The applicability of public utilities' operation charters which makes it a rule that new users must pay the overdue bills owed by old users when the name of users of their services was changed
Chinese Taipei
Case:
The applicability of public utilities' operation charters which makes it a rule that new users must pay the overdue bills owed by old users when the name of users of their services was changed
Key Words:
A monopolistic enterprise abuses its market position; in contravention of the essence of the Fair Trade Law
Reference:
Fair Trade Commission Decision of January 23, 1995 (the 173rd Commission Meeting); Disposition (84) Kung Er Tzu No. 00830
Industry:
Government agencies (9111)
Relevant Laws:
Article 10 of the Fair Trade Law
Summary:
1. Taipei Water Department in its Charter stipulated that new users applying for water supply must pay the overdue bills owed by old users. The Department believed that without collecting such debts, losses might be incurred to their operations and the rights and interests of other users might even be damaged. In addition, the Charter in question was developed pursuant to the provisions of Article 58 of the Water Law, and approved and published by the Taipei City Government, and hence had a certain degree of credibility. However, it is the Commission's opinion that new users' rights and interests might be infringed upon as the debt liability was not clarified in the change of accounts. In addition, the said regulation had no basis in law and contravenes the essence of Article 1 of the Fair Trade Law, i.e., to protect the interests and welfare of consumers. As a result, the Commission decided to invite all relevant authorities to meet for discussion. On February 1, 1994, all relevant authorities were invited to attend a meeting and asked to revise related regulations within the following four months, which also applied to Taiwan Water Company for that it had similar regulations.
2. In July 1994, Taipei Water Department revised its operation Charter by adding a regulation which provided that the exemption from paying overdue bills owed by old users is applicable to those who acquired the property rights through auction by court, which did comply with the resolutions reached in the aforesaid meeting held on February 1, 1994 and still contradicted the essence of the Fair Trade Law. On the other hand, in view of the fact that other public utilities should be made aware of the need to revise their regulations in this respect, the Commission on November 3, 1994 invited Taipei Water Department , and on January 19, 1995 invited all utilities authorities, including those for water, electricity, and gas supply, to meet and the following conclusions were reached at those meetings:
(1) With regard to the Charters of public utilities providing that "new users must pay the overdue bills owed by old users." Currently Taiwan Power Company offered new users two options; one is to apply as "new installation" and the other as "resumption of electricity." Those who apply under the "new installation" category would be charged a line subsidy fee but not the overdue bills. Moreover, the contract between old users and water companies was valid only as between the parties, which therefore should not be binding in any way on new users, who were not obligated to bear the overdue bills owed by old users. Most of the participating authorities therefore agreed that the original provisions of their Charters needed revising. As for the difficulties they might incur, operators of public utilities should on their own develop needed corresponding measures and a deadline was required to be set for the aforesaid revision.
(2) The Fair Trade Law is specially enacted to maintain trading order, ensure fair competition, protect the interests of consumers and promote economic stability and prosperity. Though not all trading acts that involve unfairness are covered by the provisions of the Fair Trade Law, it is certainly applicable to a trade concluded between the consumer and an enterprise where the latter's means of trade seriously infringes on the interests of the former. Public utilities have every right to refuse supplying services to those old users who fail to pay the overdue bills, but at the same time they have the obligation not to turn down new users' application for service supply. The aforesaid facts are clearly stipulated in the relevant laws, and any attempt by public utilities to force new users to pay the overdue bills owed by old users will likely be considered as having constituted an abuse of their market position. In view of this, public utilities related to the people's livelihood should revise their operation charters, provide new users with options of either applying under "new installation" or under "resumption of services." If new users apply under the new installation category, no collection of overdue bills shall be imposed on them in compliance with the essence of the Fair Trade Law.
(3) As for how public utilities handle the recourse of overdue bills wed by old users or adopt corresponding self-protection measures such as requiring users to pay a water connection fee or security in response to the revisions made in their operation charters, operators of these utilities should work out solutions on their own and as long as these solutions are based on proper reasons, they will not be deemed violations of the Fair Trade Law. Moreover, if the operators of public utilities have done everything within their capacity to fulfill their responsibility to recover the overdue bills in the wake of this revision, and problems like how to offset bad debts still arise, the operators are advised to report to the competent authorities this situation, asking them to take it into consideration when conducting pricing reviews.
Summarized by Huang, Chuang-chieh
Supervised by You, Su-su
＊＊: For information of translation, click here
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