Shine-Mei Foods Co., Ltd

Case:

Key Words:

maintain resale price, minimum price, retail outlet, soybean milk

Reference:

Fair Trade Commission Decision of June 20, 2012 (at the 1076th Commissioners' Meeting), Disposition Kung Ch'u Tzu 101076

Industry:

Wholesale of Other Foods (4549)

Relevant Laws:

Article 18 of the Fair Trade Law

Summary:

1. When surveying daily commodity price fluctuations, the FTC discovered that Shine-Mei Foods Co., Ltd. (hereinafter referred to as Shine-Mei Foods) had notified by email its downstream retailers to adjust the promotional prices for 2L I-Mei soybean and rice milk to at least NT$55; otherwise, the company would immediately suspend the supply of the products and its cooperation in the promotional activities. As the content of the email was in violation of the regulation against resale price maintenance, the FTC therefore initiated an ex officio investigation.
2. Findings of the FTC after investigation:
   Being common breakfast items for a lot of Taiwanese, soybean milk and rice milk (soybean drink and rice drink for other brands) are must-have items for hypermarkets. Some of the downstream retailers of Shine-Mei Foods that were interviewed by the FTC confirmed having received the aforesaid email and consequently increased the prices of the concerned products to the level specified by Shine-Mei, 55 NT dollars (the same currency applies hereinafter), for fear of having the supply suspended. As a result, after March 2012, the promotional prices for the said products became 55 dollars. Another finding of the investigation showed that some retailers did not receive the email but there was an oral notice from Shine-Mei Foods to demand them to raise the prices. The employees of Shine-Mei Foods that delivered the products to different retail outlets would check the price tags and the supply would be suspended if a retailer was found failing to comply with the demand of Shine-Mei Foods. In order to have the products supplied normally, retailers had no choice but to sell the products at the promotional prices determined by Shine-Mei Foods. Meanwhile, other retailers indicated that upstream suppliers sometimes would raise prices to put a restriction on the promotional prices of hypermarkets.
3. Grounds for disposition:
   1. The main business operation of Shine-Mei Foods is selling frozen and refrigerated products purchased from I-Mei Foods Co., Ltd., I-Mei's soybean and rice milk products being included. Another finding showed that the promotional prices for 2L I-Mei soybean milk and rice milk at the major retail outlets in January and February of 2012 ranged between 49 and 60 dollars but most of them became over 55 dollars after March of the same year. Shine-Mei Foods admitted having given the notice either through email or orally to the hypermarkets, supermarkets, and other retailers, including several retail outlets that were popular among consumers. The FTC's investigation confirmed that the promotional prices of 2L I-Mei soybean and rice milk were mostly over 55 dollars starting from March 2012.
   2. After assessment, the FTC decided that the conduct of Shine-Mei Foods to demand through email or orally hypermarkets, supermarkets, and other retailers to sell I-Mei's soybean and rice milk products at prices not any lower than the minimum price the company determined was a restriction on the freedom of the downstream retailers to set their own prices according to the competition they faced on the market and their management strategies. The conduct reduced the intra-brand price competition between different retail outlets and thus was in violation of Article 18 of the Fair Trade Law. In addition to ordering Shine-Mei Foods to cease the unlawful act, the FTC also imposed an administrative fine of 1,000,000 dollars on the company.

Summarized by: Tsai, Hui-Chi; Supervised by:Hung, Shui-Hsing

Appendix:
Shine-Mei Foods Co., Ltd.'s Uniform Invoice Number: 22345387