Fair Trade Law Q&A - Resale Price Maintenance

What constitutes "resale price maintenance" and what are the relevant regulations and penalties under the Fair Trade Act?

Resale Price Maintenance" ("RPM") is a form of vertical restraint arising in upstream-downstream commercial relationships. It refers to conduct whereby an enterprise sets the resale price of goods/services supplied to downstream distributors and restricts trading counterparts from deviating from such prescribed resale prices. For example, if manufacturer A, when selling products to wholesaler B, requires B to resell the products to retailers at prices designated by A, or if A directly fixes or mandates the retail prices of products manufactured by A, such conduct constitutes resale price maintenance.

Article 19 of the Fair Trade Act provides that, "An enterprise shall not impose restrictions on resale prices of the goods supplied to its trading counterpart for resale to a third party or to such third party for making further resale. However, those with justifiable reasons are not subject to this limitation. The provision of the preceding paragraph shall apply mutatis mutandis to services provided by an enterprise." In addition, Article 40 of the Fair Trade Act provides that the Fair Trade Commission may order any enterprise that violates Article 19 to cease the unlawful conduct, rectify the violation, or take necessary corrective measures within a prescribed time period, and may impose an administrative monetary penalty ranging from NT$100,000 to NT$50 million. If the enterprise fails to comply, the Fair Trade Commission may continue issuing orders requiring cessation, rectification, or corrective measures, and may impose successive administrative monetary penalties ranging from NT$200,000 to NT$100 million for each failure to comply until the violation is remedied.