Recommendation to the MOEA on amendments to the Regulations Governing the Establishment of Gas Stations
Chinese Taipei
Case:
Recommendation to the MOEA on amendments to the Regulations Governing the Establishment of Gas Stations
Key words:
Regulations Governing the Establishment of Gas Stations, 500 meters, secondary business
Reference:
Fair Trade Commission Decision of 22 April 1998 (the 337th Commission Meeting); Letter (87) Kung Er Tzu No. 8702316-001
Industry:
Petroleum and Coal Products Manufacturing Industry (2120)
Relevant Laws:
Summary:
Mr. Yen complained to the Fair Trade Commission that the 500-meter restriction imposed by the Regulations Governing the Institution of Gas Stations [hereinafter the “Regulations”] was improper and prevented him from setting up and operating a gas station. This Commission made the following recommendation on amendments, and forwarded it to the competent authority [the Ministry of Economic Affairs] in accordance with Article 9 of the Fair Trade Law: (1) to amend Article 9(1)(iii) of the Regulations, i.e., to remove the minimum distance restriction between any two gas stations; (2) to amend Article 18 of the Regulations: Secondary business of a gas station should be liberalized. When the requirements of the laws and regulations concerning land zoning and use, safety and environmental protection are met; (3) to amend Article 19(i) of the Regulations: to the extent that there would be no impact on safety or environmental protection principles, to liberalize gas station business operations beyond the station premises.
Article 9(1)(iii) of the Regulations provides for the minimum distance restriction between any two gas stations. Although such distance restriction was reduced from 5 kilometers to 500 meters and there was no restriction as to being located across the road, with the width and space area requirements of adjacent roads as provided for in Articles 9(1))(i) and 9(1)(ii) of the Regulations, the station distance restriction between stations had already resulted in a protection of the "regional market," which is clearly inconsistent with the special characteristics of "regional competition" for gas station operations. The distance restriction between stations curbed the entry of new gas stations and adversely affected fair competition.
Article 18 of the Regulations contains a restriction regarding gas station secondary business. It is expected that even after the domestic market for oil products is liberalized for imports, the increase in the number of firms including domestic refiners is still limited. Competition among downstream firms, i.e., gas stations would contribute to intrabrand and non-price competition. Accordingly, in order to encourage market competition, this Commission found the restriction on secondary business should be lifted if the establishment of a gas station could meet the requirements of the laws and regulations related to land zoning and use, safety and environmental protection.
Article 19(i) of the Regulations requires transactions of a gas station to be completed within the station's premises. However, according to Article 28 of the Regulations, large customers equipped with their own oil storage facilities, such as passenger or cargo transportation services, construction engineering industries, etc., are directly supplied [at their premises] by Chinese Petroleum Corporation. This has already resulted in unfair competition. In line with diversifying the market, this Commission found that the liberalization of gas station business areas should be considered. Therefore, this Commission recommended that Article 19(i) of the Regulations be appropriately amended without prejudice to safety and environmental protection principles.
Summarized by Lin, Hsiao-hung
Supervised by Li, Yen-hsi