Violation of the Fair Trade Law by Shin Nan Petroleum Gas Co., Ltd.
Chinese Taipei
Case:
Violation of the Fair Trade Law by Shin Nan Petroleum Gas Co., Ltd.
Key words:
improper setting of piping fees paid by user households, inflated quotes, excessive burden, abuse of advantageous market positions
Reference:
Fair Trade Commission Decision of 1 July 1998 (347th Commission Meeting); Disposition (87) Kung Ch'u Tzu No. 8700157
Industry:
Gas Fuel Supply Industry (4200)
Relevant Laws:
Summary:
According to the complaint filed by the Tainan Construction Investment Trade Association, which was in turn based on the petition by Cheng Ta Construction Company, Shin Nan Petroleum Gas Co., Ltd. (respondent) abused its monopoly to increase successively the fees for design and piping, thereby improperly setting piping fees for petroleum gas supply. In 1993, each of the housing units in the "Wen Hua Yi Shu Chia" project paid an average of NT$17,857 for gas supply installation. In 1997, each of the housing units in the "Cheng Ta New Home" project paid an average of NT$34,936. The price nearly doubled. Concurrently, Legislator Hsu Tian-tsai also filed a complaint on the same matter. Since the respondent in these two complaints was the same enterprise, the two complaints were combined for handling.
According to Article 20 of the respondent's operating rules, "where a user applies for a new installation, change of installation or piping extension, or other related equipment, this company may collect a fee for the piping. The piping shall belong to this company, and this company shall be responsible for maintenance and repair." According to the reply by the Construction Department of the Provincial Government, citing the opinion of the Public Gas Utilities Association in Chinese Taipei, the fees for external piping (piping fees) should be based on the distance to the site and the difficulty level of construction. That is, the respondent should properly determine and collect piping fees from user households based on its investment in the entire project. Such piping fees shall be evenly shared by all of the user households, not by only a portion thereof.
According to the respondent's detailed chart for piping installation, the piping fees paid by each of the user households of the "Wen Hua Yi Shu Chia" project, the "Cheng Ta Hsin T'e District" project, and the "Wen Hua Yi Shu Chia No. 2" project in 1993 were NT$6,000; the fees paid by each user household of the "Wen Hua Yi Shu Chia No. 3" project in 1994, paid by those in the "Cheng Ta Special District" project in 1996, and paid by those in the "Cheng Ta New Home" in 1997 were NT$8,000. The respondent's total construction investments in each of the "Cheng Ta Hsin T'e District," "Wen Hua Yi Shu Chia No. 2," "Wen Hua Yi Shu Chia No. 3," "Cheng Ta Special District," and "Cheng Ta New Home" projects were NT$268,078, NT$346,449, NT$554,619, NT$27,311 and NT$190,920, respectively. If the total number of user households in the respective projects, instead of the number of beneficiary user households, is taken as the basis for sharing the total investments, the piping fees would have been NT$1,960, NT$4,950, NT$6,603, NT$408 and NT$3,031 per user household. Obviously, the respondent did not calculate piping fees based on its investment in each individual project, and thus overburdened the user households with excessive fees. Such act was contrary to both Article 20 of the respondent's operating rules and the opinions of the provincial supervising authority. The act was also against the principle advocated by the respondent, i.e., equivalency between received benefits and payable fees.
In addition, the respondent gave a quote of NT$50 per user household for the pipe used in the interior piping of the "Cheng Ta Special District" and "Cheng Ta New Home." According to the estimated materials purchase contract, the unit purchase price of the said pipe for the two projects was NT$31.1 and NT$28 per user household, respectively. That is, the piping fees collected from the user households was 136% and 182% of the actual purchase cost. Such figure obviously differed from the 150% figure asserted by the respondent and were inflated quotes. According to the materials purchase contract, the supplier was to deliver to the designated location within 14 days after notice, which meant the respondent did not require warehouse facilities. Even should such facilities had been required, there would have been little loss during storage because the pipes were durable. Thus, the cost of materials loss was limited. The respondent's quotes on the installation fees were obviously inflated and in violation of the principle of efficient competition. It has abused its dominant position in the market in violation of Article 24 of the Fair Trade Law (FTL), which prohibits any obviously unfair act sufficient to adversely affect the trading order.
In conclusion, the respondent breached Article 20 of its own operating rules, failed to comply with the opinions of the provincial supervising authority by abusing its monopoly to set the piping fees, thereby violating the principle of efficient competition. The respondent abused its dominant position in the market against its trading counterparts. The Fair Trade Commission thus found the respondent in violation of Article 24 of the FTL and issued a disposition in accordance with Article 41 of the FTL.
Summarized by Hsieh Hsiu-ling
Supervised by Tzuo T'ien-liang
Appendix:
Shin Nan Petroleum Gas Co., Ltd.’s Uniform Invoice No.:
69793483