Request by the Department of Reconstruction of the Provincial Government for the interpretation whether the Fair Trade Law is applicable to Article 17 of the Regulations Governing the Pawning Industry
Chinese Taipei
Case:
Request by the Department of Reconstruction of the Provincial Government for the interpretation whether the Fair Trade Law is applicable to Article 17 of the Regulations Governing the Pawning Industry
Key Words:
concerted action
Reference:
Fair Trade Commission Decision of June 25, 1997 (the 295th Commission Meeting); Letter (86) Kung-Yi- Tsu 8602436-002
Industry:
The Pawning Industry (6592)
Relevant Law:
Summary:
1. Article 17 of the Regulations Governing the Pawning Industry stipulates that "the monthly interest rates applicable to the pawning industry shall be decided by the provincial/municipal competent authority together with the relevant authority such as the Ministry of Finance and the Pawning Trade Association based on the secured loan interest rate commonly adopted by the local banking industry, the price index, the local economic situation, and public pawnshop's interest rate." However, at present, the interest rates the Provincial Government prescribed in its letter dated May 15, 1978 (the interest rate applicable to private pawnshops shall be 9%; the rate applicable to public pawnshops, 3.6%), are still applicable to the pawning industry. Those prescribed interest rates have been in effect for almost twenty years. However, in view of the great changes in the current society and economy, the Department of Reconstruction of the Taiwan Provincial Government plans to invite those relevant authorities such as the Ministry of Finance to a meeting to review and modify the pawning industry's monthly interest rates. Nevertheless, whether the modification constitutes a concerted action set forth in the Fair Trade Law is controversial. Therefore, the Department is hereby filing a request for the interpretation of this issue.
2. The Regulations Governing the Pawning Industry were jointly prescribed and promulgated by the Ministry of the Interior and the Ministry of Economic Affairs in 1940, and were amended and promulgated by the Ministry of the Interior in 1976. They are orders issued by administrative authorities but not enactments promulgated under the deregulation of the law. The exemptions under Article 46(1) of the Fair Trade Law therefore does not apply to those Regulations. All provisions of those Regulations should be governed by the Fair Trade Law. In accordance with Article 7 of the Fair Trade Law and Article 2 of the Enforcement Rules of the Fair Trade Law, a "concerted action" shall mean an act by an enterprise that enters into a contract, an agreement, or another form of mutual understanding, with other enterprises with whom it competes to jointly conduct an act that is sufficient to influence production, the transaction of goods, or the market's function of supply of and demand for goods or services.
3. The said monthly interest rate was decided under the participation of the Pawning Trade Association. Private pawning businesses then collected monthly interest from pawnors at that decided rate. The private pawning businesses' act may constitute a concerted action conducted jointly with their enterprise competitors that may influence production and the market's function of supply and demand. However, the monthly interest rate was decided under the guidance of administrative authorities after considering such factors as the secured loan interest rate commonly adopted by the local banking industry, the price index, the local economic situation, and public pawnshop's interest rates, as well as taking into account the precautions against the pawning industry's taking advantage of pawnors' urgent need for money. The constituent elements of the decision on the interest rate are different from those of a concerted action that influences the market's function of supply and demand. Therefore, at its 295th Commission Meeting held on June 25, 1997, this Commission resolved as follows: If a monthly interest rate is decided for private pawnshops by the competent authority together with other authorities (e.g., the Ministry of Finance) and the Pawning Trade Association pursuant to Article 17 of the Regulations Governing the Pawning Industry after considering several relevant factors such as public pawnshops' interest rates, rather than being decided solely by the Pawning Trade Association itself and later approved by the competent authority, such act does not constitute a concerted action under the Fair Trade Law. However, there shall not be a great difference between private pawnshops' monthly interest rates and those for public pawnshops.
Summarized by Lin, H. Y.
Supervised by Hu, K. Y.
＄: For information of translation, click here
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