Complaints filed against Kang Hsuan, Nani, Han Lin and Jenlin textbooks publishers for restricting its trading counterparts to determine the resale prices and restraining their sales to a distribution area, in violation of the Fair Trade Law

Chinese Taipei

Case:

Key Words:

upplementary teaching materials of textbooks, price cut competition, price negotiations, distribution area

Reference:

Fair Trade Commission Decision of November 10, 2005 (the 731st Commissioners’ Meeting)

Industry:

Book Publishers (8430)

Relevant Laws:

Article 18、Article 19(iv) of the Fair Trade Law

Summary:

1. The Fair Trade Commission received complaints against the textbooks publishers Kang Hsuan Educational Publishing Co., Ltd., Nani Publishing House Co., Ltd., Han Lin Publishing Co., Ltd. and Jenlin Publishing Co., Ltd., alleging that the aforementioned publishers have strictly restrained the distributors in Kaohsiung area to sell their publications of “strokes for new words” and “words and phrases exercise book” within a specified area and price cut competition was not allowed, in order to maintain market monopolization and hinder the fairness of bidding, hence in violation of the provisions of the Fair Trade Law.

2. The Fair Trade Commission’s investigation found the following findings:
   • The accused textbooks publishers indicated that they have never restricted their distributors, in writing or by any other means, to determine the resale prices of the supplementary teaching materials at issue and never restrained their distributors to sell the supplementary teaching materials at issue within a specified distribution area. The relevant distributor contracts were provided as evidences.
   • In addition, the distributors of the said publishers expressed that they have mainly sold the supplementary teaching materials at issue to schools. With regard to the schools’ procurement of the supplementary teaching materials at issue, the Education Bureau of Kaohsiung City Government has conducted price negotiations for the approved textbooks and supplementary exercise books for elementary schools. Each distributor has respectively referred to the results of Kaohsiung City Government’s price negotiations, deliberated to its own cost and market conditions in determining the selling prices of the supplementary teaching materials at issue; the photocopies of sales invoices were given as evidences. The aforementioned distributors also expressed that their marketing channels include schools, distributor counterparts, retail bookstores, and individual consumers. They have provided services to schools in the northern and southern districts of Kaohsiung City. There was no incident of distributors being restrained to sell the supplementary teaching materials at issue in merely one distribution area and the relevant schools’ purchase orders are provided together as evidences.
3. Reasons of non-disposition:
   • The investigation found that all textbooks publishers indicated they have never imposed any restriction, in writing or any other means, on the setting of resale prices of the supplementary teaching materials at issue. In addition, an investigation on the distribution system of each publisher in the Kaohsiung area, and the relevant evidences provided by each individual distributor revealed that there were various sales figures for the teaching materials at issue, implying that the said materials were not sold at a single price. Moreover, the Education Bureau of Kaohsiung City Government with regard to the schools’ procurement of the teaching materials at issue has conducted price negotiations on the approved textbooks and supplementary exercise books for elementary schools. The results of price negotiations were given to all schools as the basis of purchasing the teaching materials at issue. It is indeed difficult for textbooks publishers to request its distributors to maintain the resale prices even if they have intention to do so. Therefore, in accordance with the available evidences, it is difficult to conclude that the accused has violated the provision of Article 18 of the Fair Trade Law.
   • Further investigation found that no publishers have restrained its distributors to conduct business in a specified distribution area. Besides distributors, their publications can be bought through remittance or at the companies’ retail stores. There were various channels to circulate the teaching materials at issue. The investigation also found that most publishers have two or more distributors in Kaohsiung City; moreover, their respective distributors have expressed that they were allowed to conduct business in area other than where their companies located and the relevant purchase orders of schools were provided as evidences. Therefore, in accordance with the available evidences, it is still difficult to conclude that the accused has violated the provision of Article 19, Subparagraph 6, of the Fair Trade Law.

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

Appendix: Nil