No disposition was made in the case of Pan Tsai Ink Ent. Co., Ltd. et al. was complained for improperly soliciting trading counterparts

Case:

No disposition was made in the case of Pan Tsai Ink Ent. Co., Ltd. et al. was complained for improperly soliciting trading counterparts

Key Words:

printing ink, share transfer agreement

Reference:

Fair Trade Commission Decision of August 5, 2004 (the 665th Commissioners' Meeting)

Industry:

Wholesale of Paints, Varnishes and Lacquers (4515)

Relevant Laws:

Article 19(i), 19(iii) and 19(v)of the Fair Trade Law

1. The complainant in this case, San Huang Chemical Engineering Ent. Co., Ltd. (hereinafter called "San Huang"), file a complaint letter alleging that Pan Tsai Ink Ent. Co., Ltd. (hereinafter called "Pan Tsai") and Pan Tai Paint Co., Ltd. (hereinafter called "Pan Tai") were suspected of distributing notices with untrue content to the complainant's trading counterparts. The notices stated that the complainant, San Huang, had renamed to Pan Tsai Co. due to internal reorganization, and so forth. By distributing deceptive and untrue statements to the complainant's trading counterparts, Pan Tsai et al. were intentionally trying to pass themselves off as something they were not to solicit the complainant's trading counterparts to trade with them, in violation of relevant provisions under Article 19 of the Fair Trade Law (FTL).
2. Findings of the Fair Trade Commission (FTC) after investigation:
   The letter in question was dictated by Liu Chi-Hung, the responsible person of Pan Tai, and was faxed to the customers after being typed by the company's administrative personnel. Since Pan Tsai was not notified in advance of the content of the letter, this case only involves the actions of Pan Tai's responsible person, and not Pan Tsai Co.
3. In accordance with Articles 19(i), 19(iii), and 19(v) of the FTL: No enterprise shall have any of the following acts which is likely to lessen competition or to impede fair competition: (1) causing another enterprise to discontinue supply, purchase or other business transactions with a particular enterprise for the purpose of injuring such particular enterprise; ...(3) causing the trading counterpart(s) of its competitors to do business with itself by coercion, inducement with interest, or other improper means; ... (5) acquiring the secret of production and sales, information concerning trading counterparts or other technology related secret of any other enterprise by coercion, inducement with interest, or other improper means. Therefore, violation of the aforesaid provisions by an enterprise shall constitute violation of Articles 19(i), 19(iii), and 19(v) of the FTL.
4. It was found after the investigation that the responsible person of the Pan Tai, Liu Chi-Hung, was originally one of the major shareholders of San Huang, but withdrew his investment in the company due to differences of operational philosophy. Liu signed a share transfer agreement with Chuang Tsan-Hui, another major shareholder, on November 7, 2003. The content of this agreement specified that Liu would transfer his shares of San Huang to the chairman of San Huang, Chuang Tsan-Hui, and thereby obtain ownership of the Bo Jung Polishing Oil Plant in Dongguan, Guangdong Province, in which San Huang had invested, and over NT$ 23 million in accounts receivable. In order to receive said money, in December 2003, Liu accordingly asked Pan Tsai, a company which he had dealt with, to provide a bank account number and the account name to accept the money on his behalf, and sent the notices in question to the financial departments of Bo Jung Polishing Oil Plant's customers. The intent of issuing the letters was to collect the accounts receivable owed to Bo Jung Polishing Oil Plant by asking customers to make their payments to a designated bank account of Pan Tsai. Consequently, when Liu Chi-hung sent the letters to obtain the aforesaid money, this action was not a boycott for the purpose of injuring any particular enterprise, and it was not used to improperly solicit trading counterparts, or to improperly acquire another enterprise's business secrets. Since the foregoing action was not consistent with the constitutive requirements set forth under Articles 19(i), 19(iii), or 19(v) of the FTL, there was no violation of the Law. However, this Commission requests by a letter to the Pan Tai Co. that it be cautious on the legitimacy of the letters it sent to avoid any violation.

Appendix:
Pan Tsai Ink Ent. Co., Ltd.'s Uniform Invoice Number: 16705686

Summarized by Chiu, Chia-Yun; Supervised by Lin, Gin-Lan