Request by the Bank of Taiwan for an interpretation on the compliance with the Fair Trade Law regarding its setting of a fixed price for lottery tickets in Taiwan's National Welfare Lottery.
Case:
Request by the Bank of Taiwan for an interpretation on the compliance with the Fair Trade Law regarding its setting of a fixed price for lottery tickets in Taiwan's National Welfare Lottery.
Key Words:
public welfare lottery ticket, fixed price
Reference:
Fair Trade Commission Decision of December 10, 1999 (the 418th Commissioners' Meeting)
Industry:
Banking Industry (6512)
Relevant Laws:
Article 18 of the Fair Trade Law
Summary:
1. In its Key Points Governing the Selection and Administration of Public Welfare Lottery Ticket Distributors, ("the Key Points"), the Bank of Taiwan, an institution issuing public welfare lottery tickets, required its commissioned vendors and distributors to sell the lottery tickets at face value, and prohibited them from selling the tickets at a premium or discount. As there were doubts as to whether this was in violation of the Fair Trade Law (FTL), the Fair Trade Commission (" the Commission") was requested to give an interpretation. 2. According to Article 6 of the Statute for the Issuance of Public Welfare Lottery Tickets ("the Statute"), "profits from the issuance of public welfare lottery tickets shall be used exclusively for the government's subsidy for citizens' annuities, national health insurance reserves, and social welfare and charity activities. " According to Article 8 of the Statute, "the physically and mentally handicapped, aboriginal, and low income households shall be selected, as a priority, to be the commissioned distributors of the public welfare lottery tickets. " The legislative intent of this lottery is to advance social welfare, raise financial resources and protect the employment rights of the underprivileged. Therefore, social welfare is an important element of the lottery. 3. The Bank of Taiwan was designated the issuing institution of the public welfare lottery tickets by the Ministry of Finance (MOF) in accordance with Article 4(1) of the Statute. To facilitate the issuance and the sales of the tickets and thus raise the financial resources for social welfare, the MOF prescribed the Regulations Governing Public Welfare Lottery Tickets ("the Regulations") under the mandate of the Statute, and the Bank of Taiwan prescribed its Key Points in accordance with the Regulations. Article 13 of the Key Points stipulates that distributors shall sell tickets only at their face value. The basis for his requirement is that the tickets are sold to the end buyers through the distributors' undertaking, i.e., with respect to the tickets actually sold to the end buyers, the distributors are agents for the Bank of Taiwan, charging for a fixed percentage of commission; with respect to the unsold tickets, the distributors undertake to buy for themselves at face value. Accordingly, if the distributors are permitted to sell the tickets at higher or lower prices, small-, medium- and large-sized distributors will emerge and greatly disturb the trading order, cause problems for administration, and result in different priced tickets on the market. This would be unfair because people with different purchasing costs may have the same probability of winning. Furthermore, if the distributors may return the unsold tickets, the amount of prize money awarded will exceed a preset proportion, or even result in losses for the lottery. Although there are special laws governing the competition of various lotteries (e.g., the two-in-one lottery planned to be issued, which combines the conventional lottery and the scratch-and-win lottery) and such provisions shall take precedence over those of the FTL if they do not conflict with the legislative intent of the FTL, the application of the FTL in this case cannot be directly excluded without further study. Other laws and regulations should be further examined to facilitate the making of a determination. 4 According to Article 32 of the Technician Law, "the charter of a technician trade association shall stipulate the remuneration standard and its upper and lower limits. " The true legislative intent of this provision is not for trade associations to uniformly set a single rate but to set flexible rates. According to Article 37(1) of the Architect Law, "an architect trade association shall establish architect work rules stipulating work contents, a remuneration standard, responsibilities and obligations, etc. " 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 trade association in a county (or municipality) shall stipulate a remuneration standard and its upper and lower limits for work undertaken by its accountants. " The intent of this provision gives consideration to safeguarding the interests of trading counterparts. It does not stipulate that fixed rates must be used. According to Article 6 of the Lawyer Law, "the charter of a bar association shall stipulate a remuneration standard for work undertaken. " This provision does not stipulate that fixed rates must be used. Although these laws impose general obligations of stipulating remuneration standards in the charter or work rules of the respective trade association, it does not mean that fair trade issues may be ignored or that fixed rates may be set. In terms of work nature and the impact on the public's rights and interests, there is no basis for the theory 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, based on the provisions of each of these laws, that a fixed rate standard should be used for professionals. In terms of the actual operations of these trade associations, bar associations use a flexible remuneration standard with an upper limit, accountant and architect trade associations use a flexible rate standard with upper and lower limits, and technician trade associations use either a fixed rate standard or a flexible rate standard with upper and lower limits, based on the type of work. Most of these trade associations have not punished their members for violating their remuneration rate standards. Consequently, there is no basis in this case for concluding that trade associations' not using fixed rates would lead to price instability in their respective fields. 5. According to Article 46(1) of the FTL, as amended, " where there is any other law governing the conducts of enterprises in respect of competition, such other law shall govern; provided that it does not conflict with the legislative purpose of this Law. " The setting of a fixed rate standard in this case meets the provisions in Article 7 of the Law with respect concerted acts and having the outcome of restricting competition. However, remuneration standards set by trade associations are ultimately further regulated by relevant laws such as the Technician Law, Architect Law, Accountant Law, and Lawyer Law. If these laws could definitely regulate and resolve the competition issues resulting from the above act without conflict with the intent of the FTL, the Commission will of course apply such laws in stead of the FTL. However, since these laws do not clearly resolve the related competition issues, the Commission should follow the global trend that competition rules be introduced to the setting of remuneration standards. 6. Therefore, in consideration of the fairness principle and the need for a comprehensive solution, the Commission sent a letter to the relevant competent authorities requesting that such authorities order the following measures: that the respective trade associations shall not engage in concerted acts or acts in violation of relevant provisions of the FTL, and that any trade association with a clause in its charter or work rules stipulating lower limits for remuneration shall repeal such a clause within a period of one year. At the end of this period, the Commission shall investigate and sanction any trade association or firms still in violation of the relevant provisions of the FTL. The respective competent authorities should also consider striking unified rate standards from their respective laws in the next amendment. These measures follow a case handled by the Commission during the 343rd Commissioners' Meeting involving remuneration standards set by accountant trade associations. Summarized by Cheng P'eng-chi; Supervised by Hu Kuang-yu