Twelve Liquid Petroleum Gas Distributors in Huwei Township, Yunlin County

Case:

Key Words:

liquid Petroleum Gas distributors, relevant market, domestic liquid petroleum gas

Reference:

Fair Trade Commission Decision of September 6, 2007 (the 826th Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 096147

Industry:

Retail Sale of Other Fuel Products in Specialized Stores (4829)

Relevant Laws:

Article 14(1) and 41 of the Fair Trade Law

Summary:

1. This case was originated from the complaint called by Mr. Wu in Huwei Township, Yunlin County and the complaint stated that: The liquid petroleum gas distributors (and the liquefied petroleum gas stores) in such a township almost had raised the sales price of domestic 20kg liquid petroleum gas to NT$ 500 per barrel on the later half of June, 2004 and the sales prices was raised by the amount which had reached to NT$ 50 per barrel. However, in the same month of the same year, the up-stream providers, COC Corporation, Taiwan, and Formosa Petrochemical Corporation, raised the list price of domestic liquid petroleum gas to NT$ 1.5 per kg (and the cost of 20kg liquid petroleum gas was only raised by NT$ 30) on June 5, 2004. It was obvious that the liquid petroleum gas distributors in Huwei Township, Yunlin County, possibly involved in the unreasonable raise in sales price and therefore, the Commission immediately conducted an investigation.

2. Findings of the FTC after investigation:

   • As the liquid petroleum gas distribution market in Huwei Township had undergone a long-term competition in price cutting and the enterprises had been unable to reflect costs, the liquid petroleum gas distributors in the area, Ta-Lung Fuel and Chuan-Shuai Corporation, took the advantage of the opportunity that COC Corporation, Taiwan and Formosa Petrochemical Corporation raised the list price of domestic liquid petroleum gas to NT$ 1.5 per kg on June 5, 2004 – they invited the enterprises which were in the same line of business of COC Corporation, Taiwan and Formosa Petrochemical Corporation in the township to dine in the Wu Fu Yuan Restaurant together. Four enterprises did not send the representatives to attend the meeting, but the representatives of the rest of the twelve enterprises in the township had all attended the meeting. The attendants reached a consensus to jointly raise the sales price of domestic 20kg liquid petroleum gas from NT$ 450 per barrel to NT$ 500 per barrel, and the amount of the raise per barrel was higher than the amount of the raise initiated by the up-stream enterprises.
   • The area where the main supply of liquid petroleum gas by the twelve enterprises that involved in this case was centralized was Huwei Township. As such enterprises had to face the competition among the liquid petroleum gas distributors in the township and the threat of the competition from the enterprises which were located outside the area, the FTC was to take into consideration the waiting time for delivery of gas which could be tolerated by the purchasers (subjectively, the tolerate time for each resident is different; therefore, objectively, gradually deduct the general public's demand of gas supply from the distance between Huwei Township and other areas) and the willingness and capabilities of the enterprises to deliver (objectively, gradually increase the cost of the gas supply by the distance between Huwei Township and other areas and deduct the willingness to supply gas and profits) before determining the scope of the relevant market in this case. In sum, the quantity of the gas supply of the twelve enterprises which took part in the gathering in this case amounted to 20.12% of the total quantity of gas supply of the whole liquid petroleum gas distributors in such a relevant market; it however amounted to 88.85% of the total quantity of gas supply of the liquid petroleum gas distributors in Huwei Township – it was obvious that the mutual understanding reached through the concerted action in this case could affect the demand and supply within the market, it even caused greater impacts on Huwei Township. In addition, the information on the prices of liquid petroleum gas in each township, which was gathered through the investigation of the Bureau of Energy, Ministry of Economic Affairs showed that the sales price of domestic 20kg liquid petroleum gas in Huwei Township was NT$ 450 in May 2004, the price was NT$ 500 in June and July of the same year; until August of the same year, the sales price was however affected by the raise of the list price of domestic liquid petroleum gas initiated by COC Corporation, Taiwan on August 11, 2004 and the sales price in that month reached to NT$ 500 or NT$ 520. Accordingly, the aforesaid information had proved that the concerted action of these enterprises had caused substantial impact on the demand and supply in the market related to this case.

   3. Grounds for disposition:

   • The twelve enterprises in Huwei Township, Yunlin County, which were related to this case, dined in the Wu Fu Yuan Restaurant together during June 2004, and agreed to jointly raise the sales price of domestic 20kg liquid petroleum gas to NT$ 500 per barrel. It was not only obvious that the content of the mutual understanding had caused impact on the demand and supply within the market, but it also caused greater impact on Huwei Township and the latter incident was sufficient to affect the market function of the liquid petroleum gas distribution market in such an area. It was found that the enterprises violated the provision on "No enterprise shall have any concerted action" provided by Article 14(1) of the Fair Trade Law.
   • After considering the motive, purpose and anticipated improper profits of the unlawful acts of the enterprises and the businessmen related to this case; the degree and duration of the unlawful acts' harm to trading order; the benefits derived on account of the unlawful acts; the scales, operating conditions and market positions of the enterprises; the circumstances of the past violations; and the remorse shown for the acts and attitudes of cooperation in the investigation; the enterprises and the businessmen were ordered to immediately cease the aforesaid unlawful acts in accordance with the fore part of Article 41 of the Fair Trade Law, Chuan-Shuai Corporation was imposed with an administrative fine of NT$360,000; Ms. Lin, Yen-yi and Ta-Lung Fuel an administrative fine of NT$250,000; Sen-Ming Popane Co. Ltd. NT$200,000; Tai-An Gas Corporation NT$150,000; Ms. Chen Huang, Li-hua and Yung-Chi Gas, and Mr. Liao, Yen-qin and Sen-Mao Petroleum Gas NT$100,000 respectively; Chih-Wen Corporation NT$90,000; Chien-Yeh Liquid Gas Co. Ltd. and Mr. Chiu, Sheng-ping NT$70,000 respectively; Mr. Lin, Sung-hsieh and Mr. Wu, Shun-hsing NT$50,000 respectively. The total of the administrative fines amounted to NT$ 1,590,000.

Appendix:
Chuan-Shuai Corporation's Invoice Number: 64192980
Ta-Lung Fuel's Invoice Number: 64118906
Sen-Ming Popane Co. Ltd's Invoice Number: 64408095
Tai-An Gas Corporation's Invoice Number: 64942251
Ms. Huang, Shu-chen's Identification Number: L221357720
Yung-Chi Gas's Invoice Number: 64193382
Sen-Mao Petroleum Gas's Invoice Number: 64409313
Chih-Wen Corporation's Invoice Number: 64941372
Chien-Yeh Liquid Gas Co. Ltd.'s Invoice Number: 64306267

Summarized by Hung, Ying-chieh; supervised by Sun, Ya-chuan