The Travel Quality Promotion Project and determination of Tour Group Reference Prices by the Travel Quality Assurance Association of Chinese Taipei was subject to follow-up scrutiny regarding compliance with the Fair Trade Law
Chinese Taipei
Case:
The Travel Quality Promotion Project and determination of Tour Group Reference Prices by the Travel Quality Assurance Association of Chinese Taipei was subject to follow-up scrutiny regarding compliance with the Fair Trade Law
Key Words:
promotion of competition, differential treatment, boycott
Reference:
Fair Trade Commission Decision of September 24, 1997 (the 308th Commission Meeting); Letter (86) Kung I Tzu 8505162-003
Industry:
Industrial and Commercial Associations (3251)
Relevant Laws:
Summary:
1.Pursuant to the decision of the 281st Commission Meeting, the Travel Quality Assurance Association, Chinese Taipei (hereinafter, the "TQAA") was likely in violation of Article 14 of the Fair Trade Law for its announcement of the Reference Standard for Basic Quality and Fair Prices of Tour Groups whereby the TQAA's members were required on such basis to rectify if they were below the standard and were informed by the TQAA of the likelihood of losing their membership for such reason. In addition, the Travel Quality Promotion Project set by the TQAA was binding to other relevant business and domestic and overseas travel agencies. The TQAA also formulated the Work Content for Compliance with Travel Quality Promotion Project by Foreign and Travel Agencies, whereby relevant overseas operators would be announced under such project to all members and the consumer for their reference. The TQAA also stated that a letter would be issued to notify the members not to do business with the violator. Such act probably violated Article 19(i) of the Fair Trade Law.
2.The TQAA wrote the Commission a statement indicating that cost issues are trade secrets of all industries, and that the TQAA cannot and has no right to announce the airfares, accommodation and transportation costs. The Commission's investigation revealed the following findings:
(1)The relevant decisions of the 281st Commission Meeting did not rule out the legality f the TQAA's announcement of the overall prices for tourist groups. However, to conform with the law so as to prevent the application of the prohibitive provisions governing a concerted action under Article 14 of the Fair Trade Law, the TQAA was asked to follow Article 21(4) of the Regulations for Administration of Tourist Business, which requires enumeration of all costs. Pursuant to the above requirement, the TQAA is only allowed to announce the airfares, accommodation and transportation costs of the travel market for the reference of the consumer. The above "costs" certainly refer to the market prices for the airline tickets and hotel accommodations available to travel agencies and have nothing to do with the costs of the operators. Apparently, the TQAA's letter, which mentioned issues, such as airfares, bears no direct relationship with the above requirement. The previous decision of the Commission only required the TQAA to comply with the authorization under Article 21(4) of the Regulations for Administrative of Tourist Business in order to conform to the Fair Trade Law. This decision is jurisprudentially correct.
(2)In addition, while the TQAA emphasized its inability to enumerate all items of costs in accordance with Article 21(4) of the Regulations for Administration of Tourist Business, the TQAA is authorized to provide travel information such as the reference market prices for airline tickets and accommodation and transportation for a given season pursuant to the legislative intent of the Regulations. However, it is natural that individual travel operators may have different costs due to the transaction timing and volume, credit risk or operation efficiency. The fair prices for all items as announced by the TQAA following its evaluation based on its research or information provided by the members are not accurate prices and only serve as reference for the members or the consumer. If certain tolerance or inaccuracy is specified in the announcement, such announcement can be implemented without difficulty and with the permission of the above decision of the 281st Commission Meeting.
(3) Finally, the above decision of the Commission requires that:
(i) The prices announced by the TQAA should not include profits for travel agencies, since profits should be decided by each individual enterprise in consideration of its cost structure and efficiency of operation.
(ii)The profit should not be included in the announced prices, in order to prevent restriction on competition
(iii)To prevent the consumer from being misled, the Commission will allow the practice of specifying, through an additional note, that a certain percentage of profits is not included in reference prices announced to the consumer.
Thus, the issues of both trading order and open travel market information are considered. The TQAA, which finds such practice unworkable under the current legal framework, should obtain a firm legal basis through amendment of the Regulations for Administrative of Tourist Business, and of its parent law ( The Statute for Tourism. Otherwise, the TQAA will violate the Fair Trade Law.
3.Based on the foregoing facts, the 308th Commission Meeting decided, by resolution, to notify the TQAA of the following:
(1)The TQAA should follow the decision of this Commission and announce reference prices for tour groups in accordance with Article 21(4) of the Regulations for Administrative of Tourist Business through enumeration of all airfares, board and lodging and transportation costs and all other necessary costs. However, the actual transaction prices may vary, due to factors such as the transaction timing and volume, credit risk or efficiency of operation of individual travel operators. If certain tolerance or inaccuracy is specified in the reference prices made available to the consumer by the TQAA, such practice does not violate the decision of the 281st Commission Meeting.
(2)If the TQAA decides not to announce the reference prices or reference costs of tour groups prior to amendment to relevant laws or regulations, such practice will not violate the decision of the 281st Commission Meeting. However, with regard to other aspects of the decision, the TQAA should still act in accordance therewith and notify its members of relevant requirements or explanation such as the guidelines, implementation highlights and content of work under the Travel Quality Promotion Project and of the TQAA's rectification in compliance with the request of this Commission. The TQAA should also refer the Commission's letter (86) Kung I Tzu 8507291-008 dated April 7, 1997 to its members and send a copy of such notification to the Commission.
(3)The TQAA may not restrict competition or engage in unfair competition in violation of the Fair Trade Law on the pretext of implementing the Travel Quality Promotion Project. Otherwise, the Commission will penalize the TQAA in accordance with law.
Summarized by Yieh, Ning
Supervised by Hsin, Chih-chung
＠: For information of translation, click here
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