CPC Taiwan

1365th Commissioners' Meeting (2018)

Case:

CPC Taiwan was complained for requesting gas station franchises not to put up price decrease signs to attract customers and this was in violation of the Fair Trade Law

Keyword(s):

Gas station, price advertising restriction

Reference:

Fair Trade Commission Decision of January 3, 2018 (the 1365th Commissioners' Meeting) ; Letter Kung Zhi Tzu No. 10613607284

Industry:

Gasoline and Liquefied Petroleum Gas (LPG) Stations (4821)

Relevant Law(s):

Article 9 of the Fair Trade Law

Summary:

1. After receiving an anonymous letter from a private citizen complaining about Chinese Petroleum Corporation Taiwan (hereinafter referred to as CPC Taiwan) issuing written requests demanding gas station franchises not to put up price decrease signs to attract customers, the FTC launched an investigation to understand whether CPC Taiwan had abused its monopolistic power.
2. Findings of the FTC after investigation:
   (1)According to CPC Taiwan, its measure on "control of promotional sale signs and advertising" (hereinafter referred to as the control measure) was first imposed in July 2016 on gas station franchises that looked similar to gas stations under the company's direct management. The gas station franchises could determine their retail prices. However, the promotional price signs they put up often misled consumers. Therefore, CPC Taiwan requested them to indicate clearly the prices after discounts, instead of putting up signs saying "price decreased by so many dollars." In other words, the objective was to standardize the corporate identification system of CPC Taiwan, not to prohibit promotional sale signs.
   (2)The FTC's investigation into the management condition of domestic gas stations showed that the gas station franchises of CPC Taiwan adopted a variety of approaches to promote its sales, including decreasing prices, issuing coupons that could be used to pay for gasoline, giving car wash coupons or gifts, etc., and price competition in the market was rather fierce. Furthermore, the evidence collected by the FTC indicated after the control measure was implemented, gas station franchises continued to advertise price decreases on their billboards, banners, advertising vehicles and flyers, issue coupons to be used to pay for gasoline and give car wash coupons to promote sales. Therefore, the FTC concluded that CPC Taiwan did not impose the control measure to restrict the price promotion activities of gas station franchises or to prohibit promotional sale advertisements.
   (3)After CPC Taiwan started to impose the control measure in July 2016, the sales growth at its gas station franchises, gas stations under the company's direct management and allied gas stations between July and October 2016 fluctuated. But, the overall sales of the gas station franchises became higher than that of gas stations under CPC Taiwan's direct management and allied gas stations between October 2016 and April 2017. Hence, it was difficult to conclude the control measure had any significant disadvantageous influence on the business of the gas station franchises.
3. Grounds for disposition:
   The FTC launched an ex officio investigation after receiving an anonymous complaint from a private citizen. During the investigation, the FTC did not receive any further complaints or questions from any gas station operators or other private citizens. After taking consideration the intention of CPC Taiwan when it adopted the control measure, the objective, product characteristics and the influence of implementation of the control measure on the competitiveness of gas station franchises, the FTC found it impossible to conclude CPC Taiwan had restricted competition by abusing its market status in violation of Subparagraph 4 of Article 9 of the Fair Trade Law.