Case:
Complaints filed against Jhonghwa United Gas Filling Station of Penghu County increased the price of cylinder liquefied petroleum gas and violated the Fair Trade Law
Key Words:
Penghu County, distributor, filling station, united distribution center, expired cylinde
Reference:
Fair Trade Commission Decision of October 27, 2005 (the 729th Commissioners’ Meeting); Disposition (94) Kung Ch’u Tzu No. 118
Industry:
Gas Supply (3400)
Relevant Laws:
Article 19(iv) of the Fair Trade Law
Summary:
This case originated from a complaint received by the Fair Trade Commission from the Consumer Protection Commission (hereinafter referred to as CPC). The said complaint was filed by a resident of Penghu County, alleging that the cylinder liquefied petroleum gas distributors in Penghu County have demanded its users to buy new gas cylinder since November 2003, otherwise they would not sell cylinder liquefied petroleum gas to the users. The Fair Trade Commission was requested to investigate if the said demand is a monopoly conduct. Later on, the Penghu County Government and the CPC have transferred numerous complaint letters similar to this case and all complaints are thus reviewed together.
The investigation found that the market structure of liquefied petroleum gas filling market in Penghu area has changed since the beginning of 2000 when Sin Sing Shun Enterprise Ltd. established Anjia Canister Gas Filling Station (hereinafter referred to as Anjia). Before this, there were only two gas filling stations in Penghu area, that is Jhonghwa United Gas Filling Station (hereinafter referred to as Jhonghwa United), and Guoguang Liquefied Petroleum Gas Filling Station (hereinafter referred to as Guoguang). Each station filled approximately 120 metric ton to 130 metric ton of liquefied petroleum gas every month. The price of a 20-kilogram household liquefied petroleum gas cylinder at the said area was maintained at $500 per cylinder (the price for business-used was $450 per cylinder). However, starting from the end of November 2003, the fire fighting departments in Penghu area have imposed strict banning on expired cylinder, thus causing enterprises in the said area have to increase their expenses and costs related to the purchase of new cylinders and the inspection of old cylinders. On the other hand, even though Chinese Petroleum Corporation continued to increase the list price of liquefied petroleum gas, but the retail price was mostly not adjusted due to intense market competition. On January 21, 2004, Jhonghwa United took the lead to notify and compel its distributors to increase the selling price of a 20-kilogram household liquefied petroleum gas cylinder from $500 to $600 per cylinder. On the same day, Jhonghwa United also contacted Penghu United Distribution Center that was affiliated with Guoguang, passed the relevant price increase message and requested Penghu United Distribution Center to raise the price as well. However, the said United Distribution Center in consideration of the market competition, only raise the price of a 20-kilogram household liquefied petroleum gas cylinder from $500 to $550 per cylinder on February 1, 2004.
- Jhonghwa United is a gas filling station that provides vertical marketing channel for liquefied petroleum gas, controls tank cars’ transportation, filling facilities and an important facility that issued certificate of storage. Furthermore, approximately one-third of the Penghu’s liquefied petroleum gas filling was carried out by Jhonghwa United; it is sufficient to conclude that Jhonghwa United has dominant position in the said area’s gas filling market and agrees with the aforementioned description.
- Jhonghwa United used its dominant position in the Penghu area’s liquefied petroleum gas market, took advantage of the fire fighting department’s strict banning on expired cylinders, increasing cost of cylinder inspection and purchase as well as the Chinese Petroleum Corporation’s list price adjustment, has notified its distributors and contacted Penghu United Distribution Center (gas store operators) to increase the sales price concurrently. Such conduct is likely to lessen competition or to impede fair competition, in violation of the Article 19, Subparagraph 4 of the Fair Trade Law. Taking into consideration the motivation of the unlawful acts of Jhonghwa United; the degree of the act’s harm to market order; scale of the enterprise; remorse shown for the act and attitude of cooperation in the investigation and other factors, therefore, Jhonghwa United is ordered to cease the unlawful acts immediately and a fine of NT$ 300 thousand is imposed according to the fore part of Article 41 of the Fair Trade Law.
Summarized by: Hsieh, Hsiu-Lin;
Supervised by: Shih, Chin-Tsun
Appendix:
Jhonghwa United Canister Gas Filling Station’s Uniform Invoice Number: 77184694