Taiwan Federation of Rubber Industry Associations violated the Fair Trade Law for taking joint actions in pricing of tire repair and replacement services

Chinese Taipei

Case:

Taiwan Federation of Rubber Industry Associations violated the Fair Trade Law for taking joint actions in pricing of tire repair and replacement services

Key Words:

Concerted actions, uniform prices, reference prices

Reference:

Fair Trade Commission Decision of September 23, 1992 (the 51st Commission Meeting); Disposition (81) Kung Ch'u Tzu No. 030

Industry:

Tire industry (5319)

Relevant Laws:

Article 14 of the Fair Trade Law

Summary:

1. The Taiwan Federation of Rubber Industry Associations [hereinafter referred to as the "Federation"] produced a uniform reference price list pursuant to a joint resolution, made copies of this price list, and distributed them to its member associations in sixteen cities and counties throughout Chinese Taipei. The Federation admitted that it had printed and distributed the price list, and enclosed in its reports to the Fair Trade Commission the minutes of its ninth board meeting on November 7, 1990, in which the proposal and the resolution to print the aforesaid price list were both recorded. However, the Federation argued that though it is true that a price list and an aluminum price plate were printed in accordance with the decision reached in the board meeting dated November 7,1990, the Federation did not adopt any coercive means such as punishment or boycott to force its member associations to comply with the aforementioned price list. On April 10, 1992, the Federation held a board meeting and reached a verbal resolution to change the aforesaid price list in order to address the probable violation of the Fair Trade Law. Therefore, on April 15 and 28 of the same year, letters numbered as 38 and 41 respectively were sent to its member associations in all cities and counties, asking them to inform their members of the following changes: (1) Letter No. 38 told the members not to hang the aforesaid price list or to replace "made by the Taiwan Federation of Rubber Industry Associations" with the name of their own shop if they desire to hang the price list. (2) Letter No. 41 distributed stickers with the word of "reference" printed on thereon to the members so that they can stick them on the price list and the aluminum price plate. However, the prices written on the list and the plate remained unchanged.

2. The Federation is a trade association set up in accordance with the Business Association Law and registered with the competent authority, thus fitting the description of "enterprise" defined in Article 2(3) of the Fair Trade Law. In addition,, as the Fair Trade Law was reviewed in the Legislature, trade associations were specifically included as one kind of enterprise defined in Article 2 because they can be a single agent for concerted actions, and therefore need to be regulated in this respect. As a result, the Federation should be subject to the restrictions and regulations of the Fair Trade Law. The resolution made by the Federation concerning producing a price list was aimed to impel its members to comply with it, and could be interpreted as a joint action to decide service prices in restraint of trade. The survey also showed that following the implementation of the aforesaid price list for tire repairs, there has been an increase in the service charges, which is a factual element falling within the scope of activities which constitute a violation of the provisions governing concerted actions.

3. The Federation's first decision in the board meeting on November 7, 1990 about making a price list and thereafter its act of printing and distributing the copies of the list all took place before the Law came in force. Nonetheless, from the time the Fair Trade Law came into effect till April 10, 1992 when the Federation held a board meeting, the Federation did not take any action to rescind its previous resolution and to cease its implementation. Furthermore, the Federation in accordance with the verbal resolutions reached in board meetings on April 15 and 28 of the same year sent two letters to its member associations throughout the Chinese Taipei area, asking them to inform their members of the following changes; the first letter instructed its members not to hang the price list, or if they want to hang it in their store, the Federation advised them to replace the original words of "made by the Taiwan Federation of rubber Industry Associations" with the name of their business; the second letter enclosed stickers with the word "reference" printed thereon, and the members were advised to stick them to the price list and the price plate. Therefore it can be concluded that the actions taken by the Federation to that extent failed to help its members to understand the fact that service fees should be negotiated between the two parties entering into a trade. In addition, the result of the survey showed that about 60 percent of the Federation's members do charge their customers based on the price list in question, proving that such concerted actions have been going on despite the implementation of the Fair Trade Law. The Federation has never applied to the Commission for permission for its "concerted actions", therefore constituting a violation of Article 14 of the Fair Trade Law concerning prohibiting concerted actions. The Federation on August 31, 1992 sent a letter to its members rescinding the changes made to the aforesaid price list and the aluminum price plate. However, between February 4, 1992 when the Fair Trade Law came into effect and the time the aforesaid letter was sent to its members, the Federation's concerted actions already violated the relevant provisions and should be rectified. Moreover, the letter to members rescinding the aforementioned changes did not indicate that the previous unlawful resolutions was invalidate pursuant to legal procedures, nor did the Federation adopt any effective measures to prevent unknowing members from continuing their compliance with the aforementioned unlawful resolutions, therefore proper sanctions are still needed.

　

Summarized by Lin, Ch'ing-tang
Supervised by Yung, Chia-chun

＊＊: For information of translation, click here

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