Wu Ling Shan Chuang sewage treatment project's [Project] tying of specifications in violation of the Fair Trade Law
Chinese Taipei
Case:
Wu Ling Shan Chuang sewage treatment project's [Project] tying of specifications in violation of the Fair Trade Law
Key words:
engineering technology services, patently unfair act
Reference:
Fair Trade Commission Decision of 20 May 1998 (the 341st Commission Meeting); Disposition (87) Kung Ch'u Tzu No. 130
Industry:
Engineering Technology Service Industry (7200)
Relevant Laws:
Article 24 of the Fair Trade Law
Summary:
In early 1997, Tung Shih Forestry Administration of the Provincial Government [the Project owner] procured a sewage treatment project in Wu Lin Shan Chuang Amusement Park. Through a public solicitation, the Asian Land Reform and Agricultural Village Development Center was awarded to design the Project. A complaint was made that the awarded designer specified the use of certain sewage treatment microorganisms imported from Japan, which did not acquire the Environmental Protection Administration registration permits. The company that later was awarded the Project belonged to the spouse of the representative of the designer's affiliated unit. The said representative was also a shareholder and director of the said company, i.e., the spouse's company. Upon investigation, these allegations were found to be true. It was also discovered that the commissioned designer had insisted on using the microorganisms imported from Japan, instead of less expensive domestically made microorganisms. The three suppliers available for the procuring agency to survey actually sourced from the same foreign supply. Besides, they were not in competition and had a business relationship with the representative of the designer's affiliated unit. The three suppliers, in their price quotes to and requirement for down payment from bidders with which they had no business relationship, treated said bidders in a discriminatory manner. Such acts misled the Project owner and other bidders to rely mistakenly on the tender requirement that there had existed several suppliers. Therefore, such acts clearly were deceptive or concealment of material facts. In addition, the designer's chief engineer, who knew the highest price that can be accepted by the Project owner, asked his spouse to participate in the bidding and as a result, his spouse won the contract. Such act substantially excluding related enterprises from competition was against business ethics and constituted a patently unfair act which adversely affected the trading order in violation of the provisions of Article 24 of the Fair Trade Law. Therefore, this Commission sanctioned the designer.
Regarding the Project owner, though it was not governed by the Fair Trade Law, its tender procedure obviously deviated the “Guidelines for Government Units Contracting Technical Consulting Firms for Technical Services,” which was promulgated by the Cabinet, and was contrary to the spirit of the Fair Trade Law. This Commission will separately forward the matter to the Project owner's supervisory agency for supervision and improvement. In addition, the commissioned entity is a foundation whose Articles of Incorporation does not allow for the establishment of affiliates. Its Board of Directors gave consent to the representative of its affiliate for incorporating another company, which can cooperate with it in projects tendering. There involves benefits transfer. The matter will be forwarded to the competent authorities, the Ministry of Interior and Ministry of Finance, for further disposition.
Summarized by Hou, Wen-hsien
Supervised by Shi, Chin-ts'un