Taiwan Ready-Mixed Concrete Industry Association (TRCIA) violated Article 14 of the Fair Trade Law for reaching a consensus regarding the price of concrete sold throughout Chinese Taipei

Chinese Taipei

Case:

Taiwan Ready-Mixed Concrete Industry Association (TRCIA) violated Article 14 of the Fair Trade Law for reaching a consensus regarding the price of concrete sold throughout Chinese Taipei

Key words:

trade association board meeting, consensus on prices, restrict competition, regional competition, joint action

Reference:

The Fair Trade Commission Decision of December 31, 1997 (the 323rd Commission Meeting); Letter (87) Kung Erh Tzu No. 00295

Industry:

Ready-mixed Concrete Industry (1070)

Relevant Laws:

Articles 7, 14, 35 and 41 of the Fair Trade Law

Summary:

  1. It is complained that in early 1997 members of the gravel industry and the ready-mixed concrete industry in the Kaohsiung area jointly drove up prices of their respective products. The investigation conducted by the Fair Trade Commission (FTC) did not find concrete evidence to support that a concerted action had been engaged by members of the gravel industry. However, it was found that as the price for gravel rose, members of the ready-mixed concrete industry did try to reach a consensus on prices of concrete through the TRCIA, following which the price of concrete sold in the Kaohsiung area rose as well.

  2. According to the investigation, in recent years, due to the increased number of suppliers, the decline in demand, and unfair competition resulting from the entry into the market of suppliers without factory registration certificates, members of the ready-mixed concrete industry have been facing increasingly severe competition and declining prices, especially those lawfully registered members located in the Kaohsiung area. In addition, during the end of 1996 and the beginning of 1997, gravel mining was strictly barred in all major rivers in Chinese Taipei, and the price of gravel increased, which led to cost increase on concrete, thus dealing an even more severe blow to the ready-mixed concrete industry. Therefore, in an attempt to help its members to rise to the challenge, the TRCIA engaged in concerted action through its board meeting, which was used to foster consensus among its members with regard to the reasonable cost of concrete sold in different regions.

  3. Relevant facts:

(1) On January 9, 1997, the TRCIA held a provisional board meeting in the Comprehensive Building at National Taiwan Normal University. All the board directors present in the meeting, including those from Kaohsiung, Taichung, Changhua, Taipei, and Ilan, admitted to having come to a consensus on the prices of concrete sold in different regions so as to reflect the island wide increase in the cost of gravel.

(2) According to the TRCIA, the reason for price consensus was to rationalize the cost of concrete, and the new prices based on their consensus were higher than those actually seen in all regions. As such an act was in violation of relevant laws, the TRCIA, as usual, reached the agreement verbally without incorporating it into the minutes of the meeting. Even so, what they did in this particular regard has constituted "any other form of meeting of minds" as defined in Article 2(2) of the Enforcement Rules of the Fair Trade Law.

(3) After the meeting, members of the industry located in Taipei, Taoyuan, Changhua, and Kaohsiung had a get-together, where the TRCIA's board directors from these regions conveyed the resolution reached in the meeting. As a result, the prices of concrete in both Ilan and Kaohsiung areas went up, though the price in Kaohsiung area later plummeted. So the TRCIA's engagement in acts that hindered competition with intent to maintain (or raise) the prices of concrete sold in different regions may very well make a great impact on the mechanism of price competition in the ready-mixed concrete market, which thus constitutes a concerted action defined in Article 7 and violates Article 14.

(4) Concrete is a product subject to regional competition, which is determined by the competition among the members of the industry. As there were a number of unregistered suppliers in various regions, the prices of concrete sold in the regions did not necessarily reach the so-called reasonable level decided by the TRCIA based on the consensus reached by its members. However, whether the suppliers of concrete in different regions were involved in concerted action did not change the fact that the TRCIA violated Article 14 of the Fair Trade Law, which states that no enterprises shall engage in concerted action.

　

Summarized by Liu, Chin-Chih
Supervised by Yu, Su-su

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