Shin Kong Mitsukoshi violates the Fair Trade Law by using its superior market position to incite boutique operators to refuse to supply, purchase from, or otherwise trade with Idee Department Store, Taichung branch, for the purpose of injuring that store

Case:

Shin Kong Mitsukoshi violates the Fair Trade Law by using its superior market position to incite boutique operators to refuse to supply, purchase from, or otherwise trade with Idee Department Store, Taichung branch, for the purpose of injuring that store

Key Words:

department store, superior market position

Reference:

Fair Trade Commission Decision of February 5, 2004 (the 639th Commissioners' Meeting); Disposition (93) Kung Ch'u Tzu No. 093016

Industry:

Department Stores (4751)

Relevant Laws:

Article 19(i) of the Fair Trade Law

1. This case originated with an anonymous complainant alleging that the Shin Kong Mitsukoshi Taichung branch (hereinafter called "Taichung Shin Kong") had stated to the boutique operators contracting with it that any operator who established a boutique in the Idee Department Store Co., Ltd. Taichung branch (hereinafter called "Taichung Idee") that was to open soon in its vicinity would be penalized by revocation of its boutique space in the Taichung Shin Kong. The Taichung Shin Kong was alleged to have violated the Fair Trade Law (FTL) by using its superior market position due to its numerous branches across the island to restrict boutique operators from setting up boutiques with competitors.
2. During the investigation by the Fair Trade Commission (FTC), a contracting boutique operator stated that the management of Taichung Shin Kong orally discouraged it from setting up a boutique in the Taichung Idee, and indicated that doing so might affect its sales in the Taichung Shin Kong. The boutique operator reasonably inferred that Taichung Shin Kong by making such remarks conveyed a hope and suggestion that the operator not set up a boutique in the Taichung Idee. It therefore canceled the plans it had made to do so.
3. In 2001, the Taichung Shin Kong had a sales volume of New Taiwan Dollars (NT$)8,600,000,000 or a 33.34% market share in the department stores industry in Taichung. It is an important retail channel and market relied upon and sought after by boutique operators. The Taichung Shin Kong's use of suggestion, incitement, or coercion to induce boutique operators to cut off transactions with the Taichung Idee for fear of having their boutiques at the Taichung Shin Kong revoked was, objectively speaking, sufficient grounds to deem that the Taichung Shin Kong caused them to cut off such trading with the competitor.
4. The Taichung Idee opened in early May of 2003 at a distance of about 600 meters from the Taichung Shin Kong, becoming a competitor in the same commercial district. The improper competitive tactics by the Taichung Shin Kong obstructed the Taichung Idee from soliciting boutique operators with the objective of forcing the latter out of the Taichung department store market, and thus constituted the violation of "causing another enterprise to discontinue supply, purchase, or other business transactions with a particular enterprise for the purpose of injuring such particular enterprise, where likely to restrain competition or obstruct fair competition" under Article 19(i) of the FTL.
5. Weighing the Taichung Shin Kong's motives, purposes, and anticipated profits, the damage to market trading order, the duration of the offense, the profit gained, its business scale, condition, and market position, and its cooperativeness during the investigation, the FTC imposed an administrative fine of New Taiwan Dollars (NT$)800,000 on the enterprise.

Appendix:
Shin Kong Mitsukoshi's Uniform Invoice Number: 84308670

Summarized by Chen, Ei-Chen; Supervised by Chen, Yuhn-Shan