Fong Cheng Co. Ltd. and 19 Others

Case:

Key Words:

soy bean curd, concerted price increase

Reference:

Fair Trade Commission Decision of November 22, 2007 (the 837th Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 096173

Industry:

Other Food Manufacturing Not Elsewhere Classified (0899)

Relevant Laws:

Article 14(1) of the Fair Trade Law

Summary:

1. The case was initiated from the media report on October 31, 2007 about soy bean curd enterprises in Siluo Township, Yunlin County called for an increase in prices for soy bean curd products from November 1 onwards. In order to understand whether the relevant enterprises are involved in concerted price increase, humanly manipulated, drive up price or other actions violating the Fair Trade Law, the FTC initiated this investigation.
2. Findings of FTC after its investigation: Production of soy bean curd from Yunlin region seized 70% to 80% of the national supply market. Since 2007, continuing price increase in soybean, salad oil and fuel oil gave rise to operational difficulties for manufacturers in Yunlin region and consequently some enterprises ceased to operate to stop their losses. In seeking for an effective solution, Fong Cheng Co. Ltd. (hereinafter referred to as "Fong Cheng") and 19 other soy bean curd manufacturers in Yunlin region, contacted and organized by Liao, Ming-Yi, held their first gathering in the Activity Centre at Da Shin Village, Silou Township, Yunlin County, on July 2007, and the enterprises were introduced to one another then. Subsequently, the second gathering was arranged at You-Qun Restaurant in early July and reached a mutual understanding on price increase for soy bean curd products in that meeting. The enterprises decided to increase NT$ 2.00 per 0.6 kg starting from August. Then due to continuing price increase in the raw materials, Fong Cheng called for third gathering on October 26, reaching another mutual agreement of price increase for soy bean curd products. In their third meeting, they decided to increase another NT$2.00 per 0.6kg starting from December and agreed to notify the downstream wholesalers of the November price increase.
3. Grounds for disposition:
   (1) In accordance with Article 7 and 14(1) of the Fair Trade Law, the conduct of any enterprise, by means of contract, agreement or any other forms of mutual understanding, with any other competing enterprises, to jointly determine the price of goods or services, or to limit the terms of quantity, technology, products, facilities, trading counterparts, or trading territory with respect to such goods and services, etc., and thereby to restrict each other's business activities and sufficient to influence market supply, is deemed to have violated the restricted provisions specified in the Fair Trade Law regarding concerted actions.
   (2) Fong Cheng and 19 other soy bean curd manufacturers in the Yunlin region, in order to deal with problems arising from price increase in raw materials, gathered 2 times in early July 2007 and on October 26, 2007 to reach an agreement to increase the price for soy bean curd products and reached a mutual understanding on the second gathering in early July. The detail of the decision is to increase soy bean curd price by $2 per 0.6 kg starting from August. Again at their third gathering on October 26, the collusion of notifying the downstream enterprises on November about another price increase in soy bean curd products by another $2 per 0.6kg starting from December was reached. Fong Cheng utilized agreements via meetings to reach mutual understanding and jointly decided to increase the prices for soy bean curd products. This is sufficient to influence the functioning of soy bean curd market, nationwide, and is in violation of the restrictive provisions on concerted action as specified in Article 14(1) of the Fair Trade Law.
   (3) The Commission considered Fong Cheng and other 19 soy bean curd manufacturers in Yunlin region's motivation of the unlawful acts, the degree of the unlawful act's harm to market order, the duration of the unlawful act's harm to market order, the benefits derived on account of the unlawful act, the scale of the enterprises, the remorse shown for the unlawful act and attitude of cooperation in the investigation, and other factors, Fong Cheng and the other 19 enterprises are ordered to cease such unlawful act. In addition, four parties, namely, Fong Cheng, Wang, Yung-Ting (also known as "Yung Ting Food Enterprise"), Liao, Zheng-Huang individual, Kao,Quan-Shang individual are each fined NT$150,000; fifteen parties, namely, Lan, Ling-Dui individual, Lin, Hong-Sheng individual, Cheng, Xiu-Yi individual (also known as "He-Shun Enterprise"), Lin, Sheng-Tian individual, Tseng, Zong-Ren individual, Lu, Hen-Hui individual, Lu, Zai-Ting individual, Chu, Yan-Neng individual, Liao, Mu-Chang individual, Chu, Fong-Yuan individual, Liao, Hui-Zhen individual, Lin, Ping-Shan individual, Lin, Hui-Jin individual, Chang, Lan-Ting individual (also known as "Da-Chun Soy bean Curd Enterprise"), Lin, Zhen-Yu individual are each fined NT$80,000, a total fine of NT$1.8 million.

Appendix:
Fong Cheng Co. Ltd.'s Uniform Invoice Number: 22078754
Yung Ting Food Enterprise's Uniform Invoice Number: 18338912
He-Shun Enterprise's Uniform Invoice Number: 77816832
Chang, Lan-Ting individual (also as "Da-Chun Soy beanCurd Enterprise")
Da-Chun Soy beanCurd Enterprise's Uniform Invoice Number: 45468418

Summarized by Chiang, Hui-Yi; Supervised by Wu, Pi-Ju