The Taiwan Tobacco and Wine Board [formerly the Taiwan Tobacco and Wine Monopoly Bureau] sent a letter to the Fair Trade Commission requesting the Commission to investigate alleged hoarding of rice wine by retailers in violation of the Fair Trade Law
Chinese Taipei
Case:
The Taiwan Tobacco and Wine Board [formerly the Taiwan Tobacco and Wine Monopoly Bureau] sent a letter to the Fair Trade Commission requesting the Commission to investigate alleged hoarding of rice wine by retailers in violation of the Fair Trade Law
Key Word:
hoarding of rice wine
Reference:
Fair Trade Commission Decision of June 16, 1999 (the 397th Commission Meeting); Disposition (88) Kung Chu Tzu No. 076
Industry:
Production and Formulation of Alcohol Products (1181)
Relevant Law:
Article 24 of the Fair Trade Law
Summary:
The Ministry of Finance on May 7, 1999 invited the Consumer Protection Commission of the Cabinet, the Investigation Bureau of the Ministry of Justice, Department of Prosecutorial Affairs of the Ministry of Justice, National Police Administration of the Ministry of Interior, Board of Foreign Trade of the Ministry of Economic Affairs, the Taiwan Tobacco and Wine Board (hereinafter “the TTWB”), and the Fair Trade Commission (the Commission) to organize an inter-departmental project team to resolve rice wine demand and supply issues and meet the demand of rice wine consumers. The functions of the project team were divided according to the duties and responsibilities of the participating departments, and the Commission was responsible for handling issues relating to violations of the Fair Trade Law (FTL). The project team held regular meetings to resolve the rice wine supply and demand issues.
The TTWB wrote the Commission on May 17, 1999 requesting the Commission to handle three cases of alleged hoarding of rice wine. The alleged hoarding incidents were as follows: the Tamsui Agricultural Association Supermarket, Taipei County, 108 cases; one Mr. Lee of Chuo-lan, Miaoli (not a retailer), 2,202 cases; and Ijon Enterprise, 1,309 cases. After investigation, the 397th Commission Meeting made the following resolutions:
(1) The case involving Ijon Enterprise: The Su family owned six tobacco and wine retail permits and had a responsibility to supply rice wine in accordance with law. However, due to its improper hoarding of rice wine, the consumers were unable to purchase these “daily necessities.” Market mechanisms were thus injured and consumers interests were adversely affected. Apart from being contrary to business ethics, such actions also harmed the public interest and were obviously an unfair act capable of affecting the trading order. The act violated Article 24 of the FTL and Ijon Enterprise was punished by a fine of NT$1.2 million in accordance with the fore part of Article 41 of the FTL.
(2) The case involving the Agricultural Association Supermarket of Tamsui: According to statistics on the supermarket's purchase and sale of rice wine during the past 30 months as provided by the TTWB, the said supermarket needed 2,100 to 2,500 bottles of inventory so as not to incur a supply shortage. On May 7, 1999, 2,242 bottles of rice wine were found to be in stock, close to the number of safety inventory required. No penalty was thus imposed since the condition stipulated in Article 24 of the FTL, engaging in obviously unfair acts capable of affecting the trading order, was not met. However, the number of bottles found in stock were more than the number in stock during the same period last year (1988). With such a large inventory following the rice wine supply shortage after March 1999, it was evident that the said supermarket was not supplying the needs of the consumers. A warning was thus issued for the aforementioned improper act, which was contrary to the business objectives of a retailer.
(3) The case involving Mr. Lee of Chuo-lan, Miaoli: Mr. Lee purchased 2,160 bottles of rice wine in 1997 in preparation for the opening of his restaurant serving ginger-stewed duck. Mr. Lee, however, was unable to negotiate successfully for the lease of his restaurant space, and subsequently decided to forego the opening of the restaurant. The TTWB verified that the rice wines of the batch in question were separately manufactured on September 27, 1996, May 30, 1997, and June 23, 1997. After the rice wine inventory was found, Mr. Lee returned the inventory to the supermarket from which the wines were initially purchased and at the original purchase price. Since Mr. Lee did not generate any profit, no punishment was levied. However, considering the fact that there was a general shortage of rice wine supply after March 1999, and that Mr. Lee continued to keep his inventory in stock, such action affected the steady supply of rice wines to the consumer market. A warning was thus issued for the aforementioned improper act.
(4) Investigation also showed that on March 18, 1999, the TTWB sent urgent notices notifying its branch bureaus to immediately limit the supply of rice wines and that the retailers could only purchase rice wines based on their purchase volume during the same period last year. However, statistics provided by the TTWB on the sale of rice wines by the family business Ijon Enterprise showed that the enterprise was allocated 1,740 and 7,400 bottles of rice wine in March and April 1988, respectively. Yet during the same period in 1999, the allocation was 83,000 bottles and 19,000 bottles respectively. The TTWB Taipei office sold more than the allotted volume to Ijon Enterprise and the TTWB headquarters was also unable to properly monitor the incident. Determination of whether administrative negligence or other unlawful incidents were involved should fall under the jurisdiction of the competent authority in charge of tobacco and wine. The Commission is therefore to transfer the case to the Ministry of Finance for investigation in accordance with law.
Appendix:
Agricultural Association Supermarket of Tamsui's [Taipei County] Uniform Invoice Number: 37181806
Ijon Enterprise's Uniform Invoice Number: 12123251
Summarized by Hung, Hsiu-hsing
Supervised by Shih, Chin-ts'un