Swan Panasia Enterprise Co., Ltd.

Swan Panasia Enterprise Co., Ltd.

1212nd Commissioners' Meeting (2015)

Case:

Swan Panasia violated the Fair Trade Law for restricting online sales prices of its downstream businesses

Keyword(s):

Resale price maintenance, supply discontinuation

Reference:

Fair Trade Commission Decision of January 28, 2015 (the 1212nd Commissioners' Meeting), Disposition Kung Ch'u Tzu No. 104014

Industry:

Wholesale of Toys and Recreational Goods (4583)

Relevant Law(s):

Article 18 of the Fair Trade Law in effect at the time of the conduct (Article 19 of the current version)

Summary:

The FTC received from a private citizen (hereinafter referred to as the informer) an email stating that he managed a tabletop game business and the products he sold included foreign tabletop games for which Swan Panasia Enterprise Co., Ltd. (hereinafter referred to Swan Panasia) was the agent. In December 2013, he indirectly received a warning notice from Swan Panasia that the online prices of its downstream retailers for products the company represented had to be set according to the prices suggested by the company in order to prevent malicious price competition; otherwise, supply would be discontinued. Furthermore, Swan Panasia had also sent warnings and notices of supply discontinuation to distributors in the southern region.

Findings of the FTC after investigation:

(1) Le You You Enterprise Co., Ltd. (hereinafter referred to as Le You You) was a distributor for Swan Panasia in the Kaohsiung region. Le You You resold tabletop games purchased from Swan Panasia to tabletop game retailers who then sold the products to consumers.
(2) The informer operated an online store on Ruten Auction Site where he sold products from Swan Panasia at 90% of the suggested prices from the company. On Dec. 5, 2013, he received from Swan Panasia an email stating “1. You are requested to follow our price policy and do not give consumers any discount…2. Tobey (Le You You) is requested to not give Ice (the informer) any supply for the time being; wait until Ice has made price adjustments according to our suggested prices…3. If the tabletop game stores in the Kaohsiung region find our price policy unacceptable, we will have to supply Tobey only for him to do the business alone…” Supply was discontinued on that very same day (December 5). After the informer remarked the prices at the online store according to suggested prices, Le You You made the confirmation and Swan Panasia gave its approval, Le You You started to supply the informer again.

Grounds for disposition:

(1) According to the suggested tabletop game prices established by Swan Panasia and the purchasing price lists of distributors at various levels, delivery receipts, proof of transactions with Le You You and the product price lists, Le You You made outright purchases from Swan Panasia and distributed the tabletop games. In the meantime, the informer paid for the products bought from Le You You and any risk with regard to sales of such products was the informer's. In other words, outright purchase relations also existed between Le You You and retailers.
(2) Swan Panasia had established suggested prices (retail prices) for the tabletop game products it represented, allowable discounts and distribution prices (purchasing prices of retailers). In addition, most of the company's downstream businesses (including retailers and distributors operating through physical outlets and online) sold such products in accordance with these standards. Consequently, it could be concluded that Swan Panasia did have decisive influence on the distribution and retail prices of the products in question.
(3) As mentioned earlier, Swan Panasia sent emails to warn its downstream businesses that they should stick to the company's suggested prices and it also did actually discontinue supply to force them into making price adjustments. In addition, the company admitted that it had demanded online retailers to mark its suggested prices on related web pages. If any retailer refused to comply after it received the said warnings, Swan Panasia would stop doing business with it. This was enough proof that Swan Panasia had not only established suggested prices for the products it represented but also sent warning emails as well as actually discontinued supply to force the downstream businesses of its distributors to sell the products in questions at the suggested rates. Thus, it could be concluded that Swan Panasia did restrict the resale prices of its downstream businesses.
(4) By demanding its downstream businesses to sell the tabletop game products it represented only at suggested rates, Swan Panasia restricted their freedom to determine their prices. The conduct could damage the price competition mechanism in the relevant market and was in violation of Article 18 of the Fair Trade Law at the time.
(5) After taking into consideration of the sales of Swan Panasia, the fact that purchases from retailers accounted for 60% of the company's sales each month, and the discontinuation of supply on the informer, the FTC concluded that the conduct of the company could bring certain harm to the trading order in the tabletop game retail market. However, the violation was the first time ever and the company was cooperative during the investigation. Therefore, the FTC cited the first section of Article 41 of the Fair Trade Law, ordered Swan Asia to cease its unlawful act immediately after receiving the disposition, and also imposed an administrative fine of NT$200,000 on the company.

Appendix:

Swan Panasia Enterprise Co., Ltd.'s Uniform Invoice Number: 13120886

Summarized by Wen, Che-Chia; Supervised by Chiou, Shwu-Fen

(1)	According to the suggested tabletop game prices established by Swan Panasia and the purchasing price lists of distributors at various levels, delivery receipts, proof of transactions with Le You You and the product price lists, Le You You made outright purchases from Swan Panasia and distributed the tabletop games. In the meantime, the informer paid for the products bought from Le You You and any risk with regard to sales of such products was the informer's. In other words, outright purchase relations also existed between Le You You and retailers.
(2)	Swan Panasia had established suggested prices (retail prices) for the tabletop game products it represented, allowable discounts and distribution prices (purchasing prices of retailers). In addition, most of the company's downstream businesses (including retailers and distributors operating through physical outlets and online) sold such products in accordance with these standards. Consequently, it could be concluded that Swan Panasia did have decisive influence on the distribution and retail prices of the products in question.
(3)	As mentioned earlier, Swan Panasia sent emails to warn its downstream businesses that they should stick to the company's suggested prices and it also did actually discontinue supply to force them into making price adjustments. In addition, the company admitted that it had demanded online retailers to mark its suggested prices on related web pages. If any retailer refused to comply after it received the said warnings, Swan Panasia would stop doing business with it. This was enough proof that Swan Panasia had not only established suggested prices for the products it represented but also sent warning emails as well as actually discontinued supply to force the downstream businesses of its distributors to sell the products in questions at the suggested rates. Thus, it could be concluded that Swan Panasia did restrict the resale prices of its downstream businesses.
(4)	By demanding its downstream businesses to sell the tabletop game products it represented only at suggested rates, Swan Panasia restricted their freedom to determine their prices. The conduct could damage the price competition mechanism in the relevant market and was in violation of Article 18 of the Fair Trade Law at the time.
(5)	After taking into consideration of the sales of Swan Panasia, the fact that purchases from retailers accounted for 60% of the company's sales each month, and the discontinuation of supply on the informer, the FTC concluded that the conduct of the company could bring certain harm to the trading order in the tabletop game retail market. However, the violation was the first time ever and the company was cooperative during the investigation. Therefore, the FTC cited the first section of Article 41 of the Fair Trade Law, ordered Swan Asia to cease its unlawful act immediately after receiving the disposition, and also imposed an administrative fine of NT$200,000 on the company.