Former legislator Mr. Shau-kong Chao interpellated on whether the collection of discarded oil bottles is in violation of the Fair Trade Law

Chinese Taipei

Case:

Former legislator Mr. Shau-kong Chao interpellated on whether the collection of discarded oil bottles is in violation of the Fair Trade Law

Key Words:

collection; trade association; Environmental Protection Administration

Reference:

Fair Trade Commission Decision of June 14, 1995 (the 192 Commission Meeting); Disposition of (85) Kung Erh Tzu No. 65339

Industry:

Waste Material Disposal Industry (8101)

Relevant Laws:

Article 14 of the Fair Trade Law

Summary:

1. At the 4th session, second of the Congress, legislator Shau-kong Chao raised an interpellation. The important points of which are summarized as follows:

(1) The Taiwan Vegetable Oil Manufacturers Association (hereinafter referred to as "Association") has authorized the Feng Teng Company and the Ya Chun Company to establish a collection system for discarded bottles. Since the authorization is under an exclusive contract, and the waste collection companies under contract are required to deliver the discarded containers collected to Ya Chun Company for processing, the Feng Teng Company and the Ya Chun Company are monopolizing the waste collection channel. This issue is whether such a monopoly of this Law?

(2) According to the collection system of the "Association", Feng Teng Company will manage the collection of some 5,000 metric tons of discarded bottles throughout the island annually. The "Association" will subsidize Feng Teng Company NT$9.5 for each kilo of bottle collected. In turn, Feng Teng Company will authorize the contracted companies to collect the said discarded bottles at a price of NT$8 per kilo. It is further stipulated that all the discarded bottles collected shall be delivered to Ya Chun Company for processing. Feng Teng Company will make a net profit of NT$1.5 per kilo from the transfer of the collected bottles. Since the price of recycling of plastic products is NT$11 per kilo, Ya Chun Company, after deducting the disposal cost of NT$3 per kilo, will realize a profit of NT$8 per kilo from sale of the wastes. In doing so, the two companies will profit most from this arrangement.

2. The Association's act of exclusively authoring the Feng Teng Company to plan and manage the discarded oil bottle collection system is considered reasonable; since the candidate was chosen after screening and selection, no unfair practices was determined. The "Association" composed of manufacturers of edible oil, is unfamiliar with the collection, disposal, and handling of disposed plastic bottles. In order to attain the desired collection rate, the Association conducted a screening and selection process to look for a management company to plan and manage the collection system; the task was authorized to a single company in order to facilitate the determination of responsibilities. The Feng Teng Company won the bid due to more its favorable terms offered, such as requiring the lowest amount of subsidy and offering responsibility to guarantee collection. Since the statement offered by the Association is considered reasonable, and the management company was chosen after a screening and selection process which did not violate general trade ethics, therefore, granting the Feng Teng Company exclusivity did not seem to be unfair.

3. Ya Chun Company's exclusive handling of the waste products cannot be determined as a monopoly:

(1) In calculating the collection rate, the system uses the ultimate handling capacity of the processing factory to represent the collection volume. Compared with other systems that use the collection capacity not necessarily the processed capacity of the storage site or processing factory (or site) for calculation, the first system is more environmental friendly. The system will be able to monitor the processing factory for quick processing of the collected waste products, preventing waste products from being stored over long periods in the storage site or processing factory (or site) and resulting in further pollution. Its objective should be given credit.

(2) Whether authorizing the collection system to be handled by one single company will damage market competition should be determined on a case-by-case basis. For the case in question, the Association has authorized Ya Chun Company to handle the task. Apart from considering the collection system's limited processing capacity in handling discarded oil bottles and the ease in auditing, there were only three companies qualified to process PP and PVC plastic containers. Among which, the An Sun Company was unwilling to spend more amount to subsidize the price for collection; while the Jang Jui company had limited processing capacity. Both companies were unable to match the more favorable terms of cooperation offered by Ya Chun Company. Ya Chun Company has guaranteed to purchase the different edible oil containers at reasonable market prices. If the purchase price exceeds the NT$9.5 subsidy provided by the Association, the company will pay for the balance. The company also offers transport subsidies for far-away places, and offers to be liable for penalties in case the collection rate as set by law is not attained. Therefore, the act of authorizing Ya Chun Company to handle the task is due to the limited number of legal processing companies available and the fact that Ya Chun Company was able to offer more favorable terms.

(3) Although the system was authorized exclusively to Ya Chun Company, there were still illegal processing factories competing with Ya Chun for the waste bottles, and Ya Chun Company had to collect the waste bottles in accordance with market prices. To encourage the collecting companies to deliver the waste bottles, the company had on several occasions, increased the prices of the collected bottles the amount in excess of the amount subsidized by the Association was paid for by the company. From these instances, it is evident that the collection system cannot force the collecting companies to deliver all the collected bottles to Ya Chun Company for processing. If the price paid for the collection of such bottles is lower than the market price, then Ya Chun Company will be faced with collecting companies who are unwilling to deliver and the company will be unable to achieve the desired collection rate.

(4) Although the system is authorized exclusively to Ya Chun Company, the aforementioned paragraphs have taken into account the objective of the said system, as well as stated that there were only three companies qualified to process PP and PVC plastic container and that Ya Chun offered more favorable terms. In addition, the collection system could not force the collecting companies to deliver all the collected bottles to Ya Chun Company for processing; these companies could freely decide their trading counterpart. Therefore it is difficult to consider the act of exclusively authorizing Ya Chun Company as an act of monopoly.

4. Relating to the existing system of waste collection, disposal, and processing, this Commission is concerned about the issue of deregulation. This Commission has, on September 8, 1994, achieved a consensus with the Environmental Protection Administration (hereinafter called EPA) after negotiations. On November 7, 1994, this Commission forwarded a letter to the EPA, requesting the EPA to take into account fair competition in the waste collection market and methods to reduce obstacles in competition when formulating the relevant collection laws and regulations, as well as implementing the collection policies, in order to safeguard the environmental protection polices and ensure fairness in market transactions. The EPA also forwarded letters to the different waste collection, disposal, and processing establishments, requesting such establishments to attach importance to market competition and prevent monopolies. Although the different collection establishments agree with the view of this Commission that the collection system needs to be deregulated, currently these establishments, in order to achieve the collection rate as specified by the EPA and comply with the EPA environmental protection standards on the disposal and processing of waste to prevent further pollution, can only select collection and disposal establishments from a limited number of qualified candidates. However, the legal disposal and processing establishments will require a definite amount of investment, and shall require EPA inspection and approval license. Most disposal and processing establishments are unwilling to undergo such processes, resulting in a limited number of available establishments, and thus the choice offered to the collection system. Relating to the issues arising from the existing waste collection system, apart from taking into account the management and supervision capabilities of the companies responsible for waste collection, factors such as whether the relevant disposal and processing establishments are willing to take the initiative to acquire the legal licenses, and the method by which environmental protection policies are gradually implemented by the EPA implements, are equally critical.

　

Summarized by Lee, Yan-hsi

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