Taiwan Diesel Association

Case:

TDA violated the Fair Trade Law by setting a price list

Key Word(s):

Taiwan Diesel Association, price list, illegitimate practice

Reference:

Fair Trade Commission Decision of December 11, 2013 (the 1153rd Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 102207

Industry:

Power Generation, Transmission and Distribution Machinery Manufacturing (2810)

Relevant Law(s):

Article 19 of the Fair Trade Law

Summary:

1. The Public Construction Commission forwarded to the FTC a letter from a business about being requested by Taiwan Diesel Association (hereinafter referred to as TDA) to establish a price list for its service charges and therefore concerted price increase was suspected. After assessing likely effects on the competition order of the market, the FTC initiated an ex officio investigation.
2. Findings of the FTC after investigation:
   

   (1)

   The FTC visited randomly selected TDA members to understand the situation of the industry and look into related facts. The findings of the FTC were as follows: (i) TDA was founded in 2007 and the chairperson was elected to serve a 3-year term. There were about 50 members at the time of investigation and the representative of the Diesel Square Enterprise Co., Ltd., (herein after as the offender), took office as TDA's chairperson in 2010. (ii) During TDA's June 2011 meeting, the first routine meeting of 2011, a member proposed that a price list should be established to solve the problem of uneven charges in the market. Afterward, according to the prices of original diesel engine makers and his own business experience, the representative of the offender calculated the work hours needed for repair services provided at the time and listed out the corresponding amounts. Then he faxed the price list to all the members of TDA and asked those with opinions to fax their opinions back to his fax number. As a result, the chairperson revised the price list and sent it to each member by mail and some members started to charge for their services in the beginning of 2012 accordingly.

   (2)

   The FTC sent a written request to the telecom company who provides service to the offender for the personal information of the user of the said fax number and correspondence records. The outcome confirmed that the offender was the user and faxes had indeed been sent from the number to TDA members in November, 2011.

3. Grounds for disposition:
   

   (1)

   The said price list included charges for repairs of diesel engines of commonly seen models. Among the 100 or so diesel engine repair shops in the country, at least 51 of them were TDA members. Meanwhile, according to the FTC's inspection on the billing records of the members questioned, many of the charges collected were indeed consistent with the rates on the price list whereas many of the members questioned also admitted to setting their prices either based upon the price list or using the price list as a reference or making price negotiations with customers according to the price list. As for the offender, he also operated a diesel system repair service. His business ranked among the top repair shops in the market and accounted for a significant proportion of the market share. Under such circumstances, the price list established was undoubtedly able to influence the service price decisions of diesel engine repair shops and to make competitors or potential competitors not to engage in price competition. Such conduct substantively weakened price competition on the domestic diesel engine repair service market and had to be considered likely to restrict competition or impede fair competition.

   (2)

   The price list was titled "TDA Pump and Injector Nozzle Repair Price List" and it was distributed to the 51 TDA members. Being the TDA chairperson, the representative of the offender established the price list on his own and then sent it via fax to the members to solicit opinions to create the facade that the price list was the result of the members' mutual understanding after discussion so that the members would adopt the price list. It was an illegitimate practice carried out to urge other businesses not to engage in price competition. The conduct was likely to restrict competition or impede fair competition and was therefore in violation of Article 19(iv) of the Fair Trade Law.

Appendix:
Diesel Square Enterprise Co., Ltd.'s Uniform Invoice Number: 04482845

Summarized by Liuh,Yu-Chuan; Supervised by Wu, Lieh-Ling