FTC initiated an investigation, ex officio, regarding the possible monopoly of the Language Training & Testing Center in handling General English Proficiency Test

Chinese Taipei

Case:

Key Words:

language training and test center, general English proficiency test, TOEFL, Chun Shin Limited

Reference:

Fair Trade Commission Decision of November 10, 2005 (the 731st Commissioners' Meeting); Kung Ch’u Tzu No. 094121

Industry:

Other Educational Services (7990)

Relevant Laws:

Article 24 of the Fair Trade Law

Summary:

1. This case originated from “Executive Yuan’s (Cabinet’s) Daily List of Public Sentiment & Handling Suggestions” published on October 20, 2004. According to the aforesaid list, Taiwan Solidarity Union’s legislators released news requesting the Fair Trade Commission (“FTC”) to investigate whether the Language Training & Testing Center (hereinafter referred to as the “Language Center”) was involved in monopoly. The FTC thereby initiated this case ex officio.
2. Upon the investigation, the FTC found that: In 1997, The Language Center invited domestic scholars and experts of the relevant areas to establish a research and consultant commission to deliberate an English proficiency examination system. Such a program was sponsored by the Ministry of Education for three years starting from 1999. From its commencement in 2000 till November 2004, the number of applicants for the said examination was over 1,100,000. The Language Center’s income from the General English Proficiency Test (“GEPT”) was about seventy percent of the total income of the English test market. Moreover, it was found that, upon the requests of various institutes and schools, the said Language Center deliberated a Grades Comparison Chart between GEPT and other English tests. The aforesaid comparison chart was based upon the Language Center’s research results of its tests and foreign test institutions’ handling methods, such as ETS and Cambridge ESOL. The Language Center additionally provided such comparison chart to institutes using GEPT for reference. Later on, on September 10, 2004, the Ministry of Education invited several English teaching and testing scholars and experts to deliberate on the establishment of a comparison chart regarding English proficiency tests. The Ministry of Education furthermore issued Letter Tai-She (1) Tzu No. 0930123968A on September 30, 2004 to request the Language Center to publish its “Domestic English Proficiency Tests Comparison” on its Web site. On the very same day, the Ministry of Education issued another Letter Tai-She (1) Tzu No. 0930123968B to suggest that Central Personnel Administration of Executive Yuan ( Cabinet ), colleges and universities, county/city governments, subordinate agencies, schools, and each and every unit of the Ministry of Education refer to the aforementioned comparison chart. Later on, due to Chun Shin LTD’s diverse opinions regarding the comparison of TOEIC scores and GEPT scores, the Language Center thereby deleted the comparison of CBT-TWOEFL and GEPT and the comparison of TOEIC and GEPT. The Language Center published the new comparison chart on November 13, 2004. The reference for language proficiency employed in the new chart is CEF (Common European Framework of Reference for Languages: Learning, Teaching, and Assessment). In 2005, in accordance with the Ministry of Education’s Letter Tai-She (1) Tzu No. 0940098850, the Language Center published the reference chart of each and every English test held by the said center and CEF for public’s reference on July 21, 2005. However, the “Domestic English Proficiency Test Comparison Chart” produced by the Language Center has several discrepancies and disputes.
3. Grounds for Disposition:
   • Due to the differences of each English proficiency test’s nature, purpose, content, target and implementation, each English proficiency test shall compete with others based upon its characteristics, service, and quality. When selecting a test, the employing agency shall evaluate each test’s characteristics and quality according to its actual requirement. The Language Center has developed GEPT, Foreign Language Proficiency Test, and College Student English Proficiency Test. It also accepts the commission to administer Cambridge ESOL Exams (including international English proficiency test and business language testing service). The current English proficiency test market has not yet fully developed. There are only few businesses with very different allocations of turnover and competitiveness. With regard to the domestic English proficiency tests, TOEFL and IELTS are specifically designed for applying for foreign schools. These two tests already have specific markets. Other English proficiency test, except for TOEIC, are either held by the Language Center or held by the Language Center on behalf of other institutes. The Language Center’s income from GEPT is 70% of the total income of the English proficiency test market. Although its turnover has not yet achieved the standard of monopoly enterprise stipulated in Article 5-1 of the Fair Trade Law, its market share shows that the Language Center already has a respectably advantageous market position. Moreover, with the Language Center’s history of holding English training and English proficiency tests, the Language Center has certain degree of credibility and reputation. Therefore, the Language Center’s “Domestic English Proficiency Tests Comparison” certainly has its reference effectiveness. It is difficult for general users to make judgment on the objectivity and justness of the aforesaid comparison. Consequently, the dispute of the improper grades comparison in question has already distorted competitors’ trading counterparts’ selections of English proficiency tests.
   • It was found that the Language Center had already provided the disputed comparison chart of GEPT grades and other English proficiency tests’ grades to other English proficiency test employing institutes for reference before receiving the Ministry of Education’s Letter to publish the chart on its Web site. The aforesaid act has caused a spreading effect and possibly affected the trading order. In addition, according to the Ministry of Education, such a comparison chart in question was not prepared upon the Ministry’s commission. The said comparison chart was prepared upon the Language Center’s own research results. It was found that the Language Center compared the elementary level of GEPT with a higher level of other English proficiency tests and published such improper comparison on its Web site. Such an act is sufficient to affect non-specific trading counterparts’ decisions on selecting English proficiency tests. Furthermore, The Language Center produced the said comparison chart according to its research results without the Ministry of Education’s commission. Also, the Language Center already knew that there was no accredited comparison chart at the time when it received requests from some English proficiency test employing institutes. Therefore, the Language Center was supposed to foresee the reference effectiveness and impact caused by the comparison chart in question after such a chart was published on the Internet. Under such circumstances, the Language Center should be more cautious and just. It should not have used the Ministry of Education’s Letters as its excuse. The Language Center additionally alleged that it had already marked notes on the said comparison chart. However, in light of the influence of Internet and the fact that the comparison chart in question was produced by the Language Center, the Language Center shall naturally be responsible for the validity of the chart. The Language Center should not be exempt from its responsibility simply by adding the notes. Moreover, besides being the major institute holding GEPT, the Language Center also produced the aforesaid comparison chart to engage in obviously unfair trade practice based upon trading counterparts’ unequal information access. Such competing method has caused obvious unfairness to other businesses on the market and infringed upon the nature of fair competition. The aforesaid acts are sufficient to affect trading order and fall under obviously unfair acts stipulated in Article 24 of the Fair Trade Law.
   • To sum up, although the Language Center currently is not a monopoly enterprise as set forth in the Fair Trade Law, its high market share and credibility and reputation accumulated from its long business history have put the Language Center in a respectably advantageous position. Additionally, the Language Center’s trading counterparts are in a comparatively disadvantageous position regarding the access to trading information. Therefore, the Language Center had provided a disputed comparison chart comparing GEPT grades and other English proficiency tests grades to English proficiency test employing institutes when there was no objective standard. Furthermore, the Language Center had improperly compared the elementary level of GEPT with a higher level of other English proficiency tests in the “Domestic English Proficiency Tests Comparison” and published the said comparison on its Web site. It is undoubtedly an unfair competition by exploiting its comparatively advantageous position to distort its competitors’ trading counterparts’ decisions on selecting English proficiency tests. The Language Center’s acts infringe upon the nature of fair market competition and affect trading order. These are obviously unfair acts that violate Article 24 of the Fair Trade Law.

Summarized by Mai, Huei-Li;
Supervised by Lu, Li-Na

Appendix:
The Language Training & Testing Center’s Uniform Invoice Number: 03797706