Request by the Public Construction Commission for an interpretation as to whether the setting of remuneration standard for members by the technician and architect associations was in violation of the Fair Trade Law

Chinese Taipei


Case:

Request by the Public Construction Commission for an interpretation as to whether the setting of remuneration standard for members by the technician and architect associations was in violation of the Fair Trade Law

Reference:

Fair Trade Commission Decision of the 424th Commissioners' Meeting (December 22, 1999); Letter (88) Kung Yi Tzu No. 8805482-004

Industry:

Building and Engineering Technology Services Industry (7200)

Relevant Laws:

Articles 7, 14 and 46 of the Fair Trade Law

Summary:

  1. According to Article 32 of the Technician Law, "the charter of a technician association shall stipulate the standard for remuneration and its ceiling and floor level." According to Article 37(1) of the Architect Law, "an architect association shall establish a charter and rules that stipulate work contents, remuneration standards, responsibilities, obligations, etc." Therefore, remuneration standards of technician and architect associations are set pursuant to these governing provisions respectively. The Public Construction Commission requested by letter interpretations from the Fair Trade Commission on whether the mentioned case would constitute violations of the Fair Trade Law ("the Law"), in particular, by demanding their members to follow the standard, whether that would constitute monopolization.

  2. According to Article 2(1)(iii) and 2(1)(iv) of the Fair Trade Law, a trade association, or other person or group engaging in trade by providing goods or services, constitutes an enterprise as defined in the Law. The associations organized by the professional personnel in this case certainly fall within this category. Moreover, members in professional associations formed by professionals such as technicians, architects, accountants, lawyers, and so on are also groups engaging in trade by providing goods or services, and thus should also be treated as enterprises under the Law.

  3. According to Article 7 of the Law, "The term 'concerted action' as used in this Law means the conduct of an enterprises, by means of contract, agreement or other form of mutual understanding, with any other competing enterprise, to jointly determined the price of goods or services, or to limit the terms of quantity, technology, products, facilities, trading counterparts, or trading territory with respect to such goods and services, etc." According to Article 14 of the Law, "No enterprise shall have any concerted action." Because the service rates (i.e., remuneration standards) are all uniformly set by the respective associations, their conducts have met the definition of concerted action described in Article 7 of the Law, and therefore are in violation of Article 14 of the Law.

  4. However, Article 32 of the Technician Law, Article 37(1) of the Architect Law, Article 34 of the Accountant Law, and Article 16 of the Lawyer Law, all set forth an obligation upon the associations to stipulate in the associations' charters or rules "a remuneration standard for work undertaken." The "remuneration standards" thereby determined are not legally unfounded. According to the pre-amended Article 46(1) of the Law, "the provisions of this Law shall not apply to acts performed by enterprises pursuant to other laws." Previously, out of the respect for the regulatory power of other government agencies over the specific industries under review, the Fair Trade Commission ("the Commission") had in most situations refrained itself from determining the legality of concerted acts in the form of setting uniform remuneration standards by professional associations. However, according to the amended Article 46(1) of the Law, "other laws governing the competitive activities of an enterprise shall take precedence over this Law provided that such laws do not conflict with the legislative purposes of this Law." Accordingly, it would be inappropriate to assert that application of the Law should be ruled out. Quite the opposite, review of the relevant laws and regulations shall be required to facilitate the determination of the applicability of the Law.

  5. According to Article 32 of the Technician Law, "the charter of a technician association shall stipulate the remuneration standard and its upper and lower limits." The genuine legislative intent behind this provision is not for the associations to uniformly fix a single rate but to determine flexible rates. According to Article 37(1) of the Architect Law, "an architect association shall establish rules stipulating the contents, remuneration standard, responsibilities and obligations of the services." This provision does not stipulate that fixed rates must be used. According to Article 34(6) of the Accountant Law, "the charter of an accountant association in a county (municipality) shall stipulate a remuneration standard and its upper and lower limits for services undertaken by its accountants." The purpose of this provision is to give equal consideration to the safeguarding of the interests of trading counterparts. It does not expressly mandate the use of fixed rates. According to Article 6 of the Lawyer Law, "the charter of an lawyer association shall stipulate a remuneration standard for services provided." Neither does this provision mandate the use of fixed rates.
    Although these laws impose the general obligation of stipulating a remuneration standard in the associations' charters or business rules, it does not mean that competition and fair trade issues can be ignored and that fixed rates must be used. In light of the way those professionals are admitted to participate in market competition, the characteristics of their work, and the magnitude their services would affect the public interest, there is no theoretical basis for deeming that technicians and lawyers should use a flexible rate standard and that architects and lawyers should use a fixed one. Therefore, it would be difficult in this case to infer from those regulatory provisions that a fixed rate standard should be used for professionals.
    Furthermore, in practice, lawyer associations use flexible remuneration standards with an ceiling level; accountant and architect associations use flexible rate standards with both ceiling and floor levels; and technician associations use either fixed rate standards, or flexible rate standards with both ceiling and floor levels, based on the type of services provided. Nevertheless, most of these associations have not punished their members for deviating from their remuneration rate standards. Obviously, there is no reason to believe that the failure to use fixed rates would lead to instability in each individual industry.

  6. According to the amended Article 46(1) of the Law, other laws governing the competitive activities of an enterprise shall take precedence over this Law provided that such laws do not conflict with the legislative purposes of this Law. As has been stated earlier that the setting of a fixed rate standard in this case has met the definition of concerted acts having the effect of restricting competition described in Article 7 of the Law. But admittedly, those acts are specifically and respectively regulated by the Technician Law, Architect Law, Accountant Law, and Lawyer Law. Therefore, if these laws has provided unequivocal rules sufficient to resolve the competition issues arising from the acts disputed in this case and are not in conflict with the legislative purpose of the Law, they should take precedence over the Law. However, these laws are not clear and sufficient in this regard. Moreover, taking into account of the global trend to incorporate competition mechanisms into the design of remuneration standards for various professional associations, the Commission sees no reason to exclude itself from this trend.
    Therefore, in consideration of the principle of fairness and of the need to resolve the underlying problems, the Commission sent a letter to the relevant competent authorities ordering the following measures: that the respective associations shall not engage in concerted acts or acts in violation of relevant provisions of the Law, and that any association with a clause in its charter or business rules stipulating floor levels for remuneration shall abolish such a clause within one year. At the end of this period, the Commission shall investigate and punish any association or competitor still in violation of the relevant provisions of the Law. The respective competent authority shall also consider abolishing in future amendments the requirement of setting unified rate standards from their respective laws governing professional associations. These measures follow the decision by the Commission at its 343rd Commissioners' Meeting on the remuneration standards set by accountant associations.

Summarized by Cheng P'eng-chi
Supervised by Hu Kuang-yu


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