Whether household electronic appliances manufacturers' holding a seminar on how to response to sharp appreciation of Japanese Yen violated the Fair Trade Law
Chinese Taipei
Case:
Whether household electronic appliances manufacturers' holding a seminar on how to response to sharp appreciation of Japanese Yen violated the Fair Trade Law
Key Words:
Concerted actions, exchange rate.
Reference:
Fair Trade Commission Decision of May 12, 1993 (the 84th Commission Meeting); Disposition (82) Kung Er Tzu No. 51854
Industry:
Household Electronic Appliances Industry (3121, 3122. 3123, 3124, 3129)
Relevant Laws:
Summary:
1. On 8 March 1993, some newspapers reported with headlines the treading "manufacturers of household electronic appliances are to hold a seminar to discuss increasing prices of their products in response to the appreciation of Japanese Yen." Another report on 9 March further reported the seminar in which "manufacturers of household electronic appliances had reached tacit understandings that there would be a sharp rise in the price of their products." Having noted the above mentioned reports, the Commission took the initiative to conduct an investigation, which showed that the aforesaid seminar was held by the Professional Committee of Household Electronic Appliances Manufacturers under Taiwan Electrical and Electronic Manufacture Association [hereinafter "TEEMA"]. The Committee sent seminar invitations with the name of TEEMA thereon, and the seminar started at 2:20 p.m., 8 March 1993 at the Howard Plaza Hotel. Chairperson of the Committee, Chen Sheng-tien, chaired the seminar along with the chairman of TEEMA serving as co-chairperson. The title of the seminar was "Seminar on How to Respond to the Impact of Sharp Appreciation of Japanese Yen by Household Electronic Appliances Manufacturers", and twelve local manufacturers were present at the seminar.
2. The written materials related to the seminar revealed that the main purpose of the materials was to describe the recent changes in exchange rates and other factors which had led to variations in their costs. According to the written materials, the yen had appreciated upwards against the U.S. dollar from 125:1, when the manufacturers placed orders for Japanese electronic appliances, to 115:1. Another purpose of the materials was to discuss possible strategies the manufacturers might take in response to the aforesaid situation, for example, local manufacturers may raise the price in accordance with the local content of the products, i.e., the reasonable rise in prices should range between 3~5 percent; industrial division should be reinforced; local content should be enhanced, the government should promote and assist corporate alliances; more efforts should be made to penetrate the Japanese market; and consumers of household electronic appliances may be encouraged to make their purchases as soon as possible. Moreover, the investigation showed that the seminar resulted in three conclusions as follows:
(1) whether or not a manufacturer may raise the price so as to reflect the changes in the cost shall allow each manufacturer to determine based on its own specific circumstances;
(2) all manufacturers are encouraged to reinforce their division of labor and form strategic alliances in order to tackle the present predicament; and
(3) as the consumer market in Japan is depressed , low and medium-priced Taiwan eletronic appliances should take this timely opportunity to "counterattack" the Japanese market.
3. Based on the reference materials distributed at the seminar, tapes of the manufacturers' conversation during the seminar, the manufacturers' statements, and the response of the market to such news report, it was not yet clear to the Commission whether Article 14 or article 19(iv) of the Fair Trade Law were violated. However, this may be due to that participating manufacturers' intentionally disguised their acts by making expressions in an indefinite and ambiguous manner, or that the concerted action they agreed upon has not developed into the stage of implementation. Therefore, it is necessary for the Commission to observe closely the further development of this case so as to tell whether the manufacturers have been engaged in acts in violation of the provisions of the aforesaid articles. On the other hand, as all sectors of society are concerned about commodity prices, how the case in question is handled will be bound to receive wide attention. At the same time, if the Fair Trade Commission does not make a clear disposition in a timely manner, other industries may follow suit, which would have a major impact on the government's efforts to stabilize prices. In view of the above mentioned considerations, the Commission decides to immediately notify by mail those participating enterprises that any compliance with the resolutions concerning price hikes reached at the seminar, or any other concerted actions in this particular regard will be deemed a violation of the provisions related to cartel activities taken by enterprises and sanctioned by the Commission according to relevant law. The notice will also advise relevant enterprises to make sure that all their actions comply with the provisions of the Fair Trade Law.
Summarized by Lin, Ch'ing-tang
Supervised by Yung, Chia-chun
＊＊: For information of translation, click here
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