Promulgation of the "Fair Trade Commission Disposal Directions (Policy Statements) on the Vertical Integration or Joint Management of LPG Bottling Businesses and Retailers

1360th Commissioners' Meeting (2017)

Case:

Promulgation of the "Fair Trade Commission Disposal Directions (Policy Statements) on the Vertical Integration or Joint Management of LPG Bottling Businesses and Retailers

Keyword(s):

Liquefied petroleum gas (LPG), vertical integration, joint management

Reference:

Fair Trade Commission Decision of November 29, 2017 (the 1360th Commissioners' Meeting), Order Kung Zhi Tzu No. 10613606991

Industry:

Retail Sale of Other Fuel and Related Products in Specialized Stores (4829)

Relevant Law(s):

Articless 11, 15, 19 and 20 of the Fair Trade Law

Summary:

1. In 2016, the FTC conducted a public census to understand whether the LPG "distribution center" or similar organizations still existed in the country and carried out an investigation in counties and cities like Keelung where such organizations were likely to exist. The result of the investigation showed they were not around any longer. Therefore, it was decided at the 1299th Commissioners' Meeting on Sep. 28, 2016 to abolish the "Fair Trade Commission Disposal Directions (Policy Statements) on the Business Practices of Bottled Gas Distribution Centers". However, during the investigation the FTC also learned that vertical integration or joint management of LPG bottling plants and retailers was becoming a common practice. Since such businesses involve vertical transactions between upstream and downstream operations, or involve horizontal competition, the market power of LPG bottling businesses was bound to have an impact on the LPG retail market. To prevent vertical integration or joint management of LPG bottling businesses and retailers from engaging in practices in violation of the Fair Trade Law, the FTC made the plan in 2016 to promulgate administrative rules to regulate such businesses and the plan was approved during the meeting mentioned above.
2. The administrative rules were titled the "Fair Trade Commission Disposal Directions (Policy Statements) on the Vertical Integration or Joint Management of LPG Bottling Businesses and Retailers".
3. The directions, including 9 points that covered mergers, concerted actions, resale price restrictions and other competition-restricting conducts, were discussed and amended during the 42nd Meeting of the FTC Law and Regulations Working Group on Jun. 6, 2017. Later on Jul. 18 and Aug. 18, 2017, two seminars were held respectively in Taichung and Kaohsiung. According to the suggestions from the attendees, its text was modified before its final version was approved during the 1360th Commissioners' Meeting on Nov. 29, 2017 and announced on Dec. 12, the same year.