Freezing and Refrigeration Equipment Suppliers

1240th Commissioners’ Meeting (2015)

Case:

Freezing and refrigeration equipment suppliers violated the Fair Trade Law by engaging in bid rigging when tendering for freezing and refrigeration equipment renewal projects of a domestic hypermarket

Keyword(s):

Freezing and refrigeration equipment, hypermarket, bid rigging

Reference:

Fair Trade Commission Decision of August 12, 2015 (the 1240th Commissioners’ Meeting), Dispositions Kung Ch’u Tzu No.104069 and No.104070

Industry:

Manufacture of Other General-purpose Machinery (2939)

Relevant Law(s):

Article 14 of the Fair Trade Act in effect at the time of the conduct

Summary:

1. When a company applied to the FTC for immunity or reduction of an administrative fine to be imposed for its participation in a concerted action, it unveiled that Sanyo Electric (Hong Kong) Limited Commercial Refrigeration Branch (hereinafter referred to as Sanyo) and Shyang Ling Freezing and Air-conditioning Equipment Co., Ltd. (hereinafter referred to as Shyang Lin) had reached an agreement on letting the original supplier to win the bids in the tenders put up by RT Mart International Ltd. (hereinafter referred to as RT Mart) for the renewal of freezing and refrigeration equipment of its outlets in Tainan City and Pingzhen Town respectively through phone conversations and meetings on April 3, April 5 and August 29, 2012. The above two companies also agreed to provide assistance to increase the chance for the said original supplier to win the bids. Therefore, the FTC initiated an ex officio investigation.

2. Findings of the FTC after investigation: The case involved the freezing and refrigeration equipment renewal projects put up for bidding by RT Mart for its Tainan outlet on April 3, 2012, and Pingzhen outlet on April 5, 2012 and August 29, 2012. Sanyo and Shyang Lin established a mutual understanding on bid rigging. They had shared information indicated in tender documents and making arrangements with bid winning suppliers for several times, and their mutual trust and willingness to cooperate had thus been strengthened. They engaged in concerted actions of three renewal bidding projects with single mens rea. For this reason, their conduct should not be considered as several different concerted actions. On the contrary, it had to be regarded as one single practice in violation of the regulations against concerted actions. Although Ju Yi Electrical Equipment Co., Ltd. (hereinafter referred to as Ju Yi Electrical Equipment) and You Ming Co., Ltd. were supposed to be the two other tenderers but there was no evidence showing You Ming Co., Ltd. had actually participated in the bidding or Ju Yi had taken part in the bid rigging. Therefore, Sanyo and Shyang Lin were the two offenders in the case.

3. Ground for disposition:

   (1)

   Sanyo and Shyang Lin reached a mutual understanding on bid rigging for Sanyo to win the bid for the Tainan outlet project and Shyang Lin the Pingzhen outlet project, as well as on helping each other in the bids. The successful bidders of the bids were as expected as a result of the foresaid mutual understanding between the bidders. The findings also revealed that Shyang Lin had emailed to Sanyo tender documents for the Pingzhen outlet project on which the bid amount was indicated and Sanyo simply applied the seals of the company and the representative on the forms before it turned them in to RT Mart. In the meantime, Sanyo had confirmed that the representative of Ju Yi Electrical Equipment had tried to inform Sanyo and its parent company in Japan of Sanyo’s bid rigging with Shyang Lin. Ju Yi Electrical Equipment with solid evidences as support through “Panasonic hotline”, emails and lawyer’s letters.

   (2)

   Between March 2012 and August 29, 2012, Sanyo and Shyang Lin had reached the mutual understanding on bid rigging and actually carried out the agreement. The conduct was in violation of Article 14(1) of the Fair Trade Law in effect at the time. Therefore, the FTC imposed an administrative fine of NT$1 million on Sanyo and NT$500,000 on Shyang Lin.