He An Co., Ltd.

Case:

Supreme Administrative Court overruled the appeal of administrative litigation by He An regarding its violation of the Fair Trade Law

Key Word(s):

Medicine procurement, bidding with unreasonably low price, Escitalopram

Reference:

Supreme Administrative Court Judgment (2014) Cai Tzu No. 1683

Industry:

Wholesale of Pharmaceutical and Medical Goods (4571)

Relevant Law(s):

Article 19(iii) of the Fair Trade Law

Summary:

1. To push other suppliers out of competition, the appellant He An Co., Ltd. offered to sell the 10mg Lexapro tablets (hereinafter referred to as the medicine in question) produced by Lundbeck for one NT dollar (same currency applies hereinafter) per piece, which was far lower than the company's purchasing cost, in a bid. After concluding that such an unjustifiable practice to make trading counterparts to do business with the company alone was likely to lead to competition restrictions or impede fair competition in violation of Article 19(iii) of the Fair Trade Law, the FTC cited the first section of Article 41 of the same law and issued Disposition Kung Ch'u Tzu No.100163 to order the appellant to immediately cease the unlawful act after receiving the disposition and also impose an administrative fine of 3 million on the company. Finding the decision unacceptable, the appellant filed an appeal but it was rejected. Then the appellant resorted to administrative litigation and Taipei High Administrative Court revoked the appeal rejection and the original sanction via Taipei High Administrative Court Judgement (2012) Su Tzu No.780. The FTC found the ruling unacceptable and appealed. The Supreme Administrative Court discarded the ruling via Supreme Administrative Court Judgement (2014) Pan Tzu No. 31 and remanded the case to the original court. Taipei High Administrative Court rejected the appellant's appeal; the appellant found it unacceptable and filed the appeal in question. The Supreme Administrative Court overruled the appeal via its Judgement (2014) Cai Tzu No.1683 and finalized the case.
2. In 2005, the Appellant became the exclusive agent in the country for the medicine in question. The main ingredient was Escitalopram which cured depression. Meanwhile, East Bamboo Co., Ltd. (hereinafter referred to as East Bamboo), the third party involved, also started in 2008 to sell the first generic depression tablet under the name of the aforesaid main ingredient in the country. In the same year, East Bamboo won the qualification for price competition in Kaohsiung Medical University Hospital's procurement project and was notified by the procurement unit of the hospital to engage in price competition with the appellant on Sep. 16, 2008. East Bamboo offered 11 dollars per tablet but the appellant offered one dollar and was awarded the procurement project. The appellant confessed that its purchasing cost per tablet at the time of bidding was 12 dollars and it had offered one dollar per tablet, far lower than the purchasing cost, in order to maintain the original market status of the medicine in question. In other words, knowing that it would lose money (11 dollars per tablet), the company made the offer against the common logic of a profit-seeking business always working to obtain the biggest profit. The unjustifiable bidding practice of offering an unreasonably price was intended to eliminate East Bamboo's opportunity to enter the market of medicine for domestic medical centers. It could lead to competition restrictions or impede competition. Taipei High Administrative Court therefore rejected the appellant's appeal and clearly stated the reasons in the grounds of decision. The justification for the appeal was that the said decision had been in violation of related regulations. However, the Supreme Administrative Court reviewed the appeal and concluded that the appeal brief contained no concrete description of inapplicable regulations, inappropriate application of regulations or any of the circumstances specified in Article 243(2) of the Administrative Litigation Act. As it was difficult to see how the decision had been in violation of any regulation, the Supreme Administrative Court therefore considered the appeal illegitimate and overruled the appeal via Judgement (2014) Cai Tzu No. 1683. The case was thus finalized.

Appendix:
He An Co., Ltd.'s Uniform Invoice Number: 04224381