FAIR TRADE LAW

CHAPTER ONE
GENERAL PROVISIONS

Article 1.

This Law is enacted to maintain order in transactions, to protect the interest of consumers, to ensure fair competition, and to promote the stability and prosperity of the national economy. Formatters not provided in this Law, the relevant provisions of other laws shall govern.

Article 2.

The term 'enterprise' as used herein refers to:

1. A company;
2. An industrial or commercial firm owned by a sole owner or in the form of a partnership; or
3. A trade association; or
4. Any other persons or organizations engaged in transactions by providing goods or services.

Article 3.

The term 'trading counterpart' as used herein refers to a person who engages in or concludes transactions with an enterprise as its supplier or purchaser.

Article 4.

The term 'competition' as used herein refers to the acts whereby two or more enterprises offer in the market more favorable price, quantity,quality, service or other terms in order to secure trading opportunities.

Article 5.

The term "monopoly" as used herein refers to a condition wherein an enterprise faces no competition or has an overwhelming position to enable it to exclude other competitors in a particular market.

When two or more enterprises do not in fact compete with each other in pricing and their relations as a whole with other entities are such as specified in the preceding paragraph, such situation shall be deemed a monopoly.

The term "particular market" as used in the first paragraph of this Article refers to a geographic area or a sector wherein enterprises engage in competition in respect of a particular commodity or service.

Article 6.

The term "combination" as used herein refers to any of the following circumstances where under an enterprise:

1. merges with another enterprise;
2. holds or acquires the shares or capital contributions of another enterprise to an extent of representing more than one-third of the total voting shares or the total capital stock of such other enterprise;
3. accepts a transfer of, or leases the whole or the major part of the business or properties of another enterprise;
4. frequently operates jointly with another enterprise or is entrusted by another enterprise to operate the latter's business; or
5. directly or indirectly controls the business operation, or the employment and termination of the personnel, of another enterprise.

In computing the shares or capital contributions referred to in Item 2 of the preceding paragraph, the shares or capital contributions held or acquired by an enterprise(s) controlled by, controlling, or affiliated with the subject enterprise shall be included.

Article 7.

The term "concerted action" as used herein refers to an act to mutually restrict the activities of enterprises, such as an act by an enterprise that enters into a contract, agreement or other form of mutual understanding with other enterprises with whom it competes to jointly determine the prices of goods or services, or to restrict quantities, technology, products, equipment,trading counterparts or trading territories.

Article 8.

The term "multi-level sales" as used herein refers to a sales or marketing plan or organization in which a participant pays certain consideration in exchange for acquiring the right to sell or promote the sale of goods or services and the right to introduce other persons to join the plan or organization, and therefore obtains a commission, monetary award,or other economic benefits.

The phrase "to pay a certain consideration" refers to the payment of money, the purchase of goods, the provision of services or the assumption of indebtedness.

Article 9.

The term "competent authority" as used herein refers to the Fair Trade Commission, Chinese Taipei where the central government is concerned, the Department of Reconstruction of a city or province where a municipality or province is concerned, and the city or county government where a city or county is concerned.

Those matters provided in this Law that fall within the jurisdiction of other ministries and agencies shall be entertained by the Fair Trade Commission in conjunction with such other ministries and agencies.

CHAPTER TWO

MONOPOLIES, COMBINATIONS AND CONCERTED ACTIONS

Article 10.

A monopolistic enterprise shall not engage in any of the following acts:

1. using unfair methods directly or indirectly to prevent other enterprises from taking part in competition;
2. improperly determining, maintaining or changing the prices of goods or the remuneration for services; or
3. without proper reason, causing a trading counterpart to provide preferential treatment; or
4. conducting other acts by abusing its market standing.

The names of monopolistic enterprises shall be periodically announced to the public by the central competent authority.

Article 11.

If any of the following circumstances shall exist in respect of a combination of enterprises, an application for the approval thereof shall be filed with the central competent authority:

1. As a result of the combination, the surviving enterprise will acquire a market share reaching one third (1/3);
2. An enterprise participating in the combination holds a market share reaching one fourth ( 1/4); or
3. The amount of sales in the preceding fiscal year of an enterprise participating in the combination exceeds the amount publicly announced by the central competent authority.

The names of enterprises holding a market share reaching one fifth (1/5)shall be periodically announced to the public by the central competent authority.

The central competent authority shall make its decision on approval or disapproval within two months after receipt of an application referred to in paragraph one of this Article.

Article 12.

The central competent authority may approve the application referred to in the preceding Article if the benefit of the combination to the overall economy outweighs the disadvantages of its restraining competition.

Article 13.

Where an enterprise enters into a combination without filing an application for approval as required hereunder or after the disapproval of its application, the central competent authority may prohibit such combination, or by an order specify a time limit by which the said enterprise shall divide itself into separate enterprises, dispose of its shares in whole or in part, transfer a part of its business to others, order resignation from positions held, or adopt other necessary disposition.

The central competent authority may order the dissolution, suspension of business, or the cessation of the business of an enterprise if it violates the disposition made by the central competent authority pursuant to the preceding paragraph.

Article 14.

Enterprises may not engage in concerted actions, unless the concerted action satisfies any of the following circumstances, is beneficial to the national economy as a whole and to the public interests, and has been approved by the central competent authority:

1. to unify the specifications or models of goods in order to reduce cost,improve quality or increase efficiency;
2. to jointly research and develop goods or market in order to upgrade technical skills, improve quality, reduce costs or increase efficiency;
3. to engage in specialized areas of business in order to achieve the enterprise's rational operation;
4. to enter into an agreement in respect of the competition in overseas markets in order to secure or promote exports;
5. to take concerted action in respect of the importation of foreign goods in order to strengthen trading capability;
6. to take concerted action in imposing limitations restrictions on the quantity of production and sales, equipment or prices in order to adjust to orderly demand when the enterprises in a particular industrial sector suffer hardship to continue their business operations or over-production due to the fact that the market price of goods remains at a level below the average production cost during economic recession; or
7. to take concerted action in order to improve the operational efficiency or strengthen the competitiveness of the small and medium-sized enterprise concerned.

Article 15.

In granting its approval pursuant to the preceding Article, the central competent authority may impose conditions, restrictions or encumbrances.

The approval shall be valid for a limited period not exceeding three (3)years. The enterprises involved may, with proper reasons, file a written application for an extension thereof with the central competent authority within three (3) months prior to the expiration of such period; provided,however, that the term of each extension shall not exceed three (3) years.

Article 16.

In the event that after the approval of a concerted action, the cause for such approval is extinguished, or the economic condition has changed, or the conduct of the enterprises involved exceeds the scope of the approval, the central competent authority may revoke the approval, alter the contents of the approval, or order the enterprises involved to cease or rectify such conduct.

Article 17.

The central competent authority shall maintain a specific registry to record the approvals, conditions, restrictions undertakings, time limit and relevant dispositions referred to in the preceding three Articles and shall publish these matters in government gazette.

CHAPTER THREE

UNFAIR COMPETITION

Article 18.

An enterprise which supplies goods to its trading counterpart shall allow its trading counterpart to freely decide the prices at which such goods will be resold to a third party by the trading counterpart or at which such goods will be resold by the said third party. Any agreement contrary to this provision shall be null and void except for daily products to be used by general consumers which are subject to free competition with similar kinds of goods available in the market.

The items of daily products referred to in the preceding paragraph shall be publicly announced by the central competent authority.

Article 19.

An enterprise shall not commit any of the following acts which is likely to impede fair competition:

1. causing another enterprise to discontinue supply, purchase or other business transactions with a particular enterprise with the intent to cause harm to such particular enterprise;
2. treating another enterprise discriminatively without due cause;
3. causing, by coercion, inducement with profit, or other improper means,the trading counterpart(s) of its competitors to transact business with itself;
4. causing, by coercion, inducement with profit; or other improper means,another enterprise to refrain from competing in price, or to take part in a combination or a concerted action;
5. acquiring, by coercion, inducement with profit, or other improper means,the secret of production and sales, information concerning trading counterparts or other relevant technical secret of any other enterprise; or
6. imposing improper restrictions on its trading counterparts' business activities as a condition of transacting business with them.

Article 20.

An enterprise shall not commit any of the following acts with respect to the goods or services provided by its business operation:

1. use in an identical or similar manner of the name of another person, the name of a business establishment, a corporate name, trademark, product container packaging, external appearance or other symbol signifying the goods of another persons that are commonly known to the relevant public, if such use causes confusion with goods of any other person, or sale,transport, export or import of goods using such symbols;
2. use in an identical or similar manner of the name of any other person,the name of a business establishment, a corporate name or other symbols signifying the business or service of another person that are commonly known to the relevant public, if such use causes confusion with the facilities or activities of the business or service of any other person; or
3. use an identical or similar goods trademark which is identical or similar to a well-known foreign trademark not registered in this country, or the sale, transport, export or import of goods bearing such trademark.

The provisions of the preceding paragraph are not applicable to the following situations:

1. use in an ordinary manner of the generic name customarily associated with the goods themselves or of a symbol customarily used in the trading of goods of the same category, or the sale, transport, export or import of the goods bearing the said name or symbol;
2. use in an ordinary manner of a name or other symbols customarily used in trading for similar business or services;
3. use of one's own name in good faith or the sale, transport, export or import of goods bearing the said name; or
4. use in good faith of a symbol identical or similar to the symbol referred to in Items I and 2 of the preceding paragraph, before such symbol becomes known to the relevant public, or use of the said symbol in conjunction with the transfer of business from a person who uses the same in good faith, or the sale, transport, export or import of goods bearing such symbol.

Where the business, goods, facilities or activities of an enterprise is(are) likely to suffer damage or confusion as a result of the act(s) of another enterprise as set forth in Items 3 and/or 4 of the preceding paragraph, the said enterprise may request such other enterprise to affix an appropriate symbol, unless the other enterprise acts only as a carrier of such goods.

Article 21.

An enterprise shall not make, on goods or in advertisements relating thereto, any false, untrue or misleading presentation which may likely cause confusion to or mistake by consumers such as their price, quantity, quality,content, manufacturing process, date of manufacturing, validity period, use method, purpose of use, place of origin, manufacturer, place of manufacturing, processor, and place of processing.

An enterprise shall not sell, transport, export or import goods bearing false, untrue or misleading presentations referred to in the preceding paragraph.

The provisions of the two preceding paragraphs shall apply mutatismut and is to the provision of services by an enterprise.

An advertising agent which, having the knowledge of or being able to know the fact, makes or designs a misleading advertisement shall be liable,jointly and severally with the principal of such advertisement, for the damages arising therefrom. An advertising medium, which has the knowledge of or is able to know the fact that the advertisement it may communicate or publish is likely to mislead the public but still communicates or publishes such advertisement, shall be liable, jointly and severally with the principal of the advertisement, for the damages arising therefrom.

Article 22.

An enterprise shall not, for the purpose of competition, make or publicize any false statements which is likely to cause damage to another person's business reputation.

Article 23.

Multi-level sales shall not be conducted if the participants thereof receive commissions, monetary awards, or other economic benefit mainly from introducing others to join in the sales rather than from the marketing or sale of the goods or services at reasonable market prices.

Regulations for the control of multi-level sales shall be enacted by the central competent authority.

Article 24.

In addition to what has been provided for in this Law, an enterprise Shell not conduct other deceptive or obviously unfair acts that are sufficient to affect trading order.

CHAPTER FOUR

FAIR TRADE COMMISSION

Article 25.

In order to administer matters in respect of fair trade as set forth in this Law, the Fair Trade Commission shall be established for having the following functions:

1. to prepare and formulate policies and rules related to fair trade;
2. to examine and review any fair trade matters related to this Law;
3. to investigate the activities of enterprises and the economic conditions;
4. to investigate and to dispose any case violating this Law, and
5. to administer other matters related to fair trade.

Article 26.

The Fair Trade Commission may investigate and handle, ex officio or upon complaints, any violations of the provisions of this Law that are detrimental to the public interests.

Article 27.

When conducting investigations under this Law, the Fair Trade Commission may proceed in accordance with the following procedures:

1. to notify the principal parties and interested persons to appear and To make statements;
2. to notify relevant organizations, groups, enterprises, or individuals to submit their account books, documents, and other necessary information or evidence, and
3. to send personnel to the office, place of business, or other locations of the relevant groups or enterprises to conduct necessary investigations.

In carrying out his duty under this Law, the investigator shall present documents evidencing his authority to carry out such duty; upon failure by the investigator to show such documents, the person to be investigated may refuse the investigation.

Article 28.

The Fair Trade Commission shall function independently according to law,and dispositions by the Fair Trade Commission in respect of any fair trade cases may be executed in the name of the Commission.

Article 29.

The organizational structure of the Fair Trade Commission shall be governed by a separate law.

CHAPTER FIVE

DAMAGES

Article 30.

If an enterprise violates any provision of this Law and infringes upon another person's rights or interests, the injured party may petition to eliminate such infringement. If there is a likelihood of infringement, the party may petition for prevention thereof.

Article 31.

An enterprise which infringes upon the rights and interests of another person as a result of its violation of this Law shall be liable for the damages arising therefrom.

Article 32.

In the case of intentional act, a court may, at the request of the injured party referred to in the preceding Article and based on the extent of infringement, award a compensation greater than the amount of damage actually incurred; provided, however, that the amount so awarded may no tied three times of the amount of proven damages.

In case the infringing party gains any profits from his act of infringement, the injured party may request to have the amount of damages calculated based exclusively on such profits.

Article 33.

The right to claim for damages as specified in this Chapter shall be extinguished if not exercised within two years from the time when the claimant has knowledge of the act and the person liable for the damages, or within ten years from the commitment of such act.

Article 34.

When an injured party institutes a lawsuit in accordance with this Law, he may request for publishing the contents of the judgment in newspapers at the infringing party's expense.

CHAPTER SIX

PENALTIES

Article 35.

Any violator of the provisions of Articles 10, 14, 20, or paragraph one of Article 23 shall be punished by imprisonment for not more than three (3)years, detention, or in lieu thereof or in addition thereto a fine of not more than one million New Taiwan Dollars (NT$1,000,000).

Article 36.

Any violator of the provisions of Article 19 who continues his violation after having been ordered by the central competent authority to cease and desist shall be punished by imprisonment for not more than two (2) years,detention, or in lieu thereof or in addition thereto, a fine of not more than five hundred thousand New Taiwan Dollars (NT$500,000).

Article 37.

In the event of any violation of Article 22, the person committing the acts hall be punished by imprisonment for not more than one (1) year, detention,or in lieu thereof or in addition thereto, a fine of not more than five hundred thousand New Taiwan Dollars (NT$500,000).

Article 38.

In the event that the violator referred to in any of the three preceding Articles is a legal person, in addition to the punishment to be imposed upon the person committing the act, the said legal person shall also be subject to  the fine specified in the respective Article.

Article 39.

Where more severe punishment is provided in other laws in respect of the offenses referred to in the four preceding Articles, the more severe punishment shall apply.

Article 40.

Where an enterprise fails to apply for an authorization for entering into a   combination or where it does apply for, but is not permitted to enter into a combination and nevertheless enters into such combination the enterprise shall be punished, in addition to the disposition under the provisions of Article 13 hereof, by a fine of not more than one million (1, 000, 000) but not less than one hundred thousand ( 100,000) New Taiwan Dollars.

Article 41.

Where an enterprise violates the provisions of this Law, the Fair Trade Commission may order the said enterprise to discontinue its act or set a time limit for it to take corrective action. In the event the enterprise fails to discontinue its act or to take corrective action within the given time limit after having been ordered to do so, the Fair Trade Commission may continue to give order and, in addition thereto, the said enterprise its hall be punished successively by a fine of not exceeding one million New Taiwan Dollars (NT$1, 000, 000) until its violating act is discontinued or corrected.

Article 42.

Violators of the governing regulations to be prescribed by the central competent authority under paragraph Two of Article 23 shall be punished by a fine of not more than five hundred thousand (500, 000) but not less than fifty thousand (50, 000) New Taiwan Dollars. In case of a serious violation,an order may be issued to dissolve, suspend or close down the business operation of the violators.

Article 43.

In the course of an investigation made by the Fair Trade Commission under the provisions of Article 27, if the party to be investigated refuses,without due cause, to accept the investigation, to appear at the hearing to make statements, or to submit relevant account books, documents or evidence within a given time limit, the said party shall be subject to a fine of not more than two hundred fifty thousand (250, 000) but not less than twenty thousand (20, 000) New Taiwan Dollars. If the said party, after having been notified, continues to refuse without due cause, the Fair Trade Commission may continue to issue notices of investigation and impose with respect to each successive refusal a fine of not more than five hundred thousand(500, 000) but not less than fifty thousand (50, 000) New Taiwan Dollars consecutively until its acceptance of the investigation, appearance to make statements, or submission of relevant account books, documents or evidence.

Article 44.

Any failure to pay the fine imposed under the four preceding Articles shall cause the case to be referred to a court for compulsory execution.

CHAPTER SEVEN

SUPPLEMENTARY PROVISIONS

Article 45.

The provisions of this Law shall not apply to the proper exercise of the right(s) under the Copyright Law, Trademark Law or Patent Law.

Article 46.

The provisions of this Law shall not apply to any act performed by an enterprise in accordance with other laws.

The acts of a governmental enterprise, public utility or communications and transportation enterprise approved by the cabinet shall not be subject to the application of this Law until the elapse of five years after the promulgation of this Law.

Article 47.

Unrecognized foreign legal persons or groups may file a complaint, private prosecution or civil action in respect of the matters specified in this Law provided, however, that nationals or groups of the Chinese Taipei are entitled to the same privileges in their countries under treaties, laws and regulations or customary practices of such countries, or mutual protection agreement(s) entered into by and between groups or organizations with the approval of the central competent authority.

Article 48.

The enforcement rules of this Law shall be adopted by the central competent authority.

Article 49.

This Law shall come into force one year after promulgation.