Jung Tien Co. and 55 other enterprises sought to jointly monopolize bids for powerline projects of Taiwan Power Ltd. through mutually binding acts such as joint restriction of trading areas, sharing of the project prohibition against cross-area biddings, raising of bidding prices in order to cause abortive or abrogated bids, establishing disciplinary measures against noncompliant bidders, and illegal bidding arrangements among the tenderer

Chinese Taipei

Case:

Jung Tien Co. and 55 other enterprises sought to jointly monopolize bids for powerline projects of Taiwan Power Ltd. through mutually binding acts such as joint restriction of trading areas, sharing of the project prohibition against cross-area biddings, raising of bidding prices in order to cause abortive or abrogated bids, establishing disciplinary measures against noncompliant bidders, and illegal bidding arrangements among the tenderers

Key Words:

concerted actions, market segmentation, illegal bidding arrangement among tenderers, abortive or abrogated bids

Reference:

Fair Trade Commission Decision of 16 March 1994 (the 127th Commission Meeting); Disposition (83) Kung Ch'u Tzu No. 027

Industry:

Electric Engineering, Electric Circuits, and Pipeline Construction and Engineering Industries (4701 and 4702)

Relevant Laws:

Article 14 of the Fair Trade Law

Summary:

1. Jung Tien and other construction and engineering companies are qualified powerline constructors registered with Taiwan Power Ltd. in 1993. These companies invited responsible persons of other companies in the same industry to attend the three "Construction Promotion and Quality Control Seminars" organized by such companies. However, the seminars centered around consolidation of opinions so as to divide the powerline construction market of Taiwan Power Ltd., raise prices and share profits. During these three seminars, agreements were gradually reached among the companies. Such agreements included: (1) segmentation of the market into the northern, central, southern and eastern areas; (2) designation of bidding projects within the areas for which the companies belong to; (3) increase of bidding prices, (4) prohibition against cross-area biddings or biddings for nondesignated projects, (5) individually inviting collaborating bidders by designated construction companies, (6) bid winner's allocation of 7% of the construction fees as rewards for bidders which helped "maintain the bidding order, and (7) exclusion of miscellaneous projects from the agreements and no regional restriction on companies that may function as collaborating bidders.

2. The Fair Trade Commission’s (FTC’s) investigation shows that the parties upon which this Decision is served sought to prevent price competition and increase their profit by organizing three seminars to divide the market, select the trading areas and construction projects, prevent cross-area biddings, raise the bidding prices, sanction noncompliant companies, and make illegal bidding arrangements among the bidders. These agreements were reached through communications which clearly indicated these companies’ intentions. The agreements were formulated to restrict competition among horizontal enterprises for the Taiwan Power Ltd.’s powerline market. Therefore, such act of these companies constitutes the "mutual understanding" for a concerted action as set forth in Article 7 of the Fair Trade Law.

3. The parties upon which this Decision is served hold certificates for proving their qualification for the powerline construction for Taiwan Power Ltd. Therefore, they could participate in biddings organized by regional offices of Taiwan Power Ltd. for the powerline projects. This indicates that they are competitors to each other on the same level, and makes them the subject matter of "concerted actions" set forth in Article 7 of the Fair Trade Law. The FTC’s investigation also reveals that items for agreements on the bidding arrangement in this case included the establishment of arbitration and disciplinary actions in order to compel each party to comply with the agreements, and to restrict the trading activities of the concerned parties. In addition, the fact that Taiwan Power Ltd.’s suffered from abnormalities of massive abortive or abrogated biddings indicates that such acts of the companies at issue have undermined the competition functions of Taiwan Power's bidding operations for its powerline projects. Thus, such acts constitute concerted actions within the meaning of Article 14 of the Fair Trade Law. Since no application has ever been filed with the Fair Trade Commission for approval of such concerted actions, it violates Article 14 of the Fair Trade Law, which stipulates against concerted actions. Therefore, such companies are hereby penalized in accordance with Article 41 of the Fair Trade Law.

　

Summarized by Lin, Ch'ing-t'ang
Supervised by Yang, Chia-chun

Appendix:
Jung Tien Co., Ltd.’s Uniform Invoice No.: 14026987

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