The Taiwan Sugar Corp. violated the Fair Trade Law for having imposed unreasonable pickup and payment terms for grain sugar buyers
Chinese Taipei
Case:
The Taiwan Sugar Corp. violated the Fair Trade Law for having imposed unreasonable pickup and payment terms for grain sugar buyers
Key Words:
Taiwan Sugar Corp., grain sugar, monopoly, abuse of market position, terms of trade
Reference:
Fair Trade Commission Decision of May 28, 1997 ( the 291st Commission Meeting); Letter (86) Kung Erh Tzu No. 8505922-004
Industry:
Sugar Manufacturing Industry (1161)
Relevant Laws:
Summary:
1.Members of a domestic sugar consuming industry complained that the Taiwan Sugar Corp. (hereinafter referred to as TSC) imposed several unreasonable terms for the pickup and payment of grain sugar. These terms required companies to (1) show their company registration license; (2) use cash to fill purchase orders; (3) pick up the grain sugar at the place of delivery designated by TSC; (4) provide their own vehicles to pick up the grain sugar at the TSC factory; (5) pay for warehouse rental if the sugar are not picked up within the specified period of time; and (6) allow only workers of TSC to handle the loading of the sugar.
2.After deliberation, it was found that this Law was not applicable to the first two issues listed in the above complaints.
With respect to the remaining issues, it was found that after sending personnel to the TSC factory for investigation, TSC did not designate any place of delivery to be complied by its customers. The place of delivery was determined by the buyer while filling up and paying for the purchase order.
TSC had, since 1949, sold the grain sugar at factory prices for pickup by the buyers at the TSC factory. Thus the customer’ s picking up of the grain sugar at the TSC factory was based on this customary trading practice. If the place of delivery was other than the TSC site, the buyer would have to bear the transport and miscellaneous expenses, a practice which was not different from transportation of other similar products such as animal feed, flour, and soy bean powder.
As to the issue whether the TSC compulsorily required the buyers to allow TSC’s workers to help handling the sugar while in the TSC factory, investigation showed that the TSC did not have such a compulsory requirement. The buyers could either commission third-party workers or handle the sugar themselves. In real practice however, handling the sugar by the buyers themselves would take much a longer time, and would not be economical.
For those buyers who did not pick up their sugar after a specified period has elapsed, since the sugar would occupy space at the TSC warehouse, these buyers were required to pay for their warehouse costs.
3.The above allegedly unreasonable pickup and payment terms imposed by TSC were claimed in violation of this Law. Since the issues were price-related, Article 10(1)(ii) of this Law should govern this aspect of the case.
Investigation showed that the above acts either had their special backgrounds or were not different from the trading methods of similar industry or products. Thus it was the decision of this Commission that the above terms of trade were not an abuse of TSC’s market position, and would not constitute a violation of Article 10(1)(ii) as well as Article 24 of this Law.
However, if TSC, being a monopoly, fails to exert reasonable effort to improve the terms of trade as requested by the sugar buyers, thus resulting to inconveniences or extra burden on the sugar buyers, TSC may be deemed to have abused its market position, and such failure to act may constitute a violation of Article 10 of this Law.
Summarized by Wu, Teh-sheng
Supervised by Shih, Ching-tsun
Appendix:
Taiwan Sugar Corp’s Uniformed Invoice Number: 03794905
＠: For information of translation, click here
[Browse by APEC Member
Economies] [Browse by Subject Categories] [Home]
[Decisions] [Approvals] [Interpretations] [Administrative Guidance]