Commonwealth Publishing Co., Ltd.

Case:

Key Words:

bookstore, online sales

Reference:

Fair Trade Commission Decision of September 19, 2012 (the 1089th Commissioners' Meeting), Disposition Kung Ch'u Tzu No. 101137

Industry:

Book Publishing (5813)

Relevant Laws:

Article 18 of the Fair Trade Law

Summary:

1. An individual informed the FTC via email that when marketing the book "Steve Jobs", Commonwealth Publishing Co., Ltd. (Commonwealth Publishing) demanded all bookstores to sell the book at the price of NT$599, the special offer price, and give no further discount; otherwise their supply of the book would be cut off by Commonwealth Publishing. The practice was a typical resale prices maintenance practice which was in violation of the Fair Trade Law. Initially, the FTC surfed the websites of books.com, Kingstone, and Eslite, the three major online bookstores in the country, and found that their retail price for the book was indeed all NT$599. It seemed that Commonwealth Publishing did impose a resale price restriction on online bookstores. Hence, the FTC initiated an ex officio investigation.
2. Findings of the FTC after investigation:
   (1) Commonwealth Publishing had signed with two online bookstores, PChome Online Inc. and cite Publishing Co., Ltd., an agreement in which both sides agreed that the resale price for the book would be NT$599 and the bookstores were disallowed to lower the price or offer any discount; otherwise, Commonwealth had the right to file a lawsuit, cancel the distributorship for the book, as well as seek damage compensation.
   (2) PChome Online Inc. confirmed that it had sold every copy of the book at the price suggested by Commonwealth Publishing and cite Publishing Co., Ltd. said the same thing.
   (3) Commonwealth Publishing expressed that it had established the agreement with the two aforesaid companies mainly as a statement that it would not provide any further offer if any bookstore should sell the book at prices lower than NT$599 or give bigger discounts.
3. Grounds for disposition:
   The agreement Commonwealth Publishing established with PChome Online Inc. and cite Publishing Co., Ltd., specified that the resale price for the book had to be NT$599 and provisions on handling of breach of the agreement were also stipulated. This meant that intra-brand price competition between different distributors would be impaired and this deprived the distributors of their freedom to determine their resale price and also damaged the price competition mechanism of the market. The conduct of Commonwealth Publishing violated Article 18 of the Fair Trade Law. Therefore, the FTC followed the first section of Paragraph 1, Article 41 of the same law and ordered Commonwealth Publishing to immediately cease the unlawful act, and also imposed on the company an administrative fine of NT$200,000.

Appendix:
Commonwealth Publishing Co., Ltd.'s Uniform Invoice Number: 20905449

Summarized by: Wang, Hsing-Yuan; Supervised by: Yang, Chia-Hui