Compal Electronics, Asustek Computer and Quanta Computer filed a concerted action application for the joint plan of developing standardized components for notebook

Chinese Taipei

Case:

Key Words:

Notebook, D Tray, joint development

Reference:

Fair Trade Commission Decision of April 20, 2006 (the 754th Commissioners’ Meeting), Letter Kung-Lien-Tzu-095001 of April 26, 2006

Industry:

Computer Manufacturing (2611)

Relevant Laws:

Article 7 and Article 14 of the Fair Trade Law

Summary:

1. Compal Electronics, Asustek Computer and Quanta Computer (hereinafter referred to as the applicants), the three notebook computer makers have planned to reallocate and specify the components of notebook computer through specification development. They planned to develop the specification of D tray for notebook computer jointly, including the common parts for each component of the tray, the interface between electronics and software and the interface between the components of tray and the other parts of notebook computer, such as the attached LCD cover and auxiliary components. In accordance with the first paragraph of the first proviso of Article 14 of the Fair Trade Law, the notebook makers thus have filed an application for an approval as the said plan has met the definition of concerted action.
2. Based on the following grounds, the act of the applicants to formulate standard specifications for notebook computer is beneficial to the economy as a whole and in the public interest whereas the disadvantages of lessen competition or unfair competition are yet not obvious. Therefore, the application of concerted action is approved. The grounds for approval are as follow:
1. Beneficial to the economy as a whole and in the public interest:
   1. Cost reduction: In addition to the benefits of mass production and economies of scale, the operation of standard specifications is also conducive to the reduction of research and development expense, the trading cost with suppliers, marketing cost, after-sales service and educational training costs.
   2. Quality and efficiency improvement: Because of standardization in specification, the component makers have high substitution of compatible components. Therefore, they can concentrate efforts in upgrading their product’s quality to be attractive. Then, the quality of product will become the factor of market competition. Thus, the standard specifications are beneficial to the improvement of notebook computer’s quality as a whole.
   3. Improvement in consumer benefits: After the standardization of specification, the consumers have more options in the purchase of notebook computers. Besides, they can also enjoy price reduction that brought by the economies of scale and cost reductions.
   4. The plan is beneficial to the development of the nation’s information technology industry: The deliberation of opinions provided by the relevant units and business entities reveal that the standard specifications formulated by the applicants with their capital, manpower, resources and technology will give impetus to notebook computer market and expand the scale of technology development. Because of the spillover effect, the makers not participating in the plan may also enjoy the benefits from taking part in production and sales. The competitiveness of domestic makers with the international branded makers will increase. The said concerted action is significant in the development of the nation’s information technology industry.
2. Disadvantages of lessen competition or unfair competition: The doubts that the joint act of the applicants in research, development and formulation of standard specifications may lead to lessen competition or unfair competition will exist in any of the following situations. The applicants of this concerted action do not provide the standard specifications to manufacturers not participating in the concerted action, or postpone the public announcement of the standard specifications, or do not disclose patent that is needed in the production of the relevant products or components. The standard specifications have resulted only specific manufacturers can supply or provide relevant components that use standard specifications. In addition, the necessity of patent rights for the said standard specifications can lead to exclusiveness, authorization refusal without justification, or discrimination in the authorization, and unreasonable charges collection. In order to resolve the said doubts of lessen competition or unfair competition, the Fair Trade Commission (FTC) thus has attached conditions or required undertakings in the approval to prevent the applicants from engaging in any of the aforementioned acts.
3. Upon the assessment, the conduct of the applicants in formulating standard specifications for notebook computer will reduce cost, improve quality and promote consumer interests; beneficial to economy as a whole and in the public interests. Therefore, the application is approved according to the proviso of Article 14, Paragraph 1 of the Fair Trade Law. The approval is effective until April 19, 2009. In addition, in order to prevent the disadvantages of lessen competition or unfair competition that may arise after this concerted action is approved, and also to ensure the benefits to the economy as a whole and in the public interest, the FTC has attached conditions in the approval it grants pursuant to Article 15 of the Fair Trade Law.

Summarized by: Chen, Shu-Hua;
Supervised by: Liou, Chi-Jung

Appendix:
Compal Electronics, Inc.’s Uniform Invoice Number: 21222725
Asustek Computer Inc.’s Uniform Invoice Number: 23638777
Quanta Computer Inc.’s Uniform Invoice Number: 22822281