Yuan Ching Cram School located in Tainan City violated the Fair Trade Law by accepting a receipt for tuition paid to another supplementary school as a setoff against its own tuition (tuition setoff) and offering an additional discount of NT$ 5,000
Chinese Taipei
Case:
Yuan Ching Cram School located in Tainan City violated the Fair Trade Law by accepting a receipt for tuition paid to another supplementary school as a setoff against its own tuition (tuition setoff) and offering an additional discount of NT$ 5,000
Key words:
monetary inducement, trading counterpart, likely to impede competition, cram school
Reference:
Fair Trade Commission Decision of 14 January 1998 (the 324th Commission Meeting); Letter (87) Kung Yi Tzu No 8609087-009 and Disposition (87) Kung Chu Tzu No 059
Industry:
Other Education and Training Services Industry (8219)
Relevant Laws:
Article 19(iii) of the Fair Trade Law
Summary:
It was alleged that one of the Tainan-based cram schools which high school students prepare for college entrance examinations violated the Fair Trade Law by soliciting students that had registered in the Wen Cheng Cram School (Wen Cheng) with tuition setoffs and an additional discount of NT$5,000. One of the complainants requesting the Fair Trade Commission to take actions also provided the Commission with information regarding memos that Yuan Ching Supplementary School (Yuan Ching) had specially prepared and distributed to its part-time staff.
According to the investigation, the memos provided that, "those who have registered at supplementary schools such as Hung Ta, Nan Hai, Han Lin, and Ju Lin, and have paid [any of them] over NT$20,000 shall not be admitted to our program;" and "those who have registered at other supplementary schools (except for those mentioned above) may use tuition setoffs and receive an additional discount of NT$5,000 (based on Yuan Ching's tuition charges)." when admitted into our program. Although no other cram schools were specifically named in the memos, the investigation showed that in 1997 a total of seven cram schools aiming at preparing high school students for college entrance examination were located in Tainan City, i.e., Hung Ta, Nan Hai, Han Lin, Yuan Ching, Ju Lin, Nan Kai, and Wen Cheng. Therefore, it appeared that the memos Yuan Ching prepared for its part-time staff were written with Nan Kai and Wen Cheng in mind. In other words, Yuan Ching intended to attract students who had registered at and made their payment to the two cram schools by offering them the tuition setoffs and an additional discount of NT$5,000.
Yuan Ching argued that the number of students enrolled in its program was comparable to that in other cram schools and that there was fierce competition in Tainan City between the cram schools aiming at preparing high school students for college entrance examination. It further argued that although it admitted students who had registered at and paid the tuition to either Nan Kai or Wen Cheng, and provide such students with tuition setoffs as well as an additional discount of NT$5,000, the impact on the competition in the market was limited because the promotion lasted only 20 days. Nonetheless, on the one hand, Yuan Ching was in competition with Nan Kai and Wen Cheng. On the other hand, it could be known from the student roster provided by Yuan Ching, that as much as 15% of the students enrolled in its program in the first semester of the 1997 school year had previously registered at either Nan Kai or Wen Cheng. The substantive impact of Yuan Ching's acts was hardly limited, nor could Yuan Ching justify its means for competition. The acts of Yuan Ching in offering students who had registered at Wen Cheng and Nan Kai tuition setoffs, as well as an additional discount of NT$5,000 constitutes activities likely to impede fair competition.
In accordance with Article 19(iii) of the Fair Trade Law, no enterprises shall cause the trading counterpart of its competitor to enter into a trade with itself by coercion, monetary inducement, or other improper means, which is likely to impede fair competition. In the present case, Yuan Ching by offering the trading counterparts of specific competitors tuition setoffs and an additional discount of NT$5,000, actually involved in the activities causing the trading counterpart of competitors to trade with itself by monetary inducement and likely to impede fair competition. Therefore, Yuan Ching has violated Article 19(iii) of the Fair Trade Law.
Summarized by Lai, Mei-hua
Supervised by Lin, You-ch'ing
Appendix:
Yuan Ching Cram School's Uniform Invoice No. 97947636