Sand and Gravel Businesses in Taichung City

1269th Commissioners' Meeting (2016)

Case:

Taichung City sand and gravel businesses violated the Fair Trade Law by jointly increasing prices

Keyword(s):

Sand and gravel, ready-mixed concrete, dining together

Reference:

Fair Trade Commission Decision of March 2, 2016 (the 1269th Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 105019

Industry:

Wholesale of Brick, Tile, Ballast, Cement and Products (4612)

Relevant Law(s):

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

Summary:

1. In 2013, the production of sand and gravel in Nantou Country declined. The sand and gravel supply in Miaoli County, Changhua County, Nantou County and Yunlin County was affected and there was pressure that sand and gravel prices could go up. However, some sand and gravel businesses in the Taichung area met and jointly decided to raise sand and gravel prices. Since the decision had a direct impact on the ready-mixed concrete plants at the downstream, the Ready-mixed Concrete Industry Association reported to the FTC that the joint price increase by the sand and gravel businesses was in violation of the Fair Trade Law.

2. Findings of the FTC after investigation:
   

   Certain sand and gravel businesses in the Taichung area had always kept close touch. Bao Ren Sand and Gravel Development Co., Ltd., Zhi Jian Enterprise Co., Ltd., Bao Wen Co., Ltd., Yi Hua Sand and Gravel Co., Ltd., An Xin Enterprise Co., Ltd. and Yi Yu Enterprise Co., Ltd. met several times in March, April and May 2014 at a restaurant in Xitun District, Taichung City to exchange market price information. The six businesses decided to raise their sand and gravel prices to reflect the rising costs. They respectively informed their downstream customers of the newly adjusted listed prices. Later, after finding out the FTC was about to launch an investigation into the matter, they stopped to convene the said meeting and quitted the price increase. As a consequence, sand and gravel prices in the area came down.

3. Grounds for disposition:

   (1)

   By dining together to establish their mutual understanding on raising sand and gravel prices, Bao Ren Sand and Gravel Development Co., Ltd., Zhi Jian Enterprise Co., Ltd., Bao Wen Co., Ltd., Yi Hua Sand and Gravel Co., Ltd., An Xin Enterprise Co., Ltd. and Yi Yu Enterprise Co., Ltd. had affected the supply and demand of sand and gravel in the central region. The conduct was in violation of Article 14(1) of the Fair Trade Law.

   (2)

   After assessing the motive and objective (raising prices to reflect the rising costs due to the shortages of sand and gravel supply) behind the unlawful act of the six aforesaid businesses, the level of harm done to trading order (their downstream customers could still purchase from other suppliers), the scale, management condition, sales and market status (small market share) of each of the businesses, their sense of remorse and cooperative attitudes throughout the investigation, the offense being the first ever, and sanctions handed down in the past by the FTC for concerted actions involving sand and gravel, the FTC cited Article 41(1) of the Fair Trade Law at the time of conduct and imposed an administrative fine of NT$400,000 on Bao Ren Sand and Gravel Development Co., Ltd., NT$400,000 on Zhi Jian Enterprise Co., Ltd., NT$400,000 on Bao Wen Co., Ltd., NT$200,000 on Yi Hua Sand and Gravel Co., Ltd., NT$100,000 on An Xin Enterprise Co., Ltd. and NT$100,000 on Yi Yu Enterprise Co., Ltd. The fines totaled to NT$1.6 million.