Thefore Energy Inc. and Weiduoli LPG Co., Ltd.

Case:

Key Words:

refrain from price competition, not in competition for customers, sanctions in accordance with applicable laws

Reference:

Fair Trade Commission decision of January 27, 2010 (the 951st Commissioners' Meeting); Disposition (99) Kung Ch'u Tzu No.016, 017, 018, and 019

Industry:

Other Fuel Retailers (4829)

Relevant Laws:

Subparagraph 4 of Article 19 the Fair Trade Law

Summary:

1. Thefore Energy Inc. (hereinafter referred to as Thefore), Taipei County Liquefied Petroleum Gas Association (hereinafter referred to as Taipei County LPG Association), Weiduoli LPG Co., Ltd. (hereinafter referred to as Weiduoli), and 4 other businesses jointly applied illegitimate measures to urge the LPG retailers in several districts in the greater Taipei area to rise the retail prices of bottled LPG, to refrain from price competition, and not to compete for customers. The conduct was a restriction on market competition and detrimental to fair competition and was therefore in violation of Subparagraph 4 of Article 19 of the Fair Trade Law. The FTC reached its decision at the 853rd Commission Meeting on March 13, 2008 and ordered the said organizations and businesses via Disposition Kung Ch'u Tzu No.0970944 to terminate the said illegal conduct immediately. The FTC also fined Thefore 25 million NT dollars (the same currency applies hereafter,) Taipei county LPG Association 25 million dollars, and Weiduoli 1 million dollars. In addition, according to the Administrative Penalty Act, Chairman of Taipei County LPG Association Gao Wansheng, Secretary General Peng Shuzhen, Theofore Vice General Manager Jiang Guoying were also each fined 1 million dollars, and the actual ownerr Lyu Hongtao of Weiduoli was fined 100 thousand dollars.
2. The aforementioned offenders found the sanctions unacceptable and appealed to the Executive Yuan. The Executive Yuan revoked the original sanctions on the grounds that:
   1. Was the violation by Jiang Guoying the result of the decision of Taipei County LPG Association or Thefore, and to whose advantage was the violation contributed?
   2. Should the conduct of Gao Guosheng and Peng Shuzhen be interpreted as the conduct of Taipei County LPG Association?
   3. As Lyu Hongtao was not legally in charge of Weiduoli, should he be considered, in accordance with the regulation of the Fair Trade Law, responsible for what Weiduoli has done just because he was the actual owner of Widuoli?
3. Findings of the FTC from further investigation after revocation of the original sanctions:
   1. Jjiang Guoying, Gao Wansheng, and Peng Shuzhen made use of the LPG Association's district organization system and contacted with the director of each district or contact person to get in touch with the local LPG retailers. Meetings were held intensively in the month of November in 2007 and the LPG retailers were requested to rise the retail price of each business-use 20kg bottled LPG by 20 dollars to 700 dollars. It was also agreed that the retailers would refrain from competing for customers. After the meetings, Jiang Guoying also demanded through telephone calls or paying visits at shops that refused to cooperate to make the price increase. The price of business-use bottled LPG did later rise to 700 dollars per bottle in several districts in the great` Taipei area. As a result, the price of household-use bottled LPG also went up in some places.
   2. The person legally in charge of Weiduoli confirmed the co-ownership with Lyu Hongtao. As the representative of Weiduoli, Lyu Hongtao assumed the directorship of a district in Taipei County LPG Association. Therefore, he did represent Weiduoli.
   3. Taipei County LPG Association claimed that it had nothing to do with the price increase of business-use bottled LPG in the greater Taipei area after Chairman Gao Guosheng and Secretary General Peng Shuzhen attended the meetings at the end of 2007, and Thefore made the same claim regarding its Vice General Manager Jiang Guoying.
4. Reasoning for Taipei County LPG Association and Thefore's behaviors:
   1. Thefore: The FTC's further investigation did not find concrete evidences that were sufficient to prove Jiang Guoying had attended the said meetings on behalf of Thefore. Besides, Jiang Guoying also claimed to have attended the said meetings out of personal decision. Therefore, the FTC could not prove Thefore was involved in the violation of the Fair Trade Law.
   2. Taipei County LPG Association: The FTC's further investigation did not find concrete evidences that were sufficient to prove Gao Wansheng and Peng Shuzhen had carried out the conduct under the authorization of Taipei County LPG Association. Besides, Gao Wansheng and Peng Guozhen also claimed that they had attended the said meetings out of personal decision. Therefore, the FTC could not prove Taipei County LPG Association was involved in the violation of the Fair Trade Law.
5. Grounds for Disposition against Jiang Guoying, Gao Wansheng, Peng Shuzhen, and Lyu Hongtao:
   1. Jiang Guoying, Gao Wansheng, and Peng Shuzhen acted on their own decision and collaborated with enterprises (individuals) to jointly apply illegitimate measures to urge the LPG retailers in several districts in the greater Taipei area to rise the retail prices of bottled LPG, to refrain from price competition, and not to compete for customers. The conduct was in violation of Subparagraph 4 of Article 19 of the Fair Trade Law. According to Paragraph 1 and Paragraph 2 of Article 14 of the Administrative Penalty Act, the FTC fined each of the offenders 1 million dollars. Their non-enterprise status could not exempt themselves from obligations of Administrative Penalty Act.
   2. Lyu Hongtao did represent Weiduoli when he carried out the said conduct and led to Weiduoli's violation of Subparagraph 4 of Article 19 of the Fair Trade Law and punishment in accordance with the first section of Article 41 of the same law. Therefore, in line with Paragraph 1 and Paragraph 3 of Article 15 of the Administrative Penalty Act, Lyu Hongtao was also fined 100 thousand dollars according to the fine provided by the first section of Article 41 of the Fair Trade Law.

Summarized by: Wang,Hung Chu Supervised by: Sun,Ya Chuan　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　
Appendix:
Thefore Energy Inc.' Unified Business No.: 80088772
Weiduoli LPG Co., Ltd.'s Unified Business No.: 35378590