1134th Commissioners' Meeting (2013)
Case:
FCFC and FPC violated the Fair Trade Law by cutting sodium sulfate supply
Key Word(s):
Chemical material, sodium sulfate, caustic soda
Reference:
Fair Trade Commission Decision of July 31, 2013 (the 1134th Commissioners' Meeting); Dispositions Kung Ch'u Tzu No.102118 and No.102119
Industry:
Basic Chemical Material Manufacturing (1810)
Relevant Law(s):
Article 10(iv) of the Fair Trade Law
Summary:
| (1) | The duration of business relations and the amounts and frequency of sodium sulfate transactions between the complainant and FCFC indicated that the complainant would need continuous supply of sodium sulfate from FCFC as there was no drastic change in the supply and demand of the domestic sodium sulfate market. For this reason, the excuse of FCFC that it had stopped supplying the complainant because the complainant had not placed further orders was unjustifiable. In the meantime, FCFC also claimed that it had been unable to supply sodium sulfate to the complainant due to its sodium sulfate production rearrangement as a result of reduced production of rayon staple fiber. However, the FTC's investigation showed that the sodium sulfate production of FCFC in August, 2012 had been greater than in the production of the same month the previous year. Apparently, there had been no decrease in sodium sulfate supply. Another finding also indicated that FCFC had continued to supply sodium sulfate to other main trading counterparts after August 1, 2012. The sodium sulfate supply provided to these businesses had never been stopped because of the said production rearrangement. Therefore, FCFC had cut sodium sulfate supply to the complainant without justification.
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| (2) | Meanwhile, FPC claimed that it had decided to stop selling to the complainant because the complainant had failed to order the agreed quantity of caustic soda. An inspection of the company's statistics on the sales of caustic soda chips and granules to its major trading counterparts in 2012 indicated that, besides the complainant, other businesses had also ordered less or more than agreed quantities, meaning that the complainant's failure to order the agreed quantity had not been unusual at all. Meanwhile, between 2009 and the third quarter of 2012 the complainant had made monthly purchases from FPC sometimes less than the agreed quantity while sometimes more than the agreed quantity. In other words, during that period, the complainant had not only ordered less than the agreed quantity. If FPC had thought the complainant's failure to order the agreed quantity had had an impact on its normal operation, it could have taken appropriate business measures and notified the complainant to order the agreed quantity each quarter or even requested the complainant to compensate for its loss resulting from the complainant's failure to order the agreed quantity. However, instead of choosing a measure advantageous to both sides, FPC had suddenly decided to cut its supply to the complainant and created a serious impact on the complainant's business. Moreover, FPC had never taken the same action against other trading counterparts failing to order agreed quantities. It was obviously unfair that FPC had discontinued its caustic soda supply to the complainant without justification. |
| (1) | The duration of the complainant's business relations with FCFC and FPC and the amounts it had purchased proved that the complainant had been a major trading counterpart of FCFC in sodium sulfate and of FPC in caustic soda. However, both FCFC and FPC abused their monopolistic status respectively in the domestic sodium sulfate and caustic soda markets and unilaterally cut their supply of sodium sulfate and caustic soda to the complainant without justification. Despite that the complainant had been able to obtain such materials temporarily from other trading counterparts of FCFC and FPC and continued to supply its own customers, the complainant's sales of sodium sulfate and caustic soda had dropped as a result of discontinuation of supply by FCFC and FPC. Since there existed no substitutive products for the said materials, the refusal of FCFC and FPC to continue doing business with the complainant had obviously been intended to hurt the complainant and the complainant's business operation costs (supply unit price and transportation cost) and risks (the aforesaid indirect suppliers suddenly stopping supply for fear of becoming involved in the supply dispute between the complainant and FCFC and FPC) had thus gone up. Under such circumstances, the likelihood of the complainant becoming excluded from the competition in the domestic sodium sulfate and caustic soda markets had been greatly heightened.
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| (2) | After assessing the motives of FCFC and FPC in engaging in the illegal conducts and the unlawful gains they expected from the said conduct, the level of damage incurred to trading order, and the duration of such damage, the FTC ordered the two companies to immediately cease their unlawful acts and also imposed administrative fines of NT$ 3 million on FCFC and NT$ 2 million on FPC respectively. |
Appendix:
Formosa Chemicals & Fibre Corporation's Uniform Invoice Number: 58650902
Formosa Plastics Corporation's Uniform Invoice Number: 75708007
Summarized by Chen, Haw-Kae; Supervised by Lin, Gin-Lan