Special research and analysis for promoting the competition of the petrol station market
Chinese Taipei
Case:
Special research and analysis for promoting the competition of the petrol station market
Key words:
long-term oil supply contract, scheduled for liberalization date
Reference:
Fair Trade Commission Decision of 26 January 1998 (the 326th Commission Meeting); Letter of (87) Kung Erh Tzu No. 8511058-004
Industry:
Petroleum and Coal Products Manufacturers (2120)
Relevant Laws:
Article 10 of the Fair Trade Law
Summary:
In order to strengthen its supply and distribution relationship with private petrol stations which have not been merged with the Chinese Petroleum Corporation(CPC), the CPC made efforts to study the agreements it has therewith, which include long-term oil supply, chain, general sale and purchase, and BT(built-transfer) agreements. Among these agreements, the long-term oil supply and BT agreements have provisions regarding long-term oil supply.
The CPC started entering into long-term agreements in June 1996. The term of these agreements varies from a period of five to twenty five years. The agreements of a term shorter than six years will survive January 1999, and those of a term longer than six years will survive the year 2003. Both are the scheduled liberalization dates preliminarily planned by the Ministry of Economic Affairs (MOEA) for domestic petroleum products. This will probably affect the market access of the new entry in the petrol market. Since passing through the scheduled liberalization date for domestic petrol products will affect free competition in the future petrol market, the Fair Trade Commission had thus decided to request that CPC immediately modify provisions in its long-term agreements (including general sale and purchase, chain, and petrol station BT agreements) where the term of oil supply was through the date when the refinery business and the importation of petroleum products would be liberalized. Should it fail to comply with the Commission's request, the CPC will be in violation related provisions of the Fair Trade Law. The said decision shall also apply new domestic producers.
In the Commission Meeting, the current status was also discussed regarding CPC's operation of all of the petrol stations established along the freeway, which was contracted to CPC by the Freeway Bureau under the Ministry of Transportation and Communication [MOTC]. It was resolved that a letter should be addressed to the MOTC to request that it comply with the decision reached by the FTC's 140th Commission meeting that it expedite opening up of the operation by means of open bidding, or the MOTC would be violating Article 19(ii) of the Fair Trade Law.
Summarized by Lin, Hsiao-hung
Supervised by Li, Yen-hsi
Appendix:
Chinese Petroleum Corporation's Business Reg. No.: 03707901