Violation of the Fair Trade Law by the Department of Housing and Urban Development, Taiwan Provincial Government
Chinese Taipei
Case:
Violation of the Fair Trade Law by the Department of Housing and Urban Development, Taiwan Provincial Government
Key words:
bridge expansion joint, domestic products, products imported from the original producer, specific brand, specification-based tender, designated brand, customs import certificate
Reference:
Fair Trade Commission Decision of 29 July 1998 (351st Commission Meeting); Disposition (87) Kung Ch'u Tzu No. 8800172
Industry:
Government Agency (9111)
Relevant Laws:
Summary:
The Department of Housing and Urban Development of the Provincial Government (respondent), in handling the contract tendering for the construction of new roads that are to be used for the provision of fee-based services (collecting automobile fuel fees), offers services of economic value. Therefore, the Fair Trade Law (FTL) shall govern the respondent's act of inviting bids for the east-west freeway.
For Contract Tainan Kuan Miao No. 5B bridge expansion joint of the east-west freeway construction (the subject contract), the respondent included four detailed illustrations of the bridge expansion joint, with four drawings explaining the specifications. Three of the designated products were produced by Glacier, Gaitop and Shobond. Their specifications were identical. The fourth specification was a steel, tooth-shaped product, with no specific brand designated. Since the tender was based on the given specifications, the requirements regarding the standard value of the physical features of the expansion joint, the testing method, and the testing standards for the assembling material were specified in detail. However, the respondent further required bidders'compliance that "the bridge surface expansion joint shall use products that are imported from the original producer." Thus, domestic products are allegedly excluded in violation of the FTL.
The respondent answered as follows: “Since the traffic safety depends greatly on the quality of the bridge expansion joint, it was necessary to set this requirement in order to ensure the required quality and prevent bidders from using other products. In consideration of the various well-known foreign producers that are able to produce the expansion joint according to the designated specification, and allowing these producers to join the bidding, it (the respondent) did not designate any specific brand name for the expansion joint to be used for the third contract and others. Only illustrative drawings and essential requirements were specified, and the bidder could adopt any product that conformed with the illustrative drawing.”
However, the respondent's argument of promoting competition only applied to foreign producers. Domestic products could not be used, even if they complied with the illustrative drawing. The tendering of the subject contract was specification-based. Any product meeting these requirements could have fulfilled the necessary construction quality to ensure traffic safety. Whether the product was imported or was a well-known brand should not have been related to the construction quality or traffic safety. If the respondent had considered that the quality of the expansion joint seriously affects traffic safety, then it should have specified stricter requirements to ensure construction quality, rather than excluding domestic products. Therefore, the Fair Trade Commission does not accept the respondent's assertions (as to the need for imported products). As to the fourth specification regarding the steel tooth-shaped product, since no specific brand was designated, domestic and foreign producers could manufacture the product according to the illustrative drawing. Domestic products are generally less expensive than imported ones. (The National Highway Construction Bureau, the Ministry of Transportation and Communications has used products of the same specification made by domestic producers.) However, the subject contract required that only products imported from the original producer could be used, thereby excluding domestic producers unable to present customs import certificates. On the other hand, foreign products could have been used, as they were imported from the original producer in accordance with the bid requirements. Such requirements by the respondent favored imported products and were unfair to domestic products.
In conclusion, the respondent's requirements that only imported expansion joints could be used for the subject contract, thereby excluding domestic products of local producers, was an obviously unfair act sufficient to affect trading order and was in violation of Article 24 of the FTL.
Summarized by Luo Mei-hsia
Supervised by Tzuo T'ien-liang