Taiwan Stock Exchange Corporation was complained for having given special treatment to Data Communication Institute causing unfair competition in the securities information market

Chinese Taipei

Case:

Taiwan Stock Exchange Corporation was complained for having given special treatment to Data Communication Institute causing unfair competition in the securities information market

Key Words:

securities trading, monopoly, discriminatory treatment

Reference:

Fair Trade Commission Decision of 7 June 1995 (the 191st Commission Meeting)

Industry:

Telecommunications (6320), Securities (6614)

Relevant Laws:

Article 9 of the Fair Trade Law

Summary:

1. Data Communication Institute (reorganized as "Chunghwa Telecom Data Communication Business Group" since July 1, 1996) cooperates with other software companies to provide information on securities. However Data Providers, in the course of providing their services, uses the resources and facilities already in place of the Directorate General of Telecommunications [DGT]. This enables the data providers to reduce their costs and has an impact on the competitive environment for information businesses.

Taiwan Stock Exchange Corporation (hereinafter referred to as "TSE") provides identical information to Data Communication Institute and firms in information business. However, because different requirements apply, the provisions applicable to the two in conjunction with fees and customer application procedures are different.

2. In "Implementation Keypoints for Businesses Provided in the Regulations Governing Data Communications", there is a Chapter 9 "Electronic Data Transmission Business", which was last amended and promulgated by the DGT, Ministry of Transportation and Communications, in 1988 and includes a tariff schedule for electronic data transmission services. In accordance with the provisions of Article 27 of the Regulations Governing Data Communications the fees are to be approved by the DGT. The Regulations Governing the Administration of the Use of Trading Information of the TSE were filed with the Securities Exchange Commission in 1991. Under Article 138 of the Securities Exchange Law, a stock exchange is required to provide relevant provisions in its operating rules or business rules. Article 10(2) of the TSE's business rules states that the TSE may charge securities businesses a fee for providing the use of its information or facilities, the details of which are to be set and publicly announced by the TSE (i.e., Regulations Governing the Administration of Use of Trading Information. The disputed Criteria for Calculating Use Fees of Trading Information (hereinafter "the Criteria") are set out in the aforementioned regulations. During the 130th meeting of this Commission it was determined that the relevant provisions did not explicitly authorize the stock exchange, on its own, to set the fee charging Criteria, and thus the provision of Article 46(1) of the Fair Trade Law was not applicable to the commercial act of setting the Criteria by the exchange. However, the Criteria is subject to supervision of the competent authority and thus we can not come to a conclusion that the TSE had abused its market position by setting prices inappropriately.

3. Securities trading information is the basic data which has been collected and consolidated from the securities market. The decision at the 130th meeting of this Commission determined that it is the right of every person to have full knowledge of information related to trading in the securities market and this information should be public. There is thus no question that the information at issue in this case should be provided to Data Communication Institute and firms in information businesses in a public and fully accessible manner. In order to serve the interests of society, the electronic data transmission services were allowed to be provided in 1987. The purpose was to promote the free flow of information and increase domestic utilization of information. There are many databases available (more than ninety) among which is the "securities information" database. The data for the securities information is provided by the stock exchange, however, such basic (original) data does not meet the needs of the market, and thus the Data Communication Institute permitted software companies to develop relevant software and add value thereon so as to make the information more readable and usable. This enhanced the utilization of the information and such initial intent was appropriate. Most of the software companies involved were small companies comprised of a few specialized engineers. They were unable to meet the stock exchange regulations regarding qualifications of information companies that wanted to apply for access to the market information (a capital of NT$50 million and turnover of at least NT$50 million during the preceding six months are required). They could thus not directly obtain the original data from the stock exchange. In order to obtain access to the information, they therefore had to rely on their expertise and cooperate with other entities (e.g., Data Communication Institute or firms in information business) that met the qualifications. These software companies played an important role in the information providing market. The software companies were mainly responsible for developing and selling software, and had no complicated financial arrangements with the Data Communication Institute or firms in information business. In view of all the factors concerning the supply and demand of the information market, the Commission come to the following conclusions:

(1) Although the stock exchange and Data Communication Institute provide securities information in the public interest, their product has been developed by software companies. Their cost is low and the procedures for applying are quite simple. These conditions have had an effect on the business of firms in information business.

(2) The TSE is a monopoly as announced by this Commission and has a great deal of influence in the market. Although the TSE provides the same information to Data Communication Institute and information business, because of differences in the fee structure and the application procedures, it is suspected that there may be discriminatory treatment occurring.

(3) After investigations, it appears that the discriminatory treatment is primarily due to different applicable regulations and we can not really reject their justification. However, in order to promote fair competition in the marketplace, the Commission intends, in accordance with Article 9 of the Fair Trade Law, to conduct consultations with the competent authorities for the purpose of rationalizing the system under which the Data Communication Institute's favorable price and procedures are adversely affecting the business of firms in information business.

　

Summarized by Hsieh, Chin-mei
Supervised by Chen, Ming-huang

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