Koahsiung Liquid Petroleum Gas Industrial Association

Case:

Key Words:

LPG, trade association, liquefied petroleum gas, government procurement

Reference:

Fair Trade Commission Decision of December 20, 2007 (the 841st Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 096181

Industry:

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

Relevant Laws:

Article 14 of the Fair Trade Law

Summary:

1. The complainant is a small-scaled gas refilling business operator in Koahsiung city, which had applied to and got accepted by the Koahsiung Liquid Petroleum Gas Industrial Association (hereinafter referred to as "the alleged") for membership. Therefore, the complainant has been qualified to participate in and obtained the tender for supplying liquefied petroleum gas the primary school in Koahsiung city. However, the complainant's membership was cancelled later by the alleged on the grounds that the complainant owed membership fees, and had the record of competed with lower prices affecting other members' business livelihood. Furthermore, the alleged issued notices to the said primary school on numerous occasions on the intention of preventing the complainant and the said primary school on signing a supply agreement. Thus, the complainant reported to the FTC that the Alleged had involved in inappropriate methods of preventing fair competition.
2. Upon receiving the report, the Commission initially thought to be a simple dispute arising from non-payment of membership fees by the member to the LPG association. However, further investigation revealed that the alleged called for a provisional meeting of representatives of the members on February 8, 2007, and issued "Reference table of cost analysis and estimated market price for liquefied petroleum gas for retailers (distributors)" recommending gas business operator with average sale of 20 tones a retail cost of NT$28.50 for each kilogram (excluding profits). Based on the table mention above, the alleged deemed the complainant's selling price of NT$480 per 20kg a can adopted by the complainant's gas refilling business being a vicious price cut competition behavior. Hence, the alleged decided to cancel the complainant's member representative status and issued the notices to the members. Also, the similar incidence also happened to another gas business retailer.
3. Grounds for disposition:
1. The alleged, industrial association formed by approximately 300 gas business retailers and distributors in accordance with the Commercial Group Act and conforms, falls into the definition of "enterprise" defined in the Article 2 of the Fair Trade Law. The Commission is of the opinion that the alleged called for a provisional meeting of representatives of members, distributing "Reference table of cost analysis and estimated market price for liquefied petroleum gas for retailers (distributors)", and decided on cancellation of the complainant's membership based on the fact that the complainant's sales price was lower than that in the reference table, and notified members, restrict members from engaging in price competition. The aforementioned conduct caused restriction to the operation activities of the alleged's members, intended for members not to compete on price, sufficient to influence the functioning of the canned gas distribution market supply in Koashiung city, resulted in restrictive horizontal competition effects. As a result, the Commission decided to issue this disposition.
2. In addition, during the investigation by the Fair Trade Commission, the alleged recognized its conduct was inappropriate and thus the attitude in cooperating with the inquisition was good. The Commission in balancing the motivation of the alleged's motivation, purpose, scale of the contravened operation, operation status, type of violation and degree of damage caused by details of the violation, alleged's market position, and other relevant factors, decided to impose a fine of NT$250,000.

Summarized by Liu, Chin-Chih; Supervised by Sun, Ya-Chuan