Bao Ning Neng Trading Co. Ltd. and 14 Others

1219th Commissioners' Meeting (2015)

Case:

Bao Ning Neng and 14 other businesses in violation of the Fair Trade Law

Keyword(s):

Medicines advertised on the radio, suggested price, pharmacy

Reference:

Fair Trade Commission Decision of March 25, 2015 (the 1219th Commissioners’ Meeting)

Industry:

Drugs and Medicines Manufacturing (2002), Chinese Medicines Manufacturing (2004)

Relevant Law(s):

Paragraph 1 of Article 14 of the Fair Trade Law (Paragraph 1 of Article 15 of the current version)

Summary:

  1. Bao Ning Neng Trading Co., Ltd. and 14 other businesses were sanctioned by the FTC for violating the Fair Trade Law and appealed the above sanctions. Taipei High Administrative Court revoked the fines imposed on the said businesses and ruled that the FTC shall conduct a de novo review and make another appropriate decision.

  2. Findings of the FTC after investigation:

    An earlier investigation revealed that the “Yong Jian Medicine Advertising Association” (hereinafter referred to as Yong Jian Association) was formed by dozens of pharmacies designated by radio stations running medicine advertising programs in Kaohsiung County, Kaohsiung City and Pingtung County before the administrative reorganization. The association held a routine meeting every three months. The purpose was to monopolize sales of medicines advertised on the ratio and control the prices. The organization also achieved a mutual understanding to maintain the prices of the medicines advertised in the region. It was a concerted action to constrain each other’s business activities. In addition, during the investigation the FTC also found out that upstream suppliers had also attended the routine meetings of Yong Jian Association and each upstream supplier was required to pay an annual fee of NT$12,000. Meanwhile, these upsteam suppliers also organized the “Advertised Medicine Suppliers Association” (hereinafter referred to as Suppliers Association) which was in violation of the Fair Trade Law. As a consequence, the FTC decided at its 895th Commissioners’ Meeting on Dec. 31, 2008 that the 53 member pharmacies of “Yong Jian Association” and 16 member suppliers of the “Suppliers Association” had violated the regulation prohibiting concerted actions set forth in Article 14 of the Fair Trade Law at the time and administrative fines were imposed on the said parties. Bao Ning Neng and 15 other members of “Suppliers Association found the sanctions unacceptable and appealed to the Executive Yuan. Among the offenders, Da Tian Pharmaceutical Co., Ltd. never filed further administrative suit after the appeal was rejected by the Executive Yuan. But Bao Ning Neng Trading Co., Ltd. and the other 14 members of the “Suppliers Association” appealed further to Taipei Administrative Court. Taipei Administrative Court revoked the fines and instructed the FTC to make another legally sound decision.

  3. Grounds for disposition:

    The fines imposed were decided by the FTC de novo mainly because of the following considerations:

    (1) Bao Ning Neng Trading Co., Ltd. and the other members of the “Suppliers Association” had intentionally engaged in the aforementioned concerted action. To prevent downstream pharmacies from making price competition and brand competition on products recommended among one another, the “Suppliers Association” organized lunch and dinner meetings to jointly request the members of “Yong Jian Association” to sell medicines advertised on radio programs according to the suggested prices. There was no legitimate or justifiable purposes or motives for the concerted action at all. It was undertaken simply to maintain profits and the damage resulting from market competition restrictions was rather significant.
    (2) The said illegal conduct had lasted for several years.
    (3) Bao Ning Neng Trading Co., Ltd. and the other members of the “Suppliers Association” refused to admit they had engaged in any concerted action and never provided any information to help the FTC investigation.
    (4) Taking into account the capital and sales of each offender, as well as the individual income of each party involved, the FTC respectively imposed an administrative fine of 2.71 million NT dollars (same currency applies hereinafter) on Hitona Enterprise Co., Ltd., 1.41 million on Her Chi Pharmaceutical Co., 1.21 million on Xin An Enterprise Co., Ltd., 1.06 million on Concern Biotech Corp., 1.04 million on Jian Mei Pharmaceutical Co., Ltd., 930,000 on Shen Sheng Hua Enterprise Co., Ltd., 860,000 on Ou Chi Na Wa Co., Ltd., 390,000 on De Li Co., Ltd, 290,000 on Wu Xiang Xian Pharmaceutical Co., Ltd., and 100,000 on each of Bao Ning Neng Trading Co., Ltd., Lu Wang International Development Co., Ltd., Yang De Pharmaceuticals and Mr. Guo.

    Appendix:

    Hitona Enterprise Co., Ltd. 's Uniform Invoice Number: 86444469
    Her Chi Pharmaceutical Co.'s Uniform Invoice Number: 84605622
    Xin An Enterprise Co., Ltd.'s Uniform Invoice Number: 23865441
    Concern Biotech Corp.'s Uniform Invoice Number: 80451527
    Jian Mei Pharmaceutical Co., Ltd.'s Uniform Invoice Number: 84728217
    Shen Sheng Hua Enterprise Co., Ltd.'s Uniform Invoice Number: 12619582
    Ou Chi Na Wa Co., Ltd.'s Uniform Invoice Number: 16121698
    De Li Co., Ltd.'s Uniform Invoice Number: 69519681
    Wu Xiang Xian Pharmaceutical Co., Ltd.'s Uniform Invoice Number: 97061690
    Bao Ning Neng Trading Co. Ltd.'s Uniform Invoice Number: 97193257
    Lu Wang International Development Co. Ltd.'s Uniform Invoice Number: 12789410
    Yang De Pharmaceutical's Uniform Invoice Number: 90490400


    Summarized by Yeh, Su-Yen; Supervised by Lin, Gin-Lan