Kang Hsuan Educational Publishing Co., Ltd., Nan I Book Enterprise Co., Ltd., Han Lin Publishing Co., Ltd., and Newton Education & Publishing Corporation

Case:

Key Words:

textbook, workbook, test sheet, self-regulation, deposit

Reference:

Fair Trade Commission Decision of September 7, 2006 (the 774th Commissioners' Meeting); Disposition (95) Kung Ch'u Tzu No. 095138

Industry:

Books Publishing (8430)

Relevant Laws:

Article 14 of the Fair Trade Law

Summary:

1. This case originated from a letter filed by a complainant stating that the ROC Publishing Business Association (the "Association") improperly interpreted regulations in favor of the interest of few textbook publishers by following the secret agreement of these publishers and issuing official letters to every national junior high and elementary schools saying that giving away test sheets and workbooks by businesses might constitute violation of said Association's "Guidelines Regarding Sales of National Junior High and Elementary School Textbooks".

2. Findings of FTC after investigation:
   (1) The Vice Chairperson and Executive Secretariat, Mr. Hsu, of the Textbook Publishing Commission under the Association had called many meetings with Kang Hsuan Educational Publishing Co., Ltd. (Kang Hsuan), Nan I Book Enterprise Co., Ltd. (Nan I), Han Lin Publishing Co., Ltd. (Han Lin), and Newton Education & Publishing Corporation (Newton) during their gatherings at the Association or restaurants since the end of 2005. During these gatherings, said companies discussed about joint cease of giving away complimentary items , the time tables, penalties , deposits, attorney retainer and drafting and signing of self-regulatory guidelines. The minutes of said meetings were also made.
   (2) Aforesaid businesses additionally retained an attorney to draft self-regulatory guidelines and operation rules of guarantees. In order to ensure the enforcement of the aforesaid self-regulatory guidelines, these companies also provided deposits to the attorney for safekeeping. Moreover, the personnel of the FTC attended several textbook selection explanatory meetings in which the representatives of the aforementioned companies specifically stated that these businesses were about to cease giving away workbooks and test sheets to students from school year 2006. Furthermore, the FTC dispatched personnel to visit several elementary schools and found that most of the teachers were informed of the above statement from all of the business operators.
   (3) Based upon the selection result of national junior high and elementary school textbooks for the first semester of school year 2005, Kang Hsuan had a market share of 38.59%; Nan I 25.36%, Han Lin 20.74%, and Newton 3.19%. The four companies had a total market share of 87.88%.

3. Grounds for disposition:
   (1) Kang Hsuan, Nan I, Han Lin, and Newton violated the provision governing concerted actions as provided in Article 14 of the Fair Trade Law:

   i. Definition of the Relevant Market : Due to the liberalization of domestic junior high school textbooks in 2002, the market involved herein was the "national junior high and elementary school textbooks " in the domestic context. Market participants were the relevant business operators who published textbooks for national junior high and elementary schools.
   ii.Actors of Concerted Action:Although there were several textbook business operators attending the relevant meetings convened by the Textbook Publishing Commission, only Kang Hsuan, Nan I, Han Lin and Newton were present when the resolution was made. Additionally, said four companies delivered the deposits by company checks to an attorney to ensure the enforcement of their self-regulatory guidelines. Therefore, the participants of the concerted action herein were Kang Hsuan, Nan I, Han Lin and Newton. Moreover, said companies were all publishers of textbooks for national junior high and elementary schools fitting the definition of "Enterprises" referred to in Article 2 of the Fair Trade Law with substantial competitive relationships among the companies. In conclusion, aforementioned four companies were the actors of this concerted action.
   iii.Method and Content of Concerted Actions:Since 2005, aforesaid four companies had had several meetings discussing about cease of giving away complimentary workbooks and test sheets from the first semester of school year 2006. Not only did they come to an agreement, but also retained an attorney to stipulate self-regulatory guidelines and rendered deposits to ensure the enforcement of the aforesaid actions. These companies additionally announced to schoolteachers that they would cease giving away workbooks and test sheets to students commencing from school year 2006.
   iv.Impact on Market Function:Aforesaid four companies had a market share of more than 80% in the national junior high and elementary school textbook market. Their actions had caused competition restraints to the market and had sufficient impact on the market function.

   (2) After considering the motivation, purpose, and expected improper benefit of the unlawful act of the aforesaid four companies; the degree and duration of the act's harm to market order; benefits derived on account of the unlawful act; the scale, operating condition, sales and market position of the enterprise; whether or not the type of unlawful act involved in the violation has been correct ed or warn ed by the Central Competent Authority; types and number of and intervals between past violations, and the punishment for such violations; remorse shown for the act and attitude of cooperation in the investigation; and other factors, the FTC ordered these four companies to immediately cease such unlawful act and an administrative fine of NT$6.53 million was imposed on Kang Hsuan; NT$4.23 million on Nan I, NT$2.28 million on Han Lin, and NT$1.42 million on Newton in accordance with the fore part of Article 41 of the Fair Trade Law. The total amount of the fines imposed herein was NT$14.46 million.

Appendix:
Kang Hsuan Educational Publishing Co., Ltd.'s Uniform Invoice Number: 23142092
Nan I Book Enterprise Co., Ltd.'s Uniform Invoice Number: 68461979
Han Lin Publishing Co., Ltd.'s Uniform Invoice Number: 69382361
Newton Education & Publishing Corporation's Uniform Invoice Number: 70370390

Summarized by Lin, Chia-Hua; Supervised by Wu, Pi-Ju