The Tourism Industry's Quality Assurance Association violated the Fair Trade Law by promoting the "Special Program for Upgrading the Quality of Tourism" and setting the "reference prices for tourist groups"
Chinese Taipei
Case:
The Tourism Industry's Quality Assurance Association violated the Fair Trade Law by promoting the "Special Program for Upgrading the Quality of Tourism" and setting the "reference prices for tourist groups"
Key Words:
Trade association, concerted action, concerted pricing, boycott, protection of trust
Reference:
Fair Trade Commission Decision of the 281st Commission Meeting; Disposition of (86) Kung Yi Tsu 8507291-001
Industry:
Industrial and commercial groups (8521)
Relevant Law:
Summary:
1. According to the complaints by some tourism businesses, the Tourism Industry's Quality Assurance Association (hereinafter referred as to "the Association") has promoted a "Special Program for Upgrading the Quality of Tourism," publicly announced tourist group prices for international tourism itinerary on a quarterly basis, and demanded that travel agencies which had solicited tourists or trade at the prices lower than the announced prices should give explanation therefor and make immediate correction thereof; otherwise, they would be deprived of their membership upon the resolution of the Association. In addition, the Association would inform its members not to do business with any foreign travel agencies violating the special program mentioned above.
2. The Association was organized by tourism businesses as stated in Article 7 of its Charter. Since it is an organization consisting of businesses of the same industry, the Association should not be exempt from the relevant provisions of the Fair Trade Law regardless of the legal basis for its name or organization. Therefore, as it is a "trade association" under Article 2(3) of the Fair Trade Law, it should be governed by the Fair Trade Law.
3. According to Article 21(4) of the Regulations Governing Tourism Businesses, the Association may publish information about airplane ticket price on a quarterly basis for consumers' reference. However, the Association's act (public announcement of the package prices for the tourist group of specific itineraries) is contrary to the above-mentioned Regulations. Moreover, the "Standard for the Basic Quality of and Reasonable Prices for Tour Groups" (lately modified to be "Reference Standard for the Basic Quality of and Reasonable Prices for Tour Groups") set forth by the Association was not limited for consumers' reference, but was also the major substance of the Association's "Special Program for Upgrading the Quality of Tourism." Under the Special Program, the Association requires that when its members solicit, advertise, and undertake any tourist group business, the quality and prices they offer should not below the Standard, otherwise, the Association would consider that that member or those members might have certain defects or have performed improper acts. Once those defects and/or improper acts are verified, the member(s) would be decided by the Association to have violated the said Program and might be expelled from the Association as punishment. The Association subsequently modified the key work goals and performance strategies of the Program, and deleted part of the compulsory provisions. In addition, the constituent elements of a violation of the Program include "not up to the reference standard for prices," as well as a suspected violation of Article 21(1) of the Regulations Governing Tourism Businesses. However, investigations reveal that in reality, if any of the Association's members failed to reach the "Reference Standard for the Basic Quality of and Reasonable Prices for Tour Groups," the Association would initially conclude that the member had violated the standard required under the said Program and demanded immediate explanation and correction by the allegedly violating member. The Association also stated that any violator would be deprived of its membership upon the Association's resolution. Obviously, the "reference prices" the Association publicly announced were not for consumers' reference only. The Association also required its members to adopt the reference prices as the lowest limit of their prices. Therefore, it is likely that the Association has violated Article 14 of the Fair Trade Law for it has publicly announced the "Reference Standard for the Basic Quality of and Reasonable Prices for Tour Groups," demanded correction by any of its members who were not up to the Standard, and declared that those members might be deprived of their membership.
4. The further investigation shows that the Association also bound businesses of other relevant trades and foreign-commissioned travel agencies to the Association's "Special Program for Upgrading the Quality of Tourism." The Association also prescribed the "Work Goals of Foreign-Commissioned Travel Agencies' Cooperation with the Tourism Industry's Quality Assurance Association in Promoting the Special Program for Upgrading the Quality of Tourism." The Association would provide a list of those foreign travel agencies which had violated the Work Goals to its members and consumers for reference, and even announced that it would inform its members not to do business by letter. It is likely that the said act by the Association constitutes a violation of Article 19(i) of the Fair Trade Law.
5. The legal basis for the "Special Program for Upgrading the Quality of Tourism" promoted by the Association or the "Reasonable Prices for Tour Groups" prescribed thereby (suspected violations of the Fair Trade Law) is weak. However, at the coordination meeting held by the Fair Trade Commission on December 24, 1996, various authorities in charge of end enterprises indicated that the act at issue was in fact encouraged and supported by the competent authorities and were even considered to be covered within the scope of authorization set forth in Article 21(4) of the Regulations Governing Tourism Businesses. Therefore, the Fair Trade Commission decided that due to the fact that relevant authorities' encouragement and support of the act had caused the Association to believe that its act was legitimate, it will not impose any punishment on the Association for the time being.
6. The 281st Commission Meeting of the Fair Trade Commission resolved as follows:
(1) The Tourism Industry's Quality Assurance Association publicly announced the "Reference Prices for Tour Groups," informed its members by letter, and demanded explanation and correction by any of its members which used prices lower than the referenced ones to advertise, solicit, or undertake tourist group business; otherwise, the members would be deprived of their membership. Such act of the Association may constitute a violation of Article 14 of the Fair Trade Law. Therefore, the Association is hereby requested to make the following correction:
(i) With respect to the Association's public announcement of the Reference Standard for Basic Quality of and Reasonable Prices," although it is necessary to publicly announce the tourist groups prices for consumers' reference, the announcement should be made within the scope of authorization set forth in Article 21(4) of the Regulations Governing Tourism Businesses. Therefore, when publicly announcing the package prices for tourist groups of various itineraries, the Association should itemize the airplane tickets, boarding, lodging, and transportation expenses, and other necessary costs and expenses (such as service charges) based on which the package prices were calculated, so as to conform with the provisions of Article 21(4) of the Regulations Governing Tourism Businesses. Furthermore, investigations reveal that the "reference prices" which the Association announced included the tourism businesses' reasonable profits. However, the profits a business expects to earn should be decided by the business itself according to its cost structure and operational efficiency. The Association should not have listed the profits in its public announcement. Nevertheless, when reference prices are provided for consumers' reference, it is acceptable to add notes to indicate that the announced reference prices do not include any percentage of profits. In addition, pursuant to the administration procedure, it is also necessary to file those reference prices with the Tourism Bureau of the Ministry of Transportation and Communication for approval prior to the public announcement thereof.
(ii) The Association and its members are jointly liable within the amount of a security deposit. The Association may demand that a member explain its violating conduct, if any, so as to protect the organization's reputation and interests. However, if any individual member advertises, solicits, or trade at a price lower than the reference price announced by the Association, the Association may investigate whether that member has offset tour group expenses with the income received from shopping commissions or from promoting any activities not included in the itinerary; it should not directly demand correction, or threaten to deprive the member of its membership through the Association's internal procedures, or give the member other identical or similar warnings whenever the member is found having adopted a price lower than the reference prices.
(2) Under the Association's "Key Work Goals of the Special Program for the Basic Quality Standard and Reasonable Prices for Tour Groups," the Association would inform its members of any foreign-commissioned travel agencies violating the Special Program and ask its members not to do business with those foreign agencies. The above provisions and the similar provisions in its "Work Goals of Foreign-Commissioned Travel Agencies' Cooperation with the Tourism Industry's Quality Assurance Association in Promoting the Special Program for Upgrading the Quality of Tourism" are likely to constitute violations of Article 19(i) of the Fair Trade Law. Therefore, the Association should immediately cease applying any of them.
(3) The Association should inform all of its members of the key work goals, key performance strategies, job description, and the concrete results of the improvements it made at the above-mentioned request of this Commission contained in Explanation No. 3 of its modified "Special Program for Upgrading the Quality of Tourism" as set forth by the Association in its letter dated December 27, 1996, Ref. No. Liu-Ping-(85)-690. It should also inform this Commission of the same by serving a copy thereof.
(4) The Association should report, by letter, the situation of its correction to this Commission within one month of the receipt of this decision; otherwise, this Commission will sanction the Association in accordance with the law.
Summarized by Yeh, N.
Supervised by Chen, M. H.
＄: For information of translation, click here
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