Suspected violation of the Fair Trade Law [FTL] by the Certified Public Accountants [CPA] Associations of Taiwan Province, Taipei and Kaohsiung cities [respondents], which jointly specified uniform fee standards and demanded all their members abide by those standards, and by the Taipei Municipal Certified Public Accountants Association [the TCPAA] for its decision to send a rectification demand letter to a member who failed to abide by the fee standards for services provided to a state-owned enterprise
Chinese Taipei
Case:
Suspected violation of the Fair Trade Law [FTL] by the Certified Public Accountants [CPA] Associations of Taiwan Province, Taipei and Kaohsiung cities [respondents], which jointly specified uniform fee standards and demanded all their members abide by those standards, and by the Taipei Municipal Certified Public Accountants Association [the TCPAA] for its decision to send a rectification demand letter to a member who failed to abide by the fee standards for services provided to a state-owned enterprise
Key words:
effective competition, price competition, administrative estoppel, fee standards
Reference:
Fair Trade Commission Decision of 13 May 1998 (the 340th Commission Meeting); Letters (87) Kung Yi Tzu No. 8611935-011 and 8611935-012
Industry:
Accounting Services Industry (7120)
Relevant Laws:
Summary:
It was alleged that the respondents jointly specified fee standards, demanded that all their members follow those standards, and provided that non-conformers would be subject to discipline. In its 23rd Directors' meeting and 5th directors and supervisors' joint meeting of 9 July 1997, the TCPAA reached a resolution, which directed a member who certified the financial statements of a state-owned enterprise for fees lower than the specified standards to undertake by writing within a limited time never again to provide CPA services to that certain state-owned enterprise. According to the resolution, if the member failed to produce the undertaking letter, he would be subject to discipline. As a result, the respondents were suspected of having violated the Fair Trade Law.
Article 34(6) of the Certified Public Accountants Law [CPA Law] provides that the fee standards and ceiling for a CPA's service shall be specified by the CPA Association's Articles of Incorporation, and that those violating their CPA Association's Articles of Incorporation shall be subject to discipline. Accordingly, in its 203rd Commission Meeting, the FTC decided Article 46(1) of the Fair Trade Law could exempt the above. However, the National Federation of CPA Associations and the respondents jointly decided the amendment to the fee standards. Each respective association then approved the fee standards. Such processes seemingly satisfied the elements of constitute a "concerted action." However, the fee standards remained subject to screening of the authorities. The Ministry of Finance, the competent authority, found that the proposed amendment substantially adjusted the fees and sent a letter to the respondents for a public hearing on the amendment before finalizing the fee standards. Therefore, the FTC found that the above did not materially affect the trading order. Furthermore, the competent authority also endorsed such process. Taking into account "administrative estoppel," the FTC did not hold the respondents in violation of Article 14 of the Fair Trade Law for specifying the fee standards.
Although the CPA Law authorizes CPA Associations to discipline those who violate the Association's Articles of Incorporation, it does not empower the Association to restrict the business activities of the violators. The member accountant in this case did not observe the fee standards in collecting fees for services provided to a certain state-owned company, and was accordingly subject to discipline by the TCPAA. However, the TCPAA demanded the accountant make a undertaking by writing not to provide services to the same company again. The undertaking also effectively bound the other members of the accountant's firm. In addition, the TCPAA made the discipline conditioned upon the fact whether the member issued a undertaking letter to forgo any trade opportunities, which were not for sure existing. The TCPAA's act was clearly improper and exceeded the scope of self-discipline. Such act also restricted enterprises from participating in market price competition and seriously hindered fair competition in the market. Accordingly, the FTC decided that the TCPAA violated Article 19(iv) of the Fair Trade Law and, in its 340th Commission Meeting, ordered the TCPAA to correct its act within a given time limit pursuant to the first of Article 41.
Summarized by Chen, Yun-shan
Supervised by Hu, Kuang-yu