Fair Trade Law Q&A - Monopoly

Under economic theory, a monopoly generally refers to a sole producer, seller, or purchaser in a market. However, the definition of "monopoly" under the Fair Trade Act is broader. Article 7 of the Fair Trade Act provides that: The term "monopolistic enterprise" as used in this Act means any enterprise that faces no competition or has a dominant position to enable it to exclude competition in the relevant market. Two or more enterprises shall be deemed monopolistic enterprises if they do not in fact engage in price competition with each other and they as a whole have the same status as the enterprise defined in the preceding paragraph.

Article 8 further sets out the criteria for determining monopoly status. An enterprise will be presumed to constitute a monopoly where any of the following conditions is met:

1. I.the market share of the enterprise in the relevant market reaches one-half (1/2)of the market;
2. II.the combined market share of two enterprises in the relevant market reaches two-thirds(2/3) of the market; and
3. III.the combined market share of three enterprises in the relevant market reaches three-fourths(3/4) of the market.

However, even where the above thresholds are met, an enterprise will generally not be included in the scope of monopolistic enterprises if: its individual market share is less than one-tenth (1/10), or its total sales in the preceding fiscal year are less than NT$3 billion.

Furthermore, an enterprise, which under the preceding two paragraphs should not be included, may still be determined to be a monopoly by the Commission if its establishment, or the entry of its goods or services into the relevant market is subject to legal or technological constraints, or if other circumstances exist that affect market supply and demand and enable the enterprise to exclude competition.