39 Enterprises Engaging in Joint Shipment of Wheat Imports

Case:

39 enterprises engaging in joint shipment of wheat imports was complained for violating the Fair Trade Law by disregarding conditions attached to FTC's approval of their concerted action by refusing Jing Zhong Enterprise and Taiwan Grains to be part of the operation

Key Word(s):

Wheat, joint shipment, exceptional approval

Reference:

Fair Trade Commission Decision of November 26, 2014 (the 1203rd Commissioners' Meeting

Industry:

Manufacture of Grain Mill Products (0862)

Relevant Law(s):

Article 14 of the Fair Trade Law

Summary:

1. Lien Hwa Industrial Corp. and 38 other enterprises engaging in joint shipment of wheat imports (hereinafter referred to as the 39 enterprises) refused Jing Zhong Enterprise Co., Ltd. (hereinafter referred to as Jing Zhong Enterprise) and Taiwan Grains Co., Ltd. (hereinafter referred to as Taiwan Grains) to be part of the joint operation of wheat import shipment (hereinafter referred to as the joint shipment of wheat imports). The FTC initiated an ex officio investigation to find out whether the decision was against the condition that "the 39 enterprises may not refuse other wheat importers to join the concerted action without justification" attached to the FTC's Letter Kung Lian Tzu No. 101007. At the same time, the requests from Lien Huei Co., Ltd. (hereinafter referred to as Lien Huei Co.) and Lu Cheng Trading Co., Ltd. (hereinafter referred to as Lu Cheng Co.) to the 39 enterprises for approval to be part of the joint shipment of wheat imports were also reviewed as part of the case.
2. Findings of the FTC after investigation:
   The 39 enterprises refused Jing Zhong Enterprise and others to be part of the joint shipment of wheat imports to prevent problems in slot space arrangement, warehousing facility allocation, shipment scheduling, and financial risk that could result from the uncertainty of these trading companies' wheat import quantities and difficult coordination of purchasing operations. However, the decision could be in violation of the condition attached to the FTC's Letter Kung Lian Tzu No. 101007. Therefore, the FTC visited the Taiwan Flour Mills Association (hereinafter referred to as TFMA) to explain the FTC's standpoint. Subsequently, the 39 enterprises presented the "Operating Regulations for Other Enterprises to Join the Joint Shipment of Wheat Imports" (hereinafter referred to as the Operating Regulations) and expressed that other trading companies could become part of the joint shipment of wheat imports in accordance with the Operating Regulations as long as the joint shipment could be smoothly operated. Jing Zhong Enterprise and the other trading companies all gave their consent.
3. Grounds for disposition:
   

   (1)

   Point 2 of the Operating Regulations specified the upper limit of purchase quantity for each ship that each new participant could register while a proviso regarding adjustment of the said upper limit was also attached. According to Point 2, the said upper limit for each new participant was 2% to 3.5% of the capacity of each vessel (about 800 to 1,400 tons if calculating the capacity of each vessel as 40,000 tons). The quota could meet the amount that Jing Zhong Enterprise and the other trading companies needed to bring in to supply Kinmen Kaoliang Liquor Inc. and Taiwan Tobacco and Liquor Corporation for their liquor production. Moreover, the proviso stipulated in the same point that the registered quantity for each vessel could be adjusted provided that domestic food supply and demand would not be affected made it evident that the regulation set forth in this point was aimed to maintain the stability of flour and food supply, not to control the total amount of specific businesses’ imports or restrict the freedom of such businesses to determine their quantity of imports. As for the remaining provisions in the Operating Regulations, they were internal regulations with regard to the current practices and requirements in joint shipment. Therefore, it is impossible to determine that the Operating Regulations is in violation of the condition attached to the Letter Kun Lian Tzu No. 103007 and therefore no violation of the Fair Trade Law was found. Hence, the FTC concluded that the incident was a matter of contractual autonomy in private law and it was inappropriate for the FTC to intervene.

   (2)

   After Jing Zhong Enterprise, Lien Huei Co. and Lu Cheng Co. joined the joint shipment of wheat imports according to the Operating Regulations, the 39 enterprises could no longer be considered in violation of the condition attached to the Letter Kung Lian Tzu No. 103007. Therefore, the FTC did not sanction the 39 enterprises.

Summarized by Wu, Hsin-Te; Supervised by Yang, Chia-Hui