Yao Chieh Co., Ou Ke Co., and Chu Hung Co. violates the Fair Trade Law by their participation in the procurement bid regarding the automatic machinery at the wheaten food supply center of Tainan County Shanhua Elementary School

Case:

Key Words:

procurement bid, borrowed license

Reference:

Fair Trade Commission Decision of October 7, 2004 (the 674th Commissioners’ Meeting)

Industry:

Food and Drink Processing Machinery Manufacturing and Repairing (2541)

Relevant Laws:

Article 24 of the Fair Trade Law

Summary:

According to the Tainan County Investigation Office of the Investigation Bureau, Ministry of Justice, Yao Chieh Enterprise Co. Ltd. (hereinafter called “Yao Chieh”) borrowed business licenses from Ou Ke Enterprise Co. Ltd. (hereinafter called “Ou Ke”) and Chu Hung Enterprise Co. Ltd. (hereinafter called “Chu Hung”) in order to successfully win the bid regarding the “automatic machinery at wheaten foods supply center” of Tainan County Shanhua Elementary School. Yao Chieh successfully won the aforesaid bid with an New Taiwan Dollar (NT$)1,483,500 on June 12, 1998. The act of Yao Chieh, Ou Ke, and Chu Hung involved a violation of Article 24 of the Fair Trade Law (FTL).
Findings of the Fair Trade Commission (FTC) after investigation:
1. According to both recorded statements and explanations made by Tao Chieh at the Tainan County Investigation Office, Yao Chieh admitted that in order to successfully win the bid regarding the automatic machinery equipment of the wheaten foods supply center at Shanhua Elementary School, it borrowed business licenses from Chu Hung and Ou Ke, with which Yao Chieh had ordinarily had a cooperative relationship. Yao Chieh turned over the security bond, produced bidding information itself, and ultimately was successful in winning the bid. It can consequently be confirmed that Yao Chieh borrowed business licenses to participate in the bid.
2. While Chu Hung lent its license due to its long-term customer relationship, Ou Ke did not understand Yao Chieh's intention when it lent its license. Lending of licenses is illegal. However, the companies lent their licenses based on their solidarity as members of the same industry, and did not obtain any compensation. After weighing the scale of the bid and the limited impact of this case, no disposition is imposed although the act of lending a license has debatable aspects.
In summary, Yao Chieh participated in the bid regarding automatic machinery at the wheaten foods supply center of Tainan County Shanhua Elementary School in June 1998 with borrowed licenses of other companies to falsely increase the number of bidding firms, contrive the impression of competition, and mislead the bidding unit into believing that the bid winner made a bid via fair competition and so awarding the bid. This caused the bidding unit to lose the opportunity to conduct another bid and obtain a lower contract price, and caused competitors to lose the trading opportunity to participate in a fair competition. It thus damaged commercial competition ethics and impeded the functioning of the market price mechanism. Yao Chieh’s actions constitute “deceptive and obviously unfair conducts sufficient to affect the trading order” prescribed under Article 24 of the FTL. This Commission ordered Yao Chieh to immediately cease the aforesaid violation pursuant to the forepart of Article 41 of the FTL.

Appendix:
Yao Chieh Enterprise Co. Ltd.’s Uniform Invoice Number: 84399685

Summarized by Chen, Shu-Hua; Supervised by Shih, Chin-Tsun

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