Shanghai LPG Co., Ltd. & Safeway Gas Co., Ltd.

Case:

Key Words:

LPG, bottling plant, Jhushan Town

Reference:

Fair Trade Commission Decision of December 21, 2011 (the 1050th Commissioners' Meeting), Disposition Kung Ch’u Tzu No. 100263 and No. 100264

Industry:

Gas Supply (3520)

Relevant Laws:

Subparagraph (iv), Article 19 of the Fair Trade Law

Summary:

1. The FTC received an anonymous call on January 20, 2011 to complain that the LPG bottling plants in Jhushan had organized local LPG shops in mid-January and announced that the LPG price per bottle would be increased from NT$720 to NT$780 for businesses and from NT$750 to NT$820 for regular households starting on January 21. The FTC therefore initiated an ex officio investigation into the matter.
2. Findings of the FTC after investigation:
   (1) Testimonies made by the LPG shops in Jhushan:
   A. They had received notices about the meeting to be taking place at Safeway's Nantou Bottling Plant on January 13, 2011 from either Safeway Bottling Plant or Shanghai Bottling Plant. All the LPG shops getting their bottles refilled at the two said plants attended the meeting. During the meeting, the two plants displayed a suggested retail price list for various areas from the Bureau of Energy, Ministry of Economic Affairs and indicated that the reasonable prices for Jhushan area should be NT$820 per bottle for regular households and NT$780 for businesses.
   B. LPG shops that did not attend the meeting at Safeway's Nantou Filling Plant but was invited to the gathering at Da Tou (transliteration) Seafood Restaurant later on confirmed that the manager of Safeway's Nantou Bottling Plant indeed cited the aforesaid prices.
   C. Other LPG shops that received notices about the meeting at Safeway's Nantou Bottling Plant but did not attend admitted that they were indeed notified to make the price increase on January 21.
   (2) The LPG shops directly operated by Shanghai Bottling Plant made the price increase on January 20, 2011 and the majority of the remaining LPG shops in the area also followed suit one after another.
3. Grounds for disposition:
   (1) Both bottling plants denied having organized the LPG shops. However, in response to the government's price freeze policy, upstream LPG suppliers had announced that they would not raise the prices of gasoline and LPG in January 2011. Moreover, as the LPG shops ran their business on various scales at different management costs, it was impossible for them to make almost exactly the same price adjustment at about the same time even if some of them had certain cost burden (such as bottle inspection fees and purchases of new bottles) in common. Undoubtedly, the two bottling plants had something to do with the meeting of the LPG shops on January 13, 2011.
   (2) By displaying the suggested LPG retail prices for the central region from the Bureau of Energy as ranging between NT$784 to 846, the two bottling plants indicated that the raise of price per bottle for the Jhushan area from NT$750 to NT$820 for regular households and from NT$710 to 780 for businesses was within the suggested price range and thus reasonable, and they therefore instructed the LPG shops to begin the price raise on January 20 or 21.
   (3) After the meeting at Safeway's Nantou Bottling Plant on January 13, 2011, the two LPG shops directly operated by Shanghai Bottling Plant acted according to the price increase decision and made the raise as scheduled (on January 20) to mark up the price per bottle to NT$820 for regular households and to NT$750~770 for businesses. They confessed to have notified the shops they were familiar with about the amounts and time of the increase. Meanwhile, Safeway Bottling Plant also informed its LPG shops on January 20 that the price adjustment will become effective the next day. All the above indicated the intention of the two bottling plants to cause other LPG shops to go along with the price increase.
   (4) Even the LPG shops that did not attend the meeting held at Safeway's Nantou Plant on January 13 were notified later by the two bottling plants about the increase.
   (5) The improper practices employed by Shanghai Bottling Plant and Safeway Bottling Plant to push the LPG shops in Jhushan, Nantou to increase the LPG retail price per bottle and refrain from price competition was restriction on market competition and impediment to fair competition in violation of Subparagraph 4, Article 19 of the Fair Trade Law. The Commission imposed on the two plants an administrative fine of NT$750,000 and NT%1,500,000 respectively.

Appendix:
Shanghai LPG Co., Ltd.'s Uniform Invoice Number: 00021407
Safeway Gas Co., Ltd.'s Uniform Invoice Number: 86927084

Summarized by Chang, Ching-Yi; Supervised by Sun, Ya-Chuan