Taichung City Driving School Association

Case:

Key Words:

Association, Taichung Driving School Association, driving school

Reference:

Fair Trade Commission decision of June 23, 2010 (the 972nd Commissioners' Meeting); Disposition Kung Ch'u Tzu No.099077

Industry:

Unclassified Organizations (9499)

Relevant Laws:

Subparagraph 1 of Article 14 the Fair Trade Law

Summary:

1. The FTC received an anonymous letter informing that the joint operation or joint operation in disguise to monopolize the driving training market by Taichung City Driving School Association (hereinafter referred to as the Association) was detrimental to the interests of consumers. Accordingly, the Association charged the members a membership fee in line with the ratio of the number of students enrolled at each driving school. Any schools accepting excessive students would be fined a punitive amount of money as the mutual aid fund whose purpose is to subsidize the ones with substandard enrollments. Through the supervisory mechanism, the Association requested the members to abide by established regulations of the Association and charge tuitions at a unified rate. The conduct was in violation of both Article 14 of the Fair Trade Law that prohibits concerted actions and Subparagraph 4 of Article 19 that forbids restriction of competitive activities by coercion.
2. Findings of the FTC after investigation:
   1. The FTC’s investigation revealed that the Association was not a trade union established in accordance with the Commercial Group Act, although its members had all applied to the competent authority of highway administration for permission to operate and acquired their business certificates for student recruitment. They did not need to register in pursuance to the Business Registration Act or register as profit-making operations. However, as they charge tuitions in exchange for driving training services, their operations meet the definition of "enterprise" – "any other person or organization engaging in transactions through the provision of goods or services" as prescribed in Subsection 4 of Article 2 of the Fair Trade Law.
   2. The Association had 25 members, 15 in Taichung City and 10 in Taichung County. 23 of them participated in the said concerted action, accounting for about 70% of the 33 driving schools in the Taichung County and Taichung County. The said 23 driving schools decided the mutual aid fund system under the arrangement of the Association. Each of them was required to sign an affidavit for the aforementioned fine payment and collection of the mutual aid fund. The agreed restriction on their business activities had an impact on the driving training market in Taichung County and Taichung City and led to the decrease of interest in offering better prices, quality and service to attract trading counterparts on the market. The conduct is sufficient to affect the supply-demand function of the market.
3. Grounds for Disposition:
   1. The Fongjia Private Driving School of Taichung City and 22 other driving schools jointly decided the mutual aid fund system through the Association. By so doing, they also established tuition criteria and a supervisory mechanism to mutually restrict the prices and amounts of service to be provided. The conduct had a detrimental effect on the supply-demand function of the driving training service market in Taichung County and Taichung City. It was considered a concerted action as prescribed in the Fair Trade Law and in violation of Subparagraph 1 of Article 14 of the Fair Trade Law.
   2. Fongjia and Siyuan Driving Schools were fined NTD200,000 each. Jhongshan, Jhongtai, Shichuan, Shihua, Liming and Shude were fined NTD150,000 each. Gaosu and Lingdong were fined NTD120,000 each. Dasin, Yuantai, Taichung City Huaci, Donghai, Huajiang, Guofong and Rueilian were fined NTD100,000 each. Dacian, Datong, Dafong, Taichung County Huaci, Siouping and Fongnian were fined NTD50,000 each. The total fine was NTD2.54 million.

Summarized by: Shen, Li-Wei Supervized by: Liou, Chi-Jung