Nantou Ferry and Yacht Business Association

Case:

Key Words:

joint shift arrangement, Sun Moon Lake, yacht, dock

Reference:

Fair Trade Commission Decision of September 21, 2006 (the 776th Commissioners' Meeting); Disposition (95) Kung Ch'u Tzu No. 095143

Industry:

Inland and Lake Transportation (5420)

Relevant Laws:

Article 14 of the Fair Trade Law

Summary:

1. In 2005, the Fair Trade Commission ("FTC") indirectly received email from the public complaining that the Sun Moon Lake Joint Service Reservation Center (website: www.boatshop.idv.tw) employed the name of Nantou Ferry and Yacht Business Association (hereinafter called the "Association") to advertise its business operation and might have violated the regulations prohibiting commercial organizations' profit-seeking behavior , as provided in the Law of Commercial Organizations; additionally, said business operator's joint reservation action might have violated the Fair Trade Law.

2. This case was investigated and submitted to the 776th Commissioners' Meeting on September 21, 2006 for resolution. The grounds for disposition are as follows:
   (1) It was found that the Association was established in 1959 when every business operator was striving for customers with no proper order. In order to avoid trouble in the future, business operators figured that the order at the dock might be solved through shift arrangements. As a result, the Association was established in 1959 and immediately commenced the arrangements. The current shift arrangement is to group 23 Class A boats as one team. Each boat is given equal shifts in order. The accounts are settled every 10 days. After the deduction of membership fees, insurance premiums and entertainment tax, the balance is equally disbursed to the members as the revenue distributed to each boat. In the event that the actual number of trips should be more or less than the shift scheduled, the revenue will be adjusted accordingly (each trip shall be NT$1,500), which shall be the actual income. In addition, all of the Class B, C and D boats are divided into 4 teams without being categorized. The boats of each team will take customers from the designated dock in order. The accounts are settled every 10 days. After the deduction of membership fees, insurance premiums and entertainment tax, 55% of the balance is disbursed to Class B boats; while the rest 45% to Class C and D boats.
   (2) The Association limits the number of trips made by its members and allocates business income to these members through the consent to joint shift arrangements. No competition exists among these members. The Association also refrains consumers from deciding on their patronage. Said actions cause enough impact to affect the demand and supply of the yacht service market at the Sun Moon Lake area and damage public interests and overall economic benefits. Moreover, through jointly selling tickets, collecting income and expenditure, and allocating business income based upon the types of boats or trips to shorten the income difference among business operators, share profit and avoid competition, the members' freedom of engaging in business operations to provide goods or services is restrained. The market competition mechanism of employing favorable prices, quantity, quality, services or other conditions to strive for trading opportunities has been destroyed. Therefore, these actions result in competition restraints and fall within the definition of "concerted actions" provided in Article 7 of the Fair Trade Law. Due to the Association's violation of Article 14(1) of the Fair Trade Law, the FTC shall impose an administrative fine of NT$ 510,000.

3. In addition, this case also involved the relevant provisions of the Regulations for Administrating Small Ships. Pursuant to Article 3 of the said regulations, "the Competent Authority referred to herein shall be the governing Competent Transportation Affairs Authority at the place of calling or the local government at the place where none of Competent Transportation Affairs Authority is establishes pursuant Article 62 of the Boat Act". Moreover, pursuant to Article 17 of the same regulations, "in order to maintain the order of the waters and reasonable operation, the Competent Authority may order the business operators of small boats located in the same area to cooperate in their business operations." Therefore, the Competent Authority of the Sun Moon Lake waters shall be Nantou County Government. In the event that the business operators of the small boats in said area have the need to cooperate in their business operations, the FTC shall so suggest that Nantou County Government handle the relevant affairs ex officio.

Appendix:
None

Summarized by Tsao, Hui-Wen; Supervised by Chiang, Kou-Lun