3 Turkey Businesses

1125th Commissioners' Meeting (2013)

Case:

Turkey sellers violated the Fair Trade Law by engaging in concerted action

Key Word(s):

Concerted action, discontinuation of supply, turkey

Reference:

Fair Trade Commission Decision of May 29, 2013 (the 1125th Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 102098, No. 102099 and No. 102100

Industry:

Wholesale of Meat and Meat Products (4542)

Relevant Law(s):

Article 14 of the Fair Trade Law

Summary:

A private citizen filed a complaint on July 24, 2012 to the FTC about receiving a letter from the R.O.C. Turkey Association (hereinafter referred to as ROCTA) stating that "To adjust turkey production and marketing order, the association has accepted the suggestion regarding its supply from a number of turkey businesses and the majority of the members of the board of directors of the association have accordingly decided to discontinue supply of turkey poults to your farm temporarily. If there is a need for turkey poults, please contact us by phone and the supply will be resumed if the association approves your request."The complainant believed such conduct was in violation of the Fair Trade Law.

Findings of the FTC after investigation:

The FTC's investigation revealed that the complainant had distributed advertising flyers to many turkey rice venders around the country between May and July in 2012 to promote its turkey by offering prices lower than the market prices. As a result, some venders originally buying from the other five suppliers switched to the complainant. Some of the five suppliers lost two or three customers and their business operation was affected. To stop the complainant from engaging in price competition, the five suppliers requested the ROTCA to hold a meeting at Sin Gang Siang Yi Cultural Center Garden Restaurant in Singang Township, Chiayi County on July 20, 2012 to discuss the issue. To maintain turkey prices, the attending turkey business representatives made the decision collectively to request turkey poult suppliers to stop supplying the complainant and the ROCTA would send a written notice dated July 24, 2012 to the complainant. Meanwhile, three suppliers met again at the end of July 2012 to discuss discontinuation of turkey poult supply to the complainant. Although they did not reach any conclusion during the said meeting, their intention to "discontinue turkey poult supply"to stop the complainant from engaging in price competition was beyond doubt.

Grounds for disposition:

(1) The mutual understanding achieved in this case was to request turkey poult suppliers to stop their supplies provided to the complainant, not setting a price restriction on one another. However, according to the statements from the ROCTA, the complainant and one of the suppliers, the case was triggered by the complainant's price-cutting practice. The complainant had also been asked to consult and increase the prices according to the said turkey suppliers. Besides the turkey poult suppliers had also been requested to discontinue supplies provided to the complainant so that the complainant would have no product to sell eventually and this was aimed at forcing the complainant to negotiate and adjust its prices. The objective of such concerted action was to avoid price competition and the conduct met the description of jointly determining the price of goods or services in Article 7(1) of the Fair Trade Law.

(2) According to the Council of Agriculture, the total output of ROCTA members accounted for at least 85% of domestic turkey production, whereas the ROCTA said that the annual demand was about 230 thousand turkeys and the five suppliers at issue accounted for about 32.87% of the market share. To stop their competitor from engaging in price competition and as a result jeopardizing their business, the five suppliers therefore decided to request turkey poult suppliers to discontinue their supplies provided to the complainant so that turkey prices could be maintain at original levels. However, the practice restricted the price competition and affected the supply-demand function in the turkey market. It was a concerted action as described in Article 7 of the Fair Trade Law and in violation of Article 14(1) of the same law.

(3) Considering that the turkey poult suppliers did not actually discontinue their supplies provided to the complainant and the said practice was terminated without causing serious damage to the market while the five suppliers fully cooperated throughout the investigation and made no further effort to engage in similar conduct, the FTC acted according to the first section of Article 41(1) of the Fair Trade Law, ordered the said parties to immediately cease their unlawful conduct and also imposed an administrative fine of NT$50,000 on each of them.

Summarized by Kuo, An-Chi; Supervised by Chiou, Shwu-Fen

! : For information of translation, click here

(1)	The mutual understanding achieved in this case was to request turkey poult suppliers to stop their supplies provided to the complainant, not setting a price restriction on one another. However, according to the statements from the ROCTA, the complainant and one of the suppliers, the case was triggered by the complainant's price-cutting practice. The complainant had also been asked to consult and increase the prices according to the said turkey suppliers. Besides the turkey poult suppliers had also been requested to discontinue supplies provided to the complainant so that the complainant would have no product to sell eventually and this was aimed at forcing the complainant to negotiate and adjust its prices. The objective of such concerted action was to avoid price competition and the conduct met the description of jointly determining the price of goods or services in Article 7(1) of the Fair Trade Law.
(2)	According to the Council of Agriculture, the total output of ROCTA members accounted for at least 85% of domestic turkey production, whereas the ROCTA said that the annual demand was about 230 thousand turkeys and the five suppliers at issue accounted for about 32.87% of the market share. To stop their competitor from engaging in price competition and as a result jeopardizing their business, the five suppliers therefore decided to request turkey poult suppliers to discontinue their supplies provided to the complainant so that turkey prices could be maintain at original levels. However, the practice restricted the price competition and affected the supply-demand function in the turkey market. It was a concerted action as described in Article 7 of the Fair Trade Law and in violation of Article 14(1) of the same law.
(3)	Considering that the turkey poult suppliers did not actually discontinue their supplies provided to the complainant and the said practice was terminated without causing serious damage to the market while the five suppliers fully cooperated throughout the investigation and made no further effort to engage in similar conduct, the FTC acted according to the first section of Article 41(1) of the Fair Trade Law, ordered the said parties to immediately cease their unlawful conduct and also imposed an administrative fine of NT$50,000 on each of them.