Formosa Oilseed Processing Co., Ltd. And 7 other Enterprises

Case:

Key Words:

soybean, shared shipping of procurement

Reference:

Fair Trade Commission Decision of July 22, 2009 (the 924th Commissioners' Meeting), Disposition Kung Lian Tzu No. 098004 of July 22, 2009

Industry:

Edible Oils and Fats Manufacturing (0840)

Relevant Laws:

Article 14(1)(v) and 15(2) of the Fair Trade Law

Summary:

1. Formosa Oilseed Processing Co., Ltd. (hereinafter referred to as Formosa) and other enterprises filed a concerted action application to the FTC for shared shipping of soybean procurement in June 2000, which was approved in the resolution of the 458th Commissioners' Meeting on August 18, 2000. The extension application for such approval was successively granted on August 21, 2003 in the 615th Commissioners' Meeting and August 17, 2006 in the 771st Commissioners' Meeting with the last approval to expire on August 31, 2009. In order to reduce import procurement costs and have a smoother unloading process to stabilize the quality of the imported raw materials, Taisun Enterprise Co., Ltd., Fwu Sow Industry Co., Ltd., Central Union Oil Corp., Ton Shun Industry Co., Ltd., Ta Mei Trade Co., Ltd., Ta Ting Hang Ltd., and Chang Chi Foodstuff Factory Co., Ltd. entrusted Formosa as the representative of all eight companies to file an extension application to the FTC for the approval of shared shipping of soybean procurement.

2. Findings of FTC after investigation: It is a free and open market for soybean importation where the qualifications and quantity of importation are both not restricted. Enterprises may freely select to apply for importation via shared shipping with other enterprises, via cargos by themselves, or in parcels directly from the grain suppliers. Currently there are two groups of shared shipping that have been approved by the FTC, one of which is the central Taiwan group represented by Formosa, and the other of which is the southern Taiwan group represented by TTET Union Corporation. There are also enterprises that choose to purchase and import soybeans by themselves or from the grain suppliers in parcels. Due to the increased international shipping rates, the aforementioned enterprises who used shared shipping started to select cargoes for transportation in order to reduce the costs. The percentage of using cargoes is gradually increasing. According to the statistics, with regard to the total import quantity of soybeans in 2006, 2007, and 2008, the percentage of the total quantity of soybeans imported via shared shipping by Formosa and 7 other enterprises in this case (excluding the quantity of importation via cargoes by individual enterprises) was not very high.

3. Grounds for approval:
   (1)Pursuant to Article 14(1) of the Fair Trade Law, "no enterprise shall have any concerted action; unless the concerted action that meets one of the following requirements is beneficial to the economy as a whole and in the public interest, and the application with the central competent authority for such concerted action has been approved : …5. joint acts in regards to the importation of foreign goods for the purpose of strengthening trade…." Article 15 of the same law further provides that "the central competent authority may attach conditions or require undertakings in the approval it grants pursuant to the provisions of the preceding article. The approval shall specify a time limit not exceeding three years. The enterprises involved may, with justification, file a written application for an extension thereof with the Central Competent Authority within three months prior to the expiration of such period; provided, however, that the term of each extension shall not exceed three years."
   (2)By extending the approval of shared shipping of soybean procurement, Formosa and 7 other enterprises may reduce the import costs, storage loss, burden of capital backlog and interests, and procurement risks. The extension would therefore benefit the overall economy and public interest in compliance with Articles 14(1)(v) and 15(2) of the Fair Trade Law and should be granted. The extension will be valid through August 31, 2012. However, to avoid the applicants from exploiting this approval in terms of the applicants' internal and external transactions and to convenience the FTC supervision, the FTC also required additional undertakings. The applicants were required to submit a quarterly execution report of this concerted action in writing to the FTC with regard to each importer's registered procurement quantity, actual procurement quantity, procurement loading date, loading port name, date when the ship arrives the loading port, date when the ship departs from the loading port, date when the ship arrives our domestic port, procurement price, each importer's quantity of monthly import, processing, sales, and stocks. In addition, the applicants may not exploit this approval and engage in other concerted actions, such as controlling the total procurement quantity and distributing quotas, or prevent any applicant from freely deciding its procurement quantity, or prohibit any applicant from self procuring and importing wheat, or refuse other enterprises to participate in this concerted procurement without a justifiable ground. Moreover, a report shall be made to the FTC for any changes in the applicants of this concerted action. The applicants shall not exploit their market position obtained through this approval and make improper decisions on, maintain, or alter the prices, impede the fair competition of other enterprises, or engage in other behaviors exploiting their market position.

Appendix:
Formosa Oilseed Processing Co., Ltd.'s Uniform Invoice Number: 22102298
Taisun Enterprise Co., Ltd.'s Uniform Invoice Number: 59661701
Fwu Sow Industry Co., Ltd.'s Uniform Invoice Number: 56192402
Central Union Oil Corp.'s Uniform Invoice Number: 89480404
Ton Shun Industry Co., Ltd.'s Uniform Invoice Number: 56248004
Ta Mei Trade Co., Ltd.'s Uniform Invoice Number: 22148597
Ta Ting Hang Ltd.'s Uniform Invoice Number: 76483097
Chang Chi Foodstuff Factory Co., Ltd.'s Uniform Invoice Number: 52470087

Summarized by Chiang, Hui-Yi; Supervised by Yang, Chia-Hui