Complaints against Taichung County and Taichung City Cylinder Gas Enterprises for the joint price hikes, and violated the Fair Trade Law.

Chinese Taipei

Case:

Key Words:

Increase transportation and packaging charges, increase the selling prices of cylinder gas, non-competition with one another for the customers

Reference:

Fair Trade Commission Decision of February 23, 2006 (the 746th Commissioners' Meeting), Disposition Kung Ch’u Tzu No. 095012

Industry:

Gas Supply (3400)

Relevant Laws:

Article 24 of the Fair Trade Law

Summary:

1. Beginning from November 2005, the Fair Trade Commission (FTC) has received complaints from Taichung County Government, Taichung City Government, and several people indicating that the price of a 20-kg cylinder gas has increased by the amount of NT$ 50 to NT$ 100 per cylinder in Taichung area. In addition, several legislators have held press conferences to concerns about the legitimacy of such pricing behaviors. Accordingly, the FTC conducted spot investigations of the cylinder gas market in Taichung County and Taichung City.
2. Upon investigation, the FTC found that the competitions of downstream gas distributors in the townships and towns of Taichung County were very intense; the gas filling stations have maintained the transportation and packaging charges at a pretty low level of $0.30 per kg for many years. For this reason, the gas filling stations in Taichung area have failed to increase the said transportation and packaging charges after several meetings since 2003. However, by taking advantage of the incident of liquefied petroleum gas shortage in October 2005, the said gas filling stations reached a preliminary consensus when they had a meeting at Lu Yuan Recreational Garden, Shengkang Township in the middle of October. Beginning from October 23, the gas filling stations visited each township and town, informing the gas distributors of increases of transportation and packaging charges, along with the issue of cylinder gas prices. They also conciliated the gas distributors not to cut price. Furthermore, the gas filling stations and gas distributors were invited to discuss the aforementioned matters at Lu Yuan Recreational Garden around October 26. Consequently, the price of a 20-kg household-use cylinder gas at townships and towns of Taichung County has been raised from approximately NT$ 500 to NT$ 580 since November 2005, whilst the price for a 20-kg business use cylinder gas was raised from NT$ 450 to NT$ 550. Meanwhile, the transportation and packaging charges for the upstream enterprises smoothly increased to about NT$ 1.50 per kg. In addition, the cylinder gas market in Taichung City is quite competitive in recent years. The price of a 20-kg business use cylinder gas has even dropped to about NT$ 450 per cylinder and the household-use cylinder gas were mostly priced at NT$ 550. However, the Taichung City Liquefied Gas Fuel Trade Association convened the sixth extraordinary joint meeting of the 15th term Board of Directors and Supervisors at the night of October 28, 2005, and resolved that the pricing of each gas distributor should reflect the cost and profit. Beginning from November 1, the maximum selling price of a household use cylinder gas was NT$ 630 and the maximum for a business use cylinder gas was NT$ 550. Moreover, the said price hikes message was broadcasted ten times on cable TV Channel 21, 22 and 68 from November 2, 2005 to November 4, 2005.
3. Grounds of Disposition:
   1. The aforementioned conducts of jointly increase the transportation and packaging charges and the conciliation for gas distributors to increase their selling prices and mutually not competing for one another customers, such conducts of mutually restrain one another business activities are sufficient to affect the market function of cylinder gas transportation and packaging market in Taichung area. These conducts have violated the prohibitive provision of Article 14, Paragraph 1 of the Fair Trade Law that “no enterprise shall have any concerted action”.
   2. Taken into consideration the motivation, purpose and expected illegal benefit of the unlawful acts; the degree and duration of the act’s harm to market order; benefits derived on account of the unlawful act; scale, operating condition and market position of the enterprise; past violations; remorse shown for the act and attitude of cooperation in the investigation, the said enterprises are ordered to cease the unlawful acts and subject to a fine between NT$ 200,000 to NT$ 500,000 is imposed according to the anterior paragraph of Article 41 of the Fair Trade Law.

Summarized by Huang, Chung-Chieh;
Supervised by Sun, Ya-Chuan

Appendix:
Feng Yuan Liquefied Gas Filling Station’s Uniform Invoice Number: 55638525
Chin Yuan Yu Enterprise Co., Ltd.’s Uniform Invoice Number: 12837721
Ou Kai Gas Filling Station Co., Ltd.’s Uniform Invoice Number: 97544388
Chun Hsin Enterprise Co., Ltd.’s Uniform Invoice Number: 51613777
Taichung Liquefied Gas Filling Station Co., Ltd.’s Uniform Invoice Number: 52332043
Ta Li Liquefied Petroleum Gas Filling Station Co., Ltd.’s Uniform Invoice Number: 52857645
Chu Chou Enterprise Co., Ltd.’s Uniform Invoice Number: 89647158
Taitung Enterprise Co., Ltd.’s Uniform Invoice Number: 16413610
Ta Chan Hsing Co., Ltd.’s Uniform Invoice Number: 59068814
Pei Yu Co., Ltd.’s Uniform Invoice Number: 86927084
Ping Sheng Liquefied Gas Filling Station Co., Ltd.’s Uniform Invoice Number: 61909567
Ma Wang Co., Ltd.’s Uniform Invoice Number: 80086660