Taipei Water Department violated the Fair Trade Law for charging excessive installation fees on its customers the subscribers

Chinese Taipei

Case:

Taipei Water Department violated the Fair Trade Law for charging excessive installation fees on its customers the subscribers

Key Words:

Taipei Water Department, installation fee, external pipelines

Reference:

Fair Trade Commission of 12 June 1996 (the 243rd Commission Meeting), Letter (85) Kung Er Tzu 8405046-002

Industry:

Government Agencies (9111)

Relevant Laws:

Article 10 of the Fair Trade Law

Summary:

1.Mr. Chiu, a Taipei Citizen, filed a complaint to the Fair Trade Commission alleging that the Taipei Water Department (hereinafter referred as to “TWD”) charged an excessive installation fee on the customers in violation of the Fair Trade Law. Pursuant to Article 11 of the Operating Guidelines for Taipei Water Department, customers shall apply to the TWD for installation of customers’ water facilities (considered as external pipelines) and pay relevant fees. However, there is no concrete provision governing the relevant fees except Article 2 of the “Guidelines for Calculating and Collecting Installation Fees for Customers’ Water Facilities by Taipei Water Department”, which stipulates that "the standard for calculating and collecting the installation fees in connection with applications for new installation or renovation of external water pipeline, including the design, inspection and installation fees, shall be determined by the TWD based on actual costs, and the "Fee Standard for External Water Pipelines" and collected the "installation fees" from customers. Water fees and other fees require approval from the competent authority before they are promulgated and become effective. This is evident by Article 3 of the “Operating Guidelines for Taipei Water Department”, indicating that all such collectable fees require an approval procedure from the competent authority and promulgation. According to the TWD, the payable fee at issue is NT$371,237, including an installation fee of NT$328,380, a water activation fee of NT$1,000, a road repair fee of NT$41,757 and a design fee of NT$100.

2.According to the “Operation Guidelines for Taipei Water Department”, the customers are only required to pay the relevant fees without specifying the items and amount of such fees. In addition, the legality of the “Fee Standard for Installation of External Water Pipelines”, on which the high installation fee is based, is open to question, since it has not obtain the approval from the competent authority. The TWD is a monopoly announced by this Commission. In addition, issues relating to the ownership of external water pipelines have for many years become a source of disputes between the water supplier and the customers regarding the installations. However, the TWD has presumed that the ownership of external water pipelines vests in the customers and requires the customers to bear the full amount of the installation fees. By its monopolistic position, the TWD's practice of compelling its trading counterparts to bear very costly installation fees refraining its customers from seeking another qualified company to install such external water pipelines is questionable. In addition, it is unreasonable to require new customers to pay expensive installation fees before they can use tap water. When the materials required for such installation are part of "public facilities," which cost should not be borne by the customers. Furthermore, the installation fee should cover the installation cost only, and it seems inappropriate to include the cost of the materials.

3.The TWD has agreed that the applicant at issue may retain on his own a qualified pipeline installation company to install the water pipes. However, the connecting points and water meters should be installed by the TWD at the cost of the applicant. The applicant should submit the pipeline drawings to the TWD for review, and the installation may not commence without approval. Application should also be filed for inspection of the pipelines as completed. The TWD will not install the water meters and activate the water supply if the completed pipelines fail to pass the inspection.

4.The TWD has agreed that Mr. Chiu may handle his own installation and maintenance of his external water pipelines and the TWD will only be responsible for the review and inspection to which Mr. Chiu also consented. In view of the TWD's adjustment of its practices, it may be interpreted that the ownership of external water pipelines vests in the customers. In addition, the TWD also allows the customers to install external water pipelines on their own or entrust such installation to the TWD, thus allowing the customers to exercise their de facto disposition right in conformity with the spirit of the Fair Trade Law. Therefore, there is no need for this Commission to render a disposition. However, this case also involves ownership of external water pipelines, their maintenance and safety, as well as issues such as whether the customers may entrust such installation to qualified installation companies. These are complicated issues covering a wide spectrum of questions and are related to the operation or supervision of the competent authority regarding the water business. Such issues cannot be decided simply by an individual case. Therefore, as efforts have been made to reconsider effective allocation of water resources, this Commission has included the review of operating guidelines for public utilities companies into the Annual Project of the Fair Trade Commission. Before any conclusion of review is reached, this Commission recommends that the TWD follow the rules established by this case in dealing with installation of external water pipelines and, in case the customers choose to install such external water pipelines on their own, the collectable fees such as the fee for reviewing the pipeline drawings, inspection fee, water activation fee, and installation material fees.

Summarized by Huang, Ch'ung-chieh
Supervised by Yu, Su-su

Appendix:
Taipei Water Department’s Uniform Invoice No.: 03774909

＠: For information of translation, click here

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