Violation of the Fair Trade Law by twelve Thai shrimp vendors including Hsu Ch'ung-min for lowering Thai shrimp purchasing prices
Chinese Taipei
Case:
Violation of the Fair Trade Law by twelve Thai shrimp vendors including Hsu Ch'ung-min for lowering Thai shrimp purchasing prices
Key Words:
concerted action, the lowering of purchasing prices
Reference:
Fair Trade Commission Decision of November 18, 1998 (367th Commission Meeting); Disposition Ref. (88) Kung Ch'u Tzu No. 001
Industry:
Inland Shrimp Farming Industry (0322)
Relevant Laws:
Article 14 of the Fair Trade Law
Summary:
1. In May 1998, farmers of Thai shrimp alleged in a letter to the Pingtung County Investigation Station of the Ministry of Justice's Investigation Bureau that Thai shrimp vendors jointly lowered their purchasing prices between March 3 and May 13 and were engaging in concerted action. The evidentiary information was forwarded to the Fair Trade Commission (this Commission) in a request to investigate.
2. Thai shrimp farming is concentrated mainly in the Pingtung region. Although there are about 60 to 70 shrimp vendors in the region, the Shrimp Farmers' Association trades with only two or three of the vendors. Thai shrimps sold directly by the vendors to shrimp fishing establishments or re-sold to wholesalers must be in a living state. And as the shrimps need to be replenished with water and grounded ice to increase their probability of survival during shipment and distribution, vendors often visited ice vendors near Likang, Wantan, and Chaochou. As there is no auction market and no related shrimp farmer or vendor organizations, vendors play a very important role in the process of shipment and distribution of Thai shrimps. Due to the relatively fixed trading partners, shrimp farmers and vendors rarely alter the purchasing prices to avoid disturbing the market. Unless the imbalance between supply and demand de-stabilizes prices, vendors usually take the opportunities when water and ice is replenished to exchange information regarding the production, distribution, and prices. For shrimp farmers, information regarding market demands, supplies, and prices are obtained from shrimp vendors or from other shrimp farmers.
3. According to the information provided by the Commission of Agriculture of the Cabinet concerning the production and distribution of Thai shrimps, Likang in Pingtung County has the largest production volume, accounting for two-thirds of total production in Chinese Taipei. The combined daily trading volume of the 12 vendors including Hsu Ch'ung-min accounts for 18% of the total buying volume in the Pingtung region. They have the capability to influence the purchasing prices of Thai shrimp in Chinese Taipei. The vendors also admitted that they had agreed to lower Thai shrimp prices per catty from NT$300 and NT$250 to NT$50 during the period between April 3, 1998 and May 13, 1998. According to the aforementioned information by the Commission of Agriculture and the written records by Pingtung County Investigation Station, the agreement has been relied upon by shrimp vendors to set the daily prices for Thai shrimp. Such a concerted act was sufficient to influence the normal functions of supply and demand in the Thai shrimp market.
4. According to Article 7 of the Fair Trade Law (FTL), "the term 'concerted action' as used herein refers to an act to mutually restrict the activities of enterprises, such as an act by an enterprise that enters into a contract, agreement or other form of mutual understanding with other enterprises with whom it competes to jointly determine the prices of goods or services, or to restrict quantities, technology, products, equipment, trading counterparts or trading territories." The 12 vendors including Hsu Ch'ung-min admitted that while replenishing ice and water at an ice vendor in Wantan in April or May, they agreed to lower the purchasing prices for Thai shrimp during April and May of 1998. Some shrimp vendors admitted that at that ice vendor in Wantan, market prices and information were discussed among shrimp vendors as well. They also reached a consensus to abide by the agreement and no evidence showed that it has been violated either. That the vendors including Hsu Ch'ung-min bought Thai shrimp after the prices had been lowered further indicated that the aforementioned agreement had been acknowledged. The act violated Article 14 of the FTL prohibiting concerted action and should be condemned.
Summarized by Lai, Mei-Hua
Supervised by Lin, You-Ching