Reply to Ilan District Court Prosecutor's Office Regarding the Alleged Concerted Actions in the Project of Sanhsing Hsiang's Landfills and Stadium Renovation
Chinese Taipei
Case:
Reply to Ilan District Court Prosecutor's Office Regarding the Alleged Concerted Actions in the Project of Sanhsing Hsiang's Landfills and Stadium Renovation
Key words:
borrowed licenses, accompanying bidding, bidding collusion, concerted action
Reference:
Fair Trade Commission Decision of July 30, 1997 (the 300th Commission Meeting); Letter (86) Kung Erh Tzu No. 04158-001
Industry:
Civil engineering industry (4501)
Relevant Laws:
Summary:
1. With the knowledge that Lin Jung-cheng did not have the certificates/licenses of an A (or higher)-class construction company (as registered with the Ministry of Economic Affairs) or the qualifications required for conducting the project in question, the actual responsible person of Lihung Company, Chou Wen-hsing, gave copies of its certificates/licenses, such as the construction registration certificate, credential of experiences, and business registration certificate, to Lin Jung-cheng so that the latter could submit a bid for the construction project of Sanhsing Hsiang's landfills and stadium renovation.
(1) Sanhsing Hsiang's Landfill Project:
In order to win the bid for the said landfill project, Lin Jung-cheng and Chen Ch'ien-tu colluded to borrow certificates/licenses from the general manager of Tunghuang Company, Hu A-shen and the responsible person Tungchang Company, Huang Ch'ien-chung, and an executive shareholder of Hsiusheng Company, Lin Ch'ing-shui respectively for the purpose of. Lihung, Tunghuang, Tungchang, and Hsiusheng were allegedly involved in the bidding collusion by jointly submitting high-priced bids, among which Lihung Company's submission turned out to be the relatively lowest.
(2) The Renovation Project of Sanhsing Hsiang's Stadium:
Based on their collusion, Chou Wen-hsing, Lin Jung-cheng, and Chen Chin-tu engaged to restrict each other's activities along with the responsible person of Pioneer Company, Pan Ch'in-chang, the responsible person of Rungchang Company, Huang Ch'ien-chueng, the responsible person of Yungchi Company, Chiang Ching-chih, and one shareholder of Tungbang Company, Wu Tsai-fa, by borrowing certificates from the above-mentioned persons or assisting them in writing the total amount of the bid prices. Through such arrangement, Lihung Company became the lowest-priced bid among the participating bidders for the specific project. In May 1995, Sanhsing Hsiang commissioned Lien Ch'iang Company for the planning, design and supervision of the stadium renovation project. The responsible person of Lien Ch'iang Company, Hsiu Pai-ling, with the intent of benefiting Lihung Company, revealed to Lihung Company the budget for the particular project. As a result, there were 17 items in Lihung Company‘s overall quotation, and 136 items in its unit price quotation, that were identical to those of the budget. Based on the information produced by the company, Hsiu Pai-ling made it a requirement that bidders must acquire a power of attorney and an undertaking for construction support from a foreign contractor. By doing so, Hsiu Pai-ling designated contractors in disguised form and conducted bidding collusion with Lihung Company.
2. According to the investigation, bidders in the landfill project, including Lihung Company, Tungchang Company, Hsiusheng Company and Tunghuang Company, and those participating in the bidding for the stadium renovation project, including Lihung Company, Tungchang Company, Yungchi Company, Tungbang Company and Pioneer Company, were all eligible bidders allowed to participate in the bidding for the two said projects. Therefore, they were competing with one another in a horizontal market, and thus met the requirements of enterprises engaged in concerted actions as set forth in Article 7 of the Fair Trade Law. Nonetheless, based on the materials submitted to the Commission for review, most of the enterprises involved in this case denied having done accompanying bidding. The only irregularities they confessed to were that Lin Jung-cheng and Chen Chin-tu respectively contacted Linghung Company, Tunghuang Company, Tungchang Company and Hsiusheng Company, and that Chen Chin-tu respectively contacted Tungbang Company, Tungchang Company, Yungchi Company for borrowing certificates or cooperation in the bidding process. Moreover, judging from the fact that all participating bidders provided bid bonds on their own, picked up application forms, submitted bids, and/or attended the opening of sealed tenders in person, it is unlikely to conclude that these participating bidders did engage in accompanying bidding. Nonetheless, further investigation should be conducted by the judiciary in order to verify the statements and testimonies made by the above bidders. Furthermore, with respect to whether their acts had influenced the market mechanism of the manufacturing/transactions of goods or the demand and supply of services, the following factors should be considered: (i) the winning bid price was NT$ 60 million for the landfill project and that NT$ 45.67 million for the stadium renovation project; (ii) the restriction on the qualifications of bidders that they must be A-class (or higher) construction companies; (iii) participating bidders either came from Taipei or Ilan (It should be determined whether civil engineering projects are localized and thus make the market local).
3. In addition, if Chen Chin-tu and Lin Jung-cheng had engaged in borrowing certificates, for the purpose of acquiring trading opportunities, by misleading the tendering entity to believe that there was a competition among the non-genuine participating bidders, they would have violated Article 24 of the Fair Trade Law; the article provides that no enterprise shall engage in any other deceptive or obviously unfair acts that can adversely affect the order of trade. However, no substantial evidence is available now to reach at any conclusion in this regard.
Summarized by Chen, Yi-hsing
Supervised by You, Su-su
Appendix:
Lihung Construction Company's Uniform Invoice No. 04334845
＊＊: For information of translation, click here
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