Action brought to the Administrative Court by a motorcycle manufacturing and sales company against the Commission's announcement of monopolistic enterprise
Chinese Taipei
Case:
Action brought to the Administrative Court by a motorcycle manufacturing and sales company against the Commission's announcement of monopolistic enterprise
Key Words:
Monopoly, specific market, market share, interchangeability
Reference:
Administrative Court, Pan Tzu No 1113 (1994)
Industry:
Transportation vehicle production and repair industry (3241)
Relevant Laws:
Summary:
1. The Respondent, the Fair Trade Commission, has in accordance with Article 10(2) of the Fair Trade Law, divided the specific markets as defined under the said law into the two general categories, i.e., (1) the market of industrial and agricultural industries and (2) the market of service industries. In connection with agricultural and industrial industries, after taking into account the factors of the category of products, their specific use, the interchange ability of products and the possibility of production technology potential in the short term etc., the Commission studied and drafted the division principle for specific market, which divided the "Railroad and Passenger Transportation Services Market" into 23 specific markets of the agricultural and industrial category and 10 specific markets of the services industry. The competent authorities for , the relevant groups of, and members of each industry were invited to discuss the matter and after investigating materials relating to each industry, the Commission according to Articles 3 and 4 of the Enforcement Rules of the Fair Trade Law, which prescribe the issue need to be reviewed for determining a monopolistic enterprise, designated the monopolistic enterprise to be publicly announced. The plaintiff, Yamaha Motor Company in Chinese Taipei, is involved in the business of production and sale of motorcycles. In 1991 its total sales revenues were in excess of NT$ 1 billion. Its market share in the motorcycle market was 34.1%. Taken together with the motorcycle market shares of Kwang Yang Motor Co. Ltd. and Sanyang Industry Co. Ltd., the threshold to be deemed a monopolistic enterprise has been reached and accordingly it [Yamaha Motor Company in Chinese Taipei] is categorized as a monopolistic enterprise within the specific industry of motorcycles.
2. Motorcycles are a means of transport intermediate between bicycles and automobiles. Their unit price and [physical] structure is also intermediate [between bicycles and automobiles]. The plaintiff does not dispute that motorcycles and bicycles are not part of the same specific market. Accordingly, the plaintiff would not advocate that motorcycles should be categorized in the same specific market as automobiles since automobiles are more complicated than motorcycles in terms of [physical] structure and production technology. The plaintiff also admitted that the useful life and safety of automobiles are greater, that automobile's utililizable space and the number of passengers which can be accommodated and other physical attributes are superior. In terms of the status [afforded by automobile ownership] and other intangible values, automobiles in the eyes of consumers can be distinguished from the specific market of motorcycles. Furthermore, even though the ability of consumers to purchase automobiles has increased with the increase in GNP, consumers have not for this reason given up use of motorcycles. The statements of the plaintiff that consideration be given to interchangeability based upon price, quality, function and convenience and consideration be given to availability of supply and timing factors only go to prove the commonality of the motorcycle industry.
For example, all [companies in the industry] need to increase local content rates, improve environmental protection standards and make payment of 5 years' fuels tax at one time. This also goes to prove that motorcycles belong to a different specific market as motorcycles [among a portion of the market] have already been replaced by automobiles. Furthermore, the plaintiff on the one hand argued that "price competition between brands was extremely fierce" and on the other hand argued that price leadership in this oligopolistic market (in other words the cheaper the price the more products sold) occurred in the motorcycle market. These arguments were in conflict. In addition, the plaintiff did not dispute that in 1991 its gross sales revenues were in excess of NT$ 1 billion, that its market share in the motorcycle market was 34.1% and that Sanyang Industry Co. Ltd. market share was 26.85% and Kwang Yang Industrial Co. Ltd. market share was 28.12%, with the three together having a market share in the motorcycle market in excess of three quarters of the market. The plaintiff has been announced as monopolistic enterprises by the Commission pursuant to announcement under Articles 5 and 10(2) of the Fair Trade Law based upon complete statistical information from the past year. There is nothing inappropriate in this approach because the past year data are the most substantial ones in the constantly changeable industrial world of today. Further, there is no basis for the position of plaintiff that 1 year's information was too short and that information from 5 to 10 years would be reasonable and that the respondent had made inferences from presumption in determining that the plaintiff was a monopolistic enterprise.
Summarized by Cheng, Chun T'ing
Supervised by Cheng, Hui P'ing