The Taiwan Wheat Flour Mills Industry Association (the name has been changed to Taiwan Flour Mills Industry Association) was punished for a violation of Paragraph 1, Article 14 of the Fair Trade Law, the Supreme Administrative Court dismissed the Fair Trade Commission’s appeal and the Fair Trade Commission looked for applicable law and replaced the original disposition with another appropriate one.

Chinese Taipei

Case:

The Taiwan Wheat Flour Mills Industry Association (the name has been changed to Taiwan Flour Mills Industry Association) was punished for a violation of Paragraph 1, Article 14 of the Fair Trade Law, the Supreme Administrative Court dismissed the Fair Trade Commission’s appeal and the Fair Trade Commission looked for applicable law and replaced the original disposition with another appropriate one.

Key Words:

Wheat, Total Q uantity C ontrol and Q uota, J oint P urchasing

Reference:

Fair Trade Commission Decision of September 8, 2005 (the 722nd Commissioners' Meeting), Disposition Kung Ch’u Tzu No. 094096

Industry:

Flour Milling (0852)

Relevant Laws:

Paragraph 1, Article 14 of the Fair Trade Law

Summary:

The Taiwan Flour Mills Industry Association (TFMIA) is in charge of handling the joint purchase and ship-pool import of wheat for 32 domestic flour mills. The Association has improperly implemented total quantity control and quota system and its conduct of restricting market competition through the intervention of the members’ inventory replenishment and management have violated the provision of Paragraph 1, Article 14 of the Fair Trade Law and therefore has been punished by the Fair Trade Commission. The respondent deemed that the disposition was inconvincible and thus has filed an appeal with the Executive Yuan (Cabinet); the Executive Yuan (Cabinet) dismissed the aforesaid appeal and then the respondent filed an administrative litigation. The Taipei High Administrative Court rendered a judgment to revoke penalty punishment imposed by the Fair Trade Commission and successively, the Supreme Administrative Court rendered a judgment to dismiss the Fair Trade Commission’s appeal. The case was brought up again at the Fair Trade Commission’s 669th Commissioners’ Meeting on September 2, 2004 and concluded with a decision of requesting the unit that imposed the original punishment to handle the case with other applicable laws and replaced the original disposition with another appropriate one.

2. The R esults of R e-examination:
   1. The original disposition deemed that the TFMIA has violated Paragraph 1, Article 14 of the Fair Trade Law that stipulates concerted action is prohibited and the Fair Trade Commission thus has decided to revoke the original approval according to Article 16 of the Fair Trade Law. The aforementioned conclusions were retained in the appeal decision of the Executive Yuan (Cabinet), the judgments of the High Administrative Court and the Supreme Administrative Court.
   2. With regard to the NT$20 million fine imposed in the original disposition, the statement of fact in the original disposition letter indicated that the TFMIA has conducted the unlawful concerted action at issue between the end of 1997 and the year 1998. But, the original disposition estimated that the TFMIA has conducted such act for seven years after visiting the members and examining their business income. When this case was reexamined, the Fair Trade Commission sent a letter to the TFMIA inviting the Association to be present at a meeting and give explanations. The Association expressed that the basis of evidences “Percentage of Quota Allocation Table” and “Inventory Allocation and Supplementation Table” as quoted in the original disposition were personally coordinated and compiled by the members for the purpose of coordinating shipment quantities and shipping dates. The respondent did not produce the aforesaid tables and such tables were no longer used.
3. Grounds for D isposition:
   1. The respondent in this case coordinated and restricted its members from freely determining the amount of wheat to be purchased through the year-end meeting convened by the subordinate “Purchasing and Processing Technology Development Commission” and quarterly or non-periodical meetings convened by the subordinate entity “Purchasing Working Group”. In July 1998, the Association has even intervened to adjust the members’ actual inventory through the “Inventory Allocation and Supplementation Table” which was used as the basis to determine the shipment load for each member. Such act of restricting market competition has violated the prohibitive regulation as stipulated in Paragraph 1, Article 14 of the Fair Trade Law. The Fair Trade Commission has rendered punishment and kept on file of this violation. Furthermore, the Supreme Administrative Court has rendered a judgment ascertaining this violation.
   2. The enclosed interview record did not show clearly the starting date of the respondent’s unlawful conduct, the TFMIA furthermore has expressed in the successive investigation that the Association did not produce the main evidences mentioned in the original disposition. I n addition, this case took place long time ago and hence it is in fact difficult to collect other evidence of the respondent’s unlawful acts. Therefore, in accordance with the content of the Supreme Administrative Court’s judgment and the statement of fact in the original disposition, the overall circumstances of the respondent’s violation were considered deliberately and a fine was again imposed on the respondent.
   3. Taken into consideration the motivation, purpose, and expected improper benefit of the unlawful act of the TFMIA; the degree of the act’s harm to market order; the duration of the act’s harm to market order; benefits derived on account of the unlawful act; the scale, operating condition, sales and market position of the enterprise; whether or not the type of unlawful act involved in the violation has been the subject of correction or warning by the Central Competent Authority; types of, number of, and intervening time between past violations, and the punishment for such violations; remorse shown for the act and attitude of cooperation in the investigation; and other factors, an administrative fine of NT$12 million was imposed on the respondent.

Summarized by Cheng, Hsiu-Jen;
Supervised by Wu, Pi-Ju

Appendix:

Taiwan Flour Mills Industry Association’s Uniform Invoice Number: 8108509