the complimentary gifts and awards offered by enterprises are of too much value, potential competitors may be thus prevented from entering the market. In view of the aforementioned facts, the Commission in its 172nd meeting decided to set a ceiling on annual expenditures on complimentary gifts given away by an enterprise as follows:

(1) NT$ 200 million for those enterprises whose annual sales volume of the preceding fiscal year is valued more than NT$ 1 billion; (2) One fifth (1/5) of the value of its sales volume for those whose annual sales volume of the preceding fiscal year is valued above NT$ 0.25 billion but less than NT$ 1 billion; or (3) NT$ 50 million for those whose annual sales volume of the preceding fiscal year is less than NT$ 250 million.

Enterprises violating the aforesaid rules will be deemed violating Article 19(iii) of the Fair Trade Law, i.e., causing the trading counterpart of a competitor to enter into a trade with itself by inducement with profit and likely to impede fair competition. The aforesaid decisions have come into effect since the first of April, 1995, and have been published in the Gazettes of this Commission, explained in many promotional seminars, with notice provided in a number of arenas.

2. The sanctioned party in this case achieved in 1994 a sales volume of NT$ 717,486,624. Pursuant to the decisions reached in the 172nd Commission Meeting, the expenditure ceiling of the sanctioned party on its giveaways in 1995 should be NT$ 143,497,324.8. In the advertisements the sanctioned party took out in print media, it claimed that the total value of its free gifts amounted to NT$ 200 million. If estimated by multiplying the number of available gifts by their claimed value, the total value of these gifts would be NT$ 296,412,000. On the other hand, the acquisition cost of these gifts was estimated by the sanctioned party to be NT$ 193,738,800. No matter which formula applies, the total value of these gifts was far more than the cap stipulated in the decisions reached in the 172nd Commission Meeting. There is no doubt that the sanctioned party has undertaken activities which is likely to impede fair competition by inducing a party with profit the trading counterpart of its competitor to trade with itself. This decision is thus entered in accordance with the fact that the sanctioned party has violated the provisions of Article 19(iii) of the Fair Trade Law.

　

Summarized by Cheng, Chia-lin
Supervised by Lin, Yu-ch'ing

Appendix:
The Independence Evening Post's Uniform Invoice No. : 03722001

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