21 Container Terminals Operators

21 Container Terminals Operators

1276th Commissioners' Meeting (2016)

Case:

21 container terminal operators violated the Fair Trade Law for jointly deciding to collect charges for use of machines to load and unload CFS export goods under three tons in weight

Keyword(s):

Container terminal operator, contain yard, charges for use of machines for CFS export goods

Reference:

Fair Trade Commission Decision of April 20, 2016 (the 1276th Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 105034

Industry:

Service Activities Incidental to Water Transportation (525)

Relevant Law(s):

Article 15 of the Fair Trade Law

Summary:

Between June 2014 and January 2015, the FTC received from several informers complaints about container terminal operators (hereinafter referred to as container yard operators) having jointly decided to collect charges for use of machines to load and unload CFS export goods under three tons in weight (hereinafter referred to the charges for use of machines for CFS export goods). They requested the FTC to look into the matter.

Findings of the FTC after investigation:

(1) In 1994, the container yard operators involved in this case had applied and obtained the approval of the competent authority to collect charges for use of machines to load and unload CFS export goods. However, the 1994 situation was due to the fact that the government had given container yards subsidies in accordance with the policy of encouraging exportation and promoting industrial upgrades. As a result, no container yard operators actually collected the said charges. Later, export market business declined over the past 20 years. Export quantities dropped by a large margin and container yard operation costs increased as a result. To boost business income, container yard operators began to talk about resuming collection of the charges for use of machines to load and unload CFS export goods either in private or during meetings of the Container Terminal Transport Association (hereinafter referred to as the CTTA) on several occasions. Nonetheless, not a single operator was willing to take the risk of losing customers by being the first to resume collection of the said charges. Finally, around the end of 2013 and January 2014, three container yard operators in the Taichung area started to collect the charges and 21 of the 31 container yard operators in the country decided to follow suit and began to impose the charges. Consequently, all container yard operators decided to discuss the issue again.

(2) Between December 10, 2013 and February 26, 2014, Evergreen International Storage & Transport Corp. and 20 other container yard operators had meals together after the CTTA meetings to exchange ideas and discuss the resumption of the collection of the charges for use of machines to load and unload CFS export Goods. Through the CTTA, the said businesses contacted the Keelung Customs Brokers Association for a number of times to talk about the ways of collecting the said charges. They also presented the documents or announcements regarding resumption of the said charges for the CTTA to officially notify associations of shipping companies, shipping agents, forwarders, consignors, custom brokers, import/export businesses and container truck operators as well as the Customs. The notification contained the wording of "…Starting on July 1, the members of the CTTA shall resume collection of the charges for use of machines to load and unload CFS export goods…" The documents or announcements from each container yard regarding resumption of collection of the charges were also attached.

Grounds for disposition:

(1) Evergreen International Storage & Transport Corp. and 20 other container yard operators resumed the collection of the said charges on July 1 or in the beginning of July in 2014. In addition to exchanging ideas when having meals together, some of the container yard operators also admitted that they had made the decision and established their mutual understanding to resume collection of the said charges. The 21 businesses were competitors on the same market. Their joint decision to resume collection of the charges for use of machines for CFS export goods was a restriction on the business activities of one another. The conduct was considered a "concerted action" as described in Article 14(1) of the Fair Trade Law.

(2) Evergreen International Storage & Transport Corp. and 20 other container yard operators together accounted for over 80% of the total sales of container terminals and CFS export goods transportation in the country. Being horizontal competitors on the market, they should have offered better prices, quality, services, or other transaction conditions to compete with one another for trading opportunities. Each container yard should have decided whether it would resume the collection of the charges for use of machines to load and unload CFS export goods according to its management cost, the market competition condition and its business assessment. However, all of them resorted to the concerted action at issue to accomplish the goal of resuming the collection of the charges and at the same time reduce the competition risk of any single company resuming the collection of the charges alone. As a result, the collection of the charges was indeed resumed in July 2014 at every container yard. The conduct already reduced the incentive for container yards to offer better prices, quality and services to attract trading counterparts, and this market function was seriously distorted.

(3) Evergreen International Storage & Transport Corp. and 20 other container yard operators violated the regulation of "no enterprise shall engage in any concerted action" specified in Article 15(1) of the Fair Trade Law. After evaluating the motives behind the unlawful act, the level of harm, seriousness of violation, as well as each participant’s business scale and attitude after the violation, the FTC cited Article 40(1) of the Fair Trade Law to order the said businesses to stop collecting the charges for use of machines to load and unload CFS export goods under three tons, and further imposed administrative fines ranging between NT$100,000 and 17.25 million on them. The fines totaled to NT$72.20 million.

Appendix:

Evergreen International Storage & Transport Corp.'s Uniform Invoice Number: 04406559
Tungya Transportation & Terminal Corp.'s Uniform Invoice Number: 11366005
CMT Logistics Corp.'s Uniform Invoice Number: 36510597
Kaofeng International Logistics Corp.'s Uniform Invoice Number: 79330146
Associated Consolidation & Terminal Corp.'s Uniform Invoice Number: 04398474
China Container Terminal Corp.'s Uniform Invoice Number: 39014517
TK Logistics International Corp.'s Uniform Invoice Number: 27901897
Keelung Container Terminal China Trade & Development Corp.'s Uniform Invoice Number: 03098301
Asia Pacific Logistics International Group's Uniform Invoice Number: 04230623
Express Container Terminal Corp.'s Uniform Invoice Number: 00655979
Kuo Chen Total Logistics Corp.'s Uniform Invoice Number: 04146610
Universal Container Terminal Corp.'s Uniform Invoice Number: 39227119
Unitop Corp.'s Uniform Invoice Number: 79043587
Central Freight Terminal Corp.'s Uniform Invoice Number: 04375444
Horng Maw Container Terminal Corp.'s Uniform Invoice Number: 04383606
Taiwan Container Terminal Corp.'s Uniform Invoice Number: 04448299
Tasan Hong International Container Terminal Corp.'s Uniform Invoice Number: 23983209
Worldwide Freight Terminal Corp.'s Uniform Invoice Number: 11792205
Worldwide Logistics Service Corp.'s Uniform Invoice Number: 27898725
Taipei Port Container Terminal Corp.'s Uniform Invoice Number: 80027874
United Logistics International Corp.'s Uniform Invoice Number: 16753954

Summarized by Shen, Li-Wei; Supervised by: Kuo, An-Chi

(1)	Evergreen International Storage & Transport Corp. and 20 other container yard operators resumed the collection of the said charges on July 1 or in the beginning of July in 2014. In addition to exchanging ideas when having meals together, some of the container yard operators also admitted that they had made the decision and established their mutual understanding to resume collection of the said charges. The 21 businesses were competitors on the same market. Their joint decision to resume collection of the charges for use of machines for CFS export goods was a restriction on the business activities of one another. The conduct was considered a "concerted action" as described in Article 14(1) of the Fair Trade Law.
(2)	Evergreen International Storage & Transport Corp. and 20 other container yard operators together accounted for over 80% of the total sales of container terminals and CFS export goods transportation in the country. Being horizontal competitors on the market, they should have offered better prices, quality, services, or other transaction conditions to compete with one another for trading opportunities. Each container yard should have decided whether it would resume the collection of the charges for use of machines to load and unload CFS export goods according to its management cost, the market competition condition and its business assessment. However, all of them resorted to the concerted action at issue to accomplish the goal of resuming the collection of the charges and at the same time reduce the competition risk of any single company resuming the collection of the charges alone. As a result, the collection of the charges was indeed resumed in July 2014 at every container yard. The conduct already reduced the incentive for container yards to offer better prices, quality and services to attract trading counterparts, and this market function was seriously distorted.
(3)	Evergreen International Storage & Transport Corp. and 20 other container yard operators violated the regulation of "no enterprise shall engage in any concerted action" specified in Article 15(1) of the Fair Trade Law. After evaluating the motives behind the unlawful act, the level of harm, seriousness of violation, as well as each participant’s business scale and attitude after the violation, the FTC cited Article 40(1) of the Fair Trade Law to order the said businesses to stop collecting the charges for use of machines to load and unload CFS export goods under three tons, and further imposed administrative fines ranging between NT$100,000 and 17.25 million on them. The fines totaled to NT$72.20 million.