Cement Manufacturers

Cement Manufacturers

1230th Commissioners' Meeting (2015)

Case:

Taiwan Cement Corporation, Asia Cement Corporation and Southeast Cement was complained for violating the Fair Trade Law

Keyword(s):

Type II Portland cement, Taiwan Cement, Southeast Cement and Asia Cement

Reference:

Fair Trade Commission Decision of June 3, 2015 (the 1230th Commissioners’ Meeting), Letter Kung Zhi Tzu No. 1041360352

Industry:

Cement Manufacturing (2331)

Relevant Law(s):

Article 14 (Article 15 of the current version), Subparagraph 2 of Article 19 (Subparagraph 2 of Article 20 of the current version) and Article 24 (Article 25 of the current version) of the Fair Trade Law

Summary:

An informer stated that before participating in a tender put up by BES Machinery Co. Ltd. for procurement of Type II Portland cement in June, 2012, he had made an agreement with Southeast Cement for the latter to supply cement that will meet the quality requirements indicated in the test report as well as provide a sample to be presented with his bid.

On August 6, 2012, the informer won the tender by offering the price of NT$2,600 per ton and signed a contract with BES Machinery Co. Ltd. However, Southeast Cement refused to supply the cement and the informer had to purchase the cement needed from Asia Cement at a higher unit price. The informer thought Southeast Cement had refused to supply the cement as agreed earlier because a downstream distributor of Taiwan Cement had not been awarded the contract and Taiwan Cement therefore had threatened to “stop buying slag from Southeast Cement” and “stop supplying cement clinker and cement products to Southeast Cement” so that Southeast Cement will be coerced into compliance. For this reason, the informer filed the complaint with the FTC.

Grounds for non-disposition:

(1) Regarding the allegation that Taiwan Cement, Southeast Cement and Asia Cement had violated Article 14 of the Fair Trade Law at the time: The informer accused the three cement businesses of holding a meeting with respect to the Type II cement procurement project in question on August 14, 2012 and Southeast Cement refused to do transact with the informer consequently. The informer also provided the recordings of his five telephone calls with the staff members of Southeast Cement between August 14 and September 3 in 2012. However:

It was difficult to prove whether the consultation held between the three cement businesses on August 14, 2012 as mentioned in the telephone call recordings had really taken place. The FTC questioned Southeast Cement about the matter and the reply was the statement had been made to stop the informer from bothering the company any further. In addition, the three cement businesses all denied having had any consultation with regard to the Type II cement procurement project in question that caused Southeast Cement to refuse to do the transaction with the informer.

The telephone call recordings showed that the contents of the conversation had mostly been about hypothetical questions brought up by the informer and the staff members of Southeast Cement responded accordingly. In other words, the informer employed leading questions to express his subjective thinking and the replies given were mostly to brush him off. Therefore, it was difficult to use the telephone call recordings as evidence that the accused had really consulted to establish any concerted action.

After Southeast Cement refused to supply any cement, the informer turned to Asia Cement, who gave him a price quotation. Nevertheless, the informer decided not to purchase Type II cement from Asia Cement due to business considerations. If the three cement businesses had really held the alleged consultation regarding the Type II cement procurement project on August 14, 2012 that rendered the informer unable to fulfill his contract, Asia Cement’s offering the price quotation to the informer would have been contradictory to the alleged content of the telephone call recordings. In addition, Southeast Cement had never signed any Type II cement supply contract with the informer. Therefore, Southeast Cement did not have the obligation to supply Type II cement to the informer. This was pointed out in the related decision made by Kaohsiung District Court.

The FTC thought about checking whether a lot of telephone calls had been made between the above companies before and after August 14, 2012 in order to gather more evidences with regard to the alleged concerted action in question but no telephone call recordings could be obtained because it had been too long. Under such circumstances, the recordings of five telephone calls between the informer and the staff members of Southeast Cement were insufficient for the FTC to conclude that the contents of the said telephone call recordings were true.

(2) Regarding the allegation that Southeast Cement and Asia Cement had violated Subparagraph 2 of Article 19 of the Fair Trade Law at the time:

The informer accused Southeast Cement of refusing to supply the Type II cement needed for the procurement project but having no trouble supplying it to Bing Guang Co., Ltd. on the same conditions. The FTC’s investigation revealed that Southeast Cement had not signed any contract with the informer and therefore had not supplied any cement to the informer. This was pointed out in the above decision made Kaohsiung District Court. On top of that, the informer was a cement distributor, operating on a different competition level from Bing Guang Co., Ltd. In other words, no issue of discriminatory treatment was involved here and thus there was no violation of Subparagraph 2 of Article 19 of the Fair Trade Law at the time.

As for the informer’s accusation that Asia Cement had raised the price to NT$2,850 per ton which included transportation fee NT$300 and was NT$200 more than the usual price without any justification, as well as the statement that the company had not charged Li Hong Premixed Cement Co., Ltd. for transportation, the FTC’s investigation showed that Asia Cement had quoted the informer NT$2,550 per ton if handed over at its Taichung Plant (delivery to the construction site requiring the transportation fee of NT$300 per ton) or NT$2,600 per ton if delivered to the construction site from its Hualien Plant. The informer had chosen that it was to be delivered to the construction site from the Taichung Plant and the price was NT$2,850 per ton. The evidence showed that the agreement reached between Li Hong Premixed Cement Co., Ltd. and Asia Cement had been delivery to the construction site from the Hualien Plant at NT$2,650 per ton which was the same offer Asia made to the informer. As no discriminatory treatment was involved, it is impossible for the FTC to reach the conclusion that Asia Cement had violated Subparagraph 2 of Article 19 of the Fair Trade Law at the time.

(3) Regarding the allegation that Southeast Cement and Asia Cement had violatied Article 24 of the Fair Trade Law at the time: The key issue in this case was whether the three cement businesses had engaged in any illegal concerted action or discriminatory treatment. These were practices likely to lead to competition restrictions as stated in Article 14 and Subparagraph 2 of Article 19 of the Fair Trade Law at the time. As the above provisions already provided sufficient criteria for the determination of whether the conduct involved in this case had been unlawful, there was no need to make any further exploration under Article 24 of the Fair Trade Law.

Appendix:

Taiwan Cement Corporation' s Uniform Invoice Number: 11913502
Asia Cement Corporation 's Uniform Invoice Number: 03244509
Southeast Cement Corporation 's Uniform Invoice Number: 83078600

Summarized by Hung, Chin An; Supervised by Liou ,Chi-Jung

(1)	Regarding the allegation that Taiwan Cement, Southeast Cement and Asia Cement had violated Article 14 of the Fair Trade Law at the time: The informer accused the three cement businesses of holding a meeting with respect to the Type II cement procurement project in question on August 14, 2012 and Southeast Cement refused to do transact with the informer consequently. The informer also provided the recordings of his five telephone calls with the staff members of Southeast Cement between August 14 and September 3 in 2012. However:
(1)	It was difficult to prove whether the consultation held between the three cement businesses on August 14, 2012 as mentioned in the telephone call recordings had really taken place. The FTC questioned Southeast Cement about the matter and the reply was the statement had been made to stop the informer from bothering the company any further. In addition, the three cement businesses all denied having had any consultation with regard to the Type II cement procurement project in question that caused Southeast Cement to refuse to do the transaction with the informer. The telephone call recordings showed that the contents of the conversation had mostly been about hypothetical questions brought up by the informer and the staff members of Southeast Cement responded accordingly. In other words, the informer employed leading questions to express his subjective thinking and the replies given were mostly to brush him off. Therefore, it was difficult to use the telephone call recordings as evidence that the accused had really consulted to establish any concerted action. After Southeast Cement refused to supply any cement, the informer turned to Asia Cement, who gave him a price quotation. Nevertheless, the informer decided not to purchase Type II cement from Asia Cement due to business considerations. If the three cement businesses had really held the alleged consultation regarding the Type II cement procurement project on August 14, 2012 that rendered the informer unable to fulfill his contract, Asia Cement’s offering the price quotation to the informer would have been contradictory to the alleged content of the telephone call recordings. In addition, Southeast Cement had never signed any Type II cement supply contract with the informer. Therefore, Southeast Cement did not have the obligation to supply Type II cement to the informer. This was pointed out in the related decision made by Kaohsiung District Court. The FTC thought about checking whether a lot of telephone calls had been made between the above companies before and after August 14, 2012 in order to gather more evidences with regard to the alleged concerted action in question but no telephone call recordings could be obtained because it had been too long. Under such circumstances, the recordings of five telephone calls between the informer and the staff members of Southeast Cement were insufficient for the FTC to conclude that the contents of the said telephone call recordings were true.
(2)	Regarding the allegation that Southeast Cement and Asia Cement had violated Subparagraph 2 of Article 19 of the Fair Trade Law at the time:
(2)	The informer accused Southeast Cement of refusing to supply the Type II cement needed for the procurement project but having no trouble supplying it to Bing Guang Co., Ltd. on the same conditions. The FTC’s investigation revealed that Southeast Cement had not signed any contract with the informer and therefore had not supplied any cement to the informer. This was pointed out in the above decision made Kaohsiung District Court. On top of that, the informer was a cement distributor, operating on a different competition level from Bing Guang Co., Ltd. In other words, no issue of discriminatory treatment was involved here and thus there was no violation of Subparagraph 2 of Article 19 of the Fair Trade Law at the time. As for the informer’s accusation that Asia Cement had raised the price to NT$2,850 per ton which included transportation fee NT$300 and was NT$200 more than the usual price without any justification, as well as the statement that the company had not charged Li Hong Premixed Cement Co., Ltd. for transportation, the FTC’s investigation showed that Asia Cement had quoted the informer NT$2,550 per ton if handed over at its Taichung Plant (delivery to the construction site requiring the transportation fee of NT$300 per ton) or NT$2,600 per ton if delivered to the construction site from its Hualien Plant. The informer had chosen that it was to be delivered to the construction site from the Taichung Plant and the price was NT$2,850 per ton. The evidence showed that the agreement reached between Li Hong Premixed Cement Co., Ltd. and Asia Cement had been delivery to the construction site from the Hualien Plant at NT$2,650 per ton which was the same offer Asia made to the informer. As no discriminatory treatment was involved, it is impossible for the FTC to reach the conclusion that Asia Cement had violated Subparagraph 2 of Article 19 of the Fair Trade Law at the time.
(3)	Regarding the allegation that Southeast Cement and Asia Cement had violatied Article 24 of the Fair Trade Law at the time: The key issue in this case was whether the three cement businesses had engaged in any illegal concerted action or discriminatory treatment. These were practices likely to lead to competition restrictions as stated in Article 14 and Subparagraph 2 of Article 19 of the Fair Trade Law at the time. As the above provisions already provided sufficient criteria for the determination of whether the conduct involved in this case had been unlawful, there was no need to make any further exploration under Article 24 of the Fair Trade Law.