Chung Tai Resource Technology Corp.

1236th Commissioners’ Meeting (2015)

Case:

Chung Tai Resource Technology violated the Fair Trade Law for abusing its market power by imposing restrictions on the customers, transaction amounts and management plans of trading counterparts

Keyword(s):

Cathode ray tube (CRT), waste panel glass, waste CRT glass recycling contract

Reference:

Fair Trade Commission Decision of July 15, 2015 (the 1236th Commissioners’ Meeting), Disposition Kung Ch’u Tzu No. 104056

Industry:

Materials Recovery (3830)

Relevant Law(s):

Article 19(6) of the Fair Trade Law in effect at the time of the conduct

Summary:

1. When investigating a suspected illegal concerted action involving waste electrical appliance and waste information equipment disposal businesses that set up a joint operation center, the FTC discovered that waste CRT glass recycling operator Chung Tai Resource Technology Corp. (hereinafter referred to as Chung Tai) restricted its trading counterparts for their business associates, transaction amounts and management plans through contract stipulations. At the same time, the FTC also received written complaints from other businesses about the situation and therefore initiated an ex officio investigation into the matter.

2. Findings of the FTC after investigation:

   Waste CRT glass and panel glass were generated after waste CRT TV sets and computer monitors that were dismantled by waste electrical appliance and waste information equipment disposal businesses. Since waste CRT glass contained lead and was considered toxic waste, review procedures were stricter and fewer businesses were interested in recycling it than those who recycle other wastes. Between March 2010 and April 2011, Chung Tai was the only recycler accepting waste CRT glass in the relevant market. Other businesses did not obtain the permission to process waste CRT glass in their plants before selling it domestically or exporting it for reuse until after April 2011. For this reason, Chung Tai unquestionably had considerable market power in the waste CRT disposal market. Meanwhile related statistics and investigations findings also showed that Chung Tai accounted for over 60% of the waste CRT disposal market share in 2012. In addition, from 2010 to 2012, the company also enjoyed rather considerable market power in the waste panel glass disposal market, claiming more than 30% of the market share.

3. Ground for disposition:

   Chung Tai obtained the permission to recycle waste CRT glass on July 8, 2010. Between July 21, 2010 and December 31, 2012, it took advantage of its dominating market power in the waste CRT glass disposal market and stipulated in the waste CRT glass recycling contracts signed with waste electrical appliance and waste information equipment disposal businesses that the said businesses had to regard Chung Tai as the only waste panel glass recycling plant and they could not any other sign waste CRT glass recycling agreements with other enterprises (or commission other enterprises to recycle waste CRT glass), nor could they apply for permission to recycle or process waste CRT glass in their own plants. More over, it was also specified in the above contract that the amount of waste panel glass handed over to Chung Tai could not be smaller than the waste CRT glass provided and any contracting parties who did not follow the rules set by the above contract would be subject to a punitive fine of NT$2.5 million. Chung Tai contested that the restrictions were the requirements from its obligations imposed by its contracts with overseas glass factories. However, the FTC was convinced that the said contract provisions had affected the management of waste electrical appliance and waste information equipment disposal businesses and other waste CRT glass and waste panel glass recyclers. In addition, the FTC believed that the provisions did limit the possibility for waste electrical appliance and waste information equipment disposal businesses to apply for permission to process waste CRT glass in their own plants. As a result, they restricted the freedom of other enterprises to enter and compete on the market and seek trading counterparts. The conduct was an impediment to market competition in violation of Article 19(vi) of the Fair Trade Law in effect at the time of the conduct. Therefore, the FTC citied the first section of P Article 41(1) in effect at the time of the conduct and imposed an administrative fine of NT$2 million on Chung Tai.