Enterprises of ready mixed concrete in the southern area of Hualien County violates the Fair Trade Law by jointly determining the sale price of ready mixed concrete

Case:

Enterprises of ready mixed concrete in the southern area of Hualien County violates the Fair Trade Law by jointly determining the sale price of ready mixed concrete

Key Words:

ready mixed concrete, advertisement

Reference:

Fair Trade Commission Decision of September 23, 2004 (the 672th Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 093093

Industry:

Ready Mixed Concrete Manufacturing (2232)

Relevant Laws:

Article 14 of the Fair Trade Law

1. This case originated from a complaint letter filed by the public alleging that The Kensen News reported on August 3, 2003 that twelve ready mixed concrete enterprises in southern Hualien County jointly determined the price of ready mixed concrete on August 1, 2003, in violation of Article 14 of the Fair Trade Law. The twelve enterprises were Kuan Tian Hsia Ready Mixed Concrete Co., Ltd. (hereinafter called "Kuan Tian Hsia"), Cheng Wang Enterprise Co., Ltd. (hereinafter called "Cheng Wang"), Li Tai Construction Company (hereinafter called "Li Tai"), Yu Cheng Ready Mixed Concrete Co., Ltd. (hereinafter called "Yu Cheng"), Yu Feng Ready Mixed Concrete Co., Ltd. (hereinafter called "Yu Feng"), Lu Chi Enterprise Co., Ltd. (hereinafter called "Lu Chi"), Tai Ya Ready Mixed Concrete Co., Ltd. (hereinafter called "Tai Ya"), Chan Hsin Enterprise Co., Ltd. (hereinafter called "Chan Hsin"), Yu Ku Ready Mixed Concrete Co., Ltd. (hereinafter called "Yung Ku"), Tai Yu Ready Mixed Concrete Co., Ltd. (hereinafter called "Tai Yu"), Chin Shan Enterprise Co., Ltd. (hereinafter called "Chin Shan"), and Tsung Shun Enterprise (hereinafter called "Tsung Shun"). The Hualien County Council also deliver a complaint letter regarding the resolution No. 1 of civil affairs of people petition adopted by the 11th provisional meeting of the Hualien County Council of the 15th year regarding the said unlawful fact to the Fair Trade Commission (FTC) hereafter. The two cases were jointly processed hereby.
2. indings of the FTC after investigation:
   Prior to the end of 2001, the price in southern Hualien County for each cubic meter of ready mixed concrete was New Taiwan Dollars (NT$)900 to NT$1,000 for 2,000 pounds; NT$1,000 to NT$1,100 for 2,500 pounds; and NT$1,100 to NT$1,200 for 3,000 pounds. In 2002, abundant sandstone produced from the second phase of the Shoufeng River dredging construction caused a decrease in the cost of supplying sandstone, therefore the enterprises in that area lowered their prices to meet competition and caused the sale prices of ready mixed concrete to drop in the ready mixed concrete market in southern Hualien County. The price for each cubic meter of ready mixed concrete was down to NT$700 to NT$800 for 2,000 pounds; NT$800 to NT$900 for 2,500 pounds; and NT$900 to NT$1,000 for 3,000 pounds. Although the sale price of ready mixed concrete rose slightly before August 2003, it was still relatively low in comparison with the increase in the cost of supplying sandstone and concrete. To avoid the difficulty of operating the business and the significant loss of customers, Kuan Tian Hsia determined to gather for a meeting the other ten enterprises in southern Hualien County, Cheng Wang, Li Tai, Yu Cheng, Yu Feng, Kuan Tian Hsia, Lu Chi, Chan Hsin, Yung Ku, Tai Yu, and Chin Shan, in July 2003. In the said meeting, the eleven enterprises agreed to bring the prices back to the levels before competition was initiated, that is NT$1,000 for 2,000 pounds; NT$1,100 for 2,500 pounds; and NT$1,200 for 3,000 pounds for one cubic meter of ready mixed concrete. Kuan Tian Hsia was further authorized to contact the Kensen News for publication of the aforementioned information. The advertising expense was borne by all of the enterprises. Although Tsung Shun did not send any representative to attend the meeting, yet it agreed to the aforesaid decision after being in formed by Tai Yu, and implemented and shared the expense accordingly.
3. Grounds for disposition:
   The ready mixed concrete suppliers in the Hualien area have always used the Shoufeng River as the borderline to divide the market into the southern and northern areas. Due to the considerations of cost, quality requirements and the stability of market prices, cross-area shipments were rare. It further made the southern and northern areas of Hualien County two independent relevant markets for ready mixed cement. When this case took place (2003), the ready mixed concrete enterprises in southern Hualien County were Kuan Tian Hsia, Cheng Wang, Li Tai, Yu Cheng, Yu Feng, Lu Chi, Chan Hsin, Yung Ku, Tai Yu, Chin Shan and Tsung Shun. The aforementioned enterprises did not compete on more favorable prices, quantity, quality, service or other conditions to attract more trading opportunities but instead rely on communications with each other through meetings or telephone calls to reach consents on each other's sale prices to restrict the price competition of the ready mixed concrete market in southern Hualien County. The preceding acts had affected the competitive mechanisms of the ready mixed concrete market in the southern Hualien County. They were in violation of the prohibition provision governing concerted actions prescribed in Article 14(1) of the Fair Trade Law (FTL), and the disposition prescribed in the forepart of Article 41 of the FTL shall be imposed. The aforementioned enterprises were ordered to cease the violation described in the preceding paragraphs. After weighing the motive, extent and duration of harm to the trading order, an administrative fine of NT$200,000 was additionally imposed on the leading enterprise among all, Kuan Tian Hsia; an administrative fine of NT$100,000 was imposed on Cheng Wang, Li Tai, Yu Cheng, Yu Feng, Lu Chi, Chan Hsin, Tai Yu, Chin Shan and Tsung Shun, an administrative fine of NT$50,000 was imposed on Yung Ku; and a warning to Tai Ya for listing its name on the published advertisement.

Appendix:
Kuan Tian Hsia Ready Mixed Concrete Co., Ltd.'s Uniform Invoice Number: 97010476
Cheng Wang Enterprise Co., Ltd.'s Uniform Invoice Number: 94787354
Li Tai Construction Company's Uniform Invoice Number: 78036291
Yu Cheng Ready Mixed Concrete Co., Ltd.'s Uniform Invoice Number: 86673363
Yu Feng Ready Mixed Concrete Co., Ltd.'s Uniform Invoice Number: 86748913
Lu Chi Enterprise Co., Ltd.'s Uniform Invoice Number: 86748913
Chan Hsin Enterprise Co., Ltd.'s Uniform Invoice Number: 86643354
Yu Ku Ready Mixed Concrete Co., Ltd.'s Uniform Invoice Number: 86086646
Tai Yu Ready Mixed Concrete Co., Ltd.'s Uniform Invoice Number: 89806893
Chin Shan Enterprise Co., Ltd.'s Uniform Invoice Number: 16378395
Tsung Shun Enterprise's Uniform Invoice Number: 08169331
Tai Ya Ready Mixed Concrete Co., Ltd.'s Uniform Invoice Number: 94762776

Summarized by Hsieh, Hsiu-Lin; Supervised by Tso, Tien-Liang