Four Cable TV System Operators in Kaohsiung City

Case:

Key Words:

cable TV, MSO organization, cooperative operation, joint shift arrangement

Reference:

Fair Trade Commission Decision of December 17, 2008 (the 893rd Commissioners' Meeting), Disposition Kung Ch'u Tzu No. 097163

Industry:

Cable and Other Subscription Programming (6022)

Relevant Laws:

Article 11(1) and 13(1) of the Fair Trade Law

Summary:

1. This case originated from the fact that media published that a foreign company was suspected of cornering four cable TV system operators in Kaohsiung City. The FTC therefore initiated an ex officio investigation on this case and found out that the cable TV system operators in northern Kaohsiung City were Ching Lian Cable TV Co., Ltd. (hereinafter referred to as "Ching Lian Company") and Clearvision CATV Ltd. (hereinafter referred to as "Clearvision Company"), while cable TV system operators in southern Kaohsiung City were Gang Du Cable TV Co., Ltd. (hereinafter referred to as "Gang Du Company") and Harborview Cable TV Co., Ltd. (hereinafter referred to as "Harborview Company").
2. Findings of FTC after Investigation:
   (1) In this case, the FTC tracked down the "Table of MSO Organizational Arrangement and Allocation of Manpower of MSO Organization in Kaohsiung." Six major departments, Production Support Center, Customer Service Center, Financial Department, Broadband Business department, Engineering Department, and Administration Department, were established under the MSO organization and were responsible for operating businesses of the four cable TV companies stated in the summary. Furthermore, the responsible persons of the related departments of the MSO organization covered the first-level supervisors of these cable TV companies, and the MSO organization mixed and arranged all employees of said cable TV companies into each business service group. The FTC also separately tracked down the engineering organization chart of the South-North of Kaohsiung City, and the chart even further recorded a detailed list of all engineering staff of the four cable TV companies.
   (2) The FTC looked into the case and singly found out that with respect to sources of cable TV programs, the four cable TV companies all commissioned the same company to purchase programs for cable TV channels, while as regards the reception of signals, Clearvision Company and Harborview Company commissioned the other two cable TV companies to receive signals of programs, and they shared terminal systems; with respect to network engineering, said four cable TV companies held engineering meetings irregularly, and a joint shift arrangement occurred among their engineering staff and customer service personnel. The FTC also found out that with regard to other administrative items, these four cable TV companies made uniforms (for their employees) to manifest the entity, co-hosted an annual employees' dinner party, jointly arranged engineering insurance, and jointly used to dial specific voice message codes to communicate. In addition, supervisors of specific companies even used e-mail accounts of other companies, and certain companies kept bills, and information concisely and internally proposed by staff of other companies. Over and above the FTC's findings, the internal documents of the cable TV companies provided by the witness encompassed a detailed list of all engineering staff of the four cable TV companies, and the compiled information of detailed data being related to the business secrets of these cable TV companies. The provision of said compiled information of detailed data manifested that, without an organization to operate and give orders uniformly, there were hardly reasonable causes for a specific person to acquire and compile the related business secrets of the four cable TV companies.
3. Grounds for Disposition:
   (1) In accordance with the findings of FTC after investigation, the facts that the four cable TV companies had close cooperation of important businesses and usually jointly operated the businesses, had constituted the element set forth in Article 6(1)(iv) of the Fair Trade Law, and conformed to the threshold set forth for a pre-merger notification provided by Article 11(1) of the same law, as well as not falling within the exceptions to pre-merger filing, which were provided by Article 11-1 of the same law. However, these four cable TV companies did not make a pre-merger filing to the Commission and therefore violated Article 11(1) of the Fair Trade Law.
   (2) On the basis of Articles 13(1) and 40(1) of the Fair Trade Law, the FTC ordered that the four cable TV companies should cease such a type of unlawful act immediately, and Ching Lian Company, Gang Du Company, Clearvision Company, and Harborview Company were imposed with an administrative fine of NT$ 10,000,000, NT$ 7,400,000, NT$ 1,800,000, and NT$ 1,400,000 respectively.

Appendix:
Ching Lian Cable TV Co., Ltd.'s Uniform Invoice Number: 97164582
Gang Du Cable TV Co., Ltd.'s Uniform Invoice Number: 97178452
Clearvision CATV Ltd.'s Uniform Invoice Number: 97175618
Harborview Cable TV Co., Ltd.'s Uniform Invoice Number: 16085834
Summarized by Chang, Hsin-Yi; supervised by Liou, Chi-Jung