Bicycles Associations of Tainan Tainan City and Kaohsiung City

Case:

Key Words:

bicycle, association, reference wage list

Reference:

Fair Trade Commission Decision of November 5, 2008 (the 887th Commissioners' Meeting), Disposition Kung Ch'u Tzu No. 097143, Disposition Kung Ch'u Tzu No. 097144

Industry:

Business Associations (9421)

Relevant Laws:

Article 14 of the Fair Trade Law

Summary:

1. Since the second half of year 2008, the demand for bicycles was tending to increase due to the rising oil prices, and the trend of energy saving and carbon reduction in early 2008. The public made some negative opinions on rising prices of bicycles and their components. In the same way, the public complained to the FTC anonymously about the Tainan City Bicycles Association's conclusion of a price table of bicycle repair with the aim of impeding bicycle-trading stores to collect repair fees on the basis of the price table. Since the public did not provide names of relevant bicycle trading stores, the FTC initiated an ex officio investigation on it to see if such a table could possibly affect competition in the bicycle assembly and repair market, and impair rights and interests of consumers.
2. According to the on-the-spot investigation conducted by the Commission, the Tainan City Bicycles Association admitted to the following facts: in July and August, 2007, the increasing costs of bicycle parts compressed profits of bicycle assembly and repair businesses, so the members requested the Tainan City Bicycles Association to refer to the reference table made by the Kaohsiung City Bicycles Association. As a result, in the 6th meeting of the 25th directors and supervisors held on July 18, 2007, the association resolved to formulate the"Reference Wage List for Bicycle Assembly and Repair by the Tainan City Bicycles Association." On September 1, 2007, the said list was distributed to the members. On the other hand, the Kaohsiung City Bicycles Association indicated that in order to solve the disputes between consumers and stores, it took opinions from its members, and consumers, synthesized these opinions, and negotiated with the board of directors and supervisors. Then the Association formulated the"Reference Wage List for Bicycle Assembly and Repair by the Kaohsiung City Bicycles Association" and sent to the members on November 1, 2006.
3. Grounds for Disposition:
   (1) There were 74 member enterprises in the Tainan City Bicycles Association. It was about two thirds of the total number of bicycles enterprises in Tainan City. Moreover, the percentage of the total number of 139 member enterprises in the Kaohsiung City Bicycles Association to the total number of bicycles enterprises in Kaohsiung City were approximately 95%. The FTC considered that, although the two associations resolved to formulate reference wage tables for bicycle assembly and repair because of increasing costs, or solving the disputes between consumers and stores, the acts in casu clearly had appearances of concerted actions. With respect to the fact that these two associations sent the reference wage tables in casu to their members respectively, though it had not, at that time. Although they didn't put into practice the regime of supervising sales prices of members, and there were enterprises which determined assembly and repair charges for some components according to their own costs and consumer groups, these tables might still make members of these two associations adjust prices on the basis of the resolutions of the associations respectively, and further affect rights and benefits of consuming public of Tainan City and Kaohsiung City. These risks should be believed to be sufficient to affect the supply and demand of the bicycle assembly and repair market in Tainan City and Kaohsiung City respectively. Thus, the associations' acts were found to violate Article 14(1) of the Fair Trade Law, which prohibits concerted actions. Accordingly, these two associations should cease the unlawful acts immediately and an administrative fine amounting to NT$ 100,000 was imposed on each of them pursuant to the fore part of Article 41 of the Fair Trade Law.

Summarized by Lin, Hui-Mei; Supervised by Wu, Lieh-Ling