The Fair Trade Commission initiated investigation on whether Nan Taoyuan CATV, Ltd. and Taoyuan Bus Co. Ltd. have abused their monopolistic market positions and charged high advertisement fees

Chinese Taipei

Case:

The Fair Trade Commission initiated investigation on whether Nan Taoyuan CATV, Ltd. and Taoyuan Bus Co. Ltd. have abused their monopolistic market positions and charged high advertisement fees

Key Words:

Monopoly, Pricing, Advertisement

Reference:

Fair Trade Commission Decision of August 1, 2005 (the 715th Commissioners' Meeting), Letter Kung Yi Tzu No. 0940006175

Industry:

?Television Broadcasting (8620), Motor Bus Transportation (5331)

Relevant Laws:

Subparagraph 2, Article 10 of the Fair Trade Law

Summary:

1. This case originated from the verbal interrogation of Legislator Kuo, Jung-Chung during the Sixth Executive Yuan’s (the parliament in Chinese Taipei) first session Economics and Energy standing committee meeting convened on March 10, 2005, regarding that there is only one cable television operator in southern Taoyuan, consequently led to various charges, for example, the advertisement fees at southern Taoyuan is double of that at northern Taoyuan where there are two cable television operators, therefore a supposition of monopolization could be established. The Fair Trade Commission thus has filed and initiated an investigation about this case.
2. The investigation found that in Taoyuan area, Northern Taoyuan Cable Television Company and TeleFirst Cable Communication Company provide cable television program services for northern Taoyuan and Nan Taoyuan CATV Ltd. is the sole operator of cable television program services for a total of 173,105 subscribers in southern Taoyuan. The advertisement fees for each broadcasted commercial that is being consigned, taking an example of the charges for a 20 seconds commercial, Nan Taoyuan CATV Ltd. charges around NT$85,000 to NT$100,000; Northern Taoyuan Cable Television Company charges around NT$50,000 to NT$80,000 and TeleFirst Cable Communication Company charges around NT$65,000 to NT$75,000. In Taoyuan, there are six bus transportation companies, including Taoyuan Bus Co. Ltd., providing the services of bus card, a form of placing advertisements inside the bus or the outer covering the bus.
3. The advertisement businesses as defined in this case shall include the competition among the media of newspapers, broadcasting station, outdoor walls or designated points, free-standing inserts and fli ers delivery, as well as bus cards. There is no regulation that specially restrains the aforementioned advertising media from competing freely in Taoyuan County. Therefore, the market definitions in this case are as such that the product or service market is advertisement media market, and the geographical market is the Taoyuan County. Newspaper media accounts for approximately 45 percent of the total advertisement market; broadcasting station, television media, outdoor walls or designated points, free-standing inserts and fliers delivery, and bus card advertisements account for approximately 15 percent, 20 percent, 10 percent, 5 percent and 5 percent respectively. There are many competitors and the market competition is very intense. The investigated are enterprises that neither face no market competitions nor have any dominant positions to enable them to exclude competition on the relevant market. The market share of each individual enterprise on the relevant market is less than half of the market and the combined market share of both enterprises on the relevant market is also less than two-thirds of the market. Consequently , it is unsubstantiated to conclude that both enterprises are monopolistic enterprises as defined in the Article 5 of the Fair Trade Law. In addition, it is appropriate for an enterprise to use price, service and quality factors to compete with other counterparts for trading opportunity on the market. In general, the advertiser must pay higher advertisement fees in the case of hoping its advertisements can reach more viewers and attain greater results. The investigation found that although Nan Taoyuan CATV Ltd. charges higher advertisement fees than the other two cable television system operators in northern Taoyuan for broadcasted commercial that is being consigned , a reference to the statistical information of the Government Information Office, Executive Yuan (Cabinet) does show that as of the end of March 2005, there are 173,105 subscribers for Nan Taoyuan CATV Ltd., and the numbers for Northern Taoyuan Cable Television Company and TeleFirst Cable Communication Company are 94,650 subscribers and 100,749 subscribers respectively. In other words, Nan Taoyuan CATV Ltd. has 78,455 subscribers more than Northern Taoyuan Cable Television Company and 72,356 subscribers more than TeleFirst Cable Communication Company. As a result , the advertisements broadcasted by Nan Taoyuan CATV Ltd. shall reach more viewers . Secondly , a comparison of charges for a 20 seconds broadcasted commercial that is being consigned, depending on the broadcasted channels, Nan Taoyuan CATV Ltd. charges around NT$85,000 to NT$100,000; Northern Taoyuan Cable Television Company charges around NT$50,000 to NT$80,000 and TeleFirst Cable Communication Company charges around NT$65,000 to NT$75,000. From the perspective of the communication effects of the advertisement, the aforementioned variations of advertisement fees shall be considered as reasonable phenomenon of reflecting the market’s supply and demand. The investigation found that the written bus card quotation of Taoyuan Bus Co. Ltd., another enterprise being investigated, is lower than that of its counterparts, there seems to be no incident of high advertisement fees. To sum up, in Taoyuan area’s advertisement market, Nan Taoyuan CATV, Ltd. and Taoyuan Bus Co. Ltd. in this case are not monopolistic enterprises as defined in the Article 5 of the Fair Trade Law, it is still quite difficult to conclude that their conducts in advertisement pricing have violated the provision of Subparagraph 2, Article 10 of the Fair Trade Law.

Summarized by Liao, Hsien-Chou;
Supervised by Hou, Vn-Hsien

Appendix:

Nan Taoyuan CATV, Ltd.’s Uniform Invoice Number: 97170775
Northern Taoyuan CATV, Ltd.’s Uniform Invoice Number: 97169897
TeleFirst Cable Communications, Ltd.’s Uniform Invoice Number: 97161945
Taoyuan Bus Co. Ltd.’s Uniform Invoice Number: 43266009