Nan-i Book Enterprise Co., Ltd.

1324th Commissioners' Meeting (2017)

Case:

Nan-I Books violated the Fair Trade Law by foretelling to offer certain gift items as an attempt to have its textbooks selected before the 2016 elementary school textbook selection

Keyword(s):

textbook, trading order

Reference:

Fair Trade Commission Decision of March 22, 2017 (the 1324th Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 106018

Industry:

Book Publishing (5813)

Relevant Law(s):

Article 25 of the Fair Trade Law

Summary:

1. The FTC received complaints from private citizens about Nan-I Book Enterprise Co., Ltd. (hereinafter referred to as Nan-I Books) distributing a list of gifts to be given out of the attempt to increase the opportunity of having its textbooks selected before the 2016 elementary school textbook selection. The list indicated that five gift items would be provided if its Chinese and Math textbooks were selected. The practice was illegitimate and constituted an violation of the Fair Trade Law. The Fair Trade Commission therefore initiated an ex officio investigation.
2. Findings of the FTC after investigation:
   (1) Nan-I Books admitted the person surnamed Chen distributing the list was indeed its employee, the list was given to ten grade directors of Jiushe Elementary School and five other elementary schools in Changhua County and, in addition to the item of "guided composition practice sheet and manuscript paper" which was associated with Chinese language teaching, the four other gifts offered, namely the teacher-parent communication notebook with a jacket, dictionary, math table game and desk name tag production and classroom decoration kit, had no direct connection with teaching purposes. Nan-I Books also confessed that, despite the items on the list were decided by the employee, the company indeed had to be responsible for the conducts its employees that was within the scope of execution of duties for the company.
   (2) In 2016, the elementary school Chinese and math textbooks published by Nan-I Books had 47.3% market share in the southern region of Changhua County. Compared to the textbooks for the second, fourth and sixth grades sold in 2015 and the textbooks for the first, third and fifth grades in 2016, the Chinese textbook market share of the company increased from 18.1% to 31.2% and the math textbook market share remained 61.6%.
3. Grounds for disposition:
   (1) Article 25 of the Fair Trade Law provides that "[I]n addition to what is provided for in this Law, no enterprise shall otherwise have any deceptive or obviously unfair conduct that is able to affect trading order." At the same time, the FTC has also established the "Fair Trade Commission Disposal Directions (Policy Statements) on the Sales of Elementary and Junior High School Textbooks" to point out potential patterns of illegal conduct of textbook publishers for related businesses to refer to. According to Paragraph 1 and Subparagraph 2 of Paragraph 2 of Point 8 of the aforesaid disposal directions, if a publishing business offers and foretells to offer supplementary teaching aids that are irrelevant to the uses of textbooks, such teaching aids are not necessary for teaching and the practice would constitute illegitimate marketing described in the disposal directions and is therefore in violation of Article 25 of the Fair Trade Law.
   (2) Among the gift items on the list, the "teacher-parent communication notebook with a jacket" was for teachers to inform students' parents of the homework assignments for students, the jacket was to protect the notebook, while the desk name tag production and classroom decoration kit was to help teachers remember the names of students and to facilitate decoration of the classroom. Neither of them had anything to do with the uses of any specific textbooks. As for the dictionary and the math table game, the former could be considered a reference book for the Chinese class and the latter perhaps could make math learning more interesting. However, it would be difficult to regard either of them as a necessary teaching-aid tool. Nan-I Books asserted that the guided composition practice sheet and manuscript paper" were associated with teaching. According to the Taipei High Administrative Court Su-Zi Decision No. 503 in 2009, however, if an item was really related to teaching, it should have been included in the textbook, so that all the teachers and students could use it. In reality, they were only offered to the elementary schools in certain areas, suggesting that not all the teachers and students would have the opportunity to use them. Therefore, they could only be considered gift items the company inappropriately offered to increase the opportunity of having its textbooks selected.
   (3) During the elementary textbook selection period in May 2016, Nan-I Books foretold to offer certain gift items in certain areas in Changhua County. The practice was likely to affect the textbook selectors' decision making and accordingly the results. In consequence, competitors not making any offers of gift items might lose transaction opportunities because of such unfair competition conduct. In other words, the aforementioned practice of Nan-I Books could jeopardize the fairness in textbook selection and the market competition. It was obviously unfair conduct able to affect trading order in violation of Article 25 of the Fair Trade Law. The FTC therefore imposed an administrative fine of NT$1 million on Nan-I Books.