The Taiwan Fair Trade Commission has responded to concerns about rising consumer prices by more vigorously enforcing the anti-price fixing provisions of the Fair Trade Act and imposing higher fines. At the same time, the Commission has attempted to equip itself with new tools to fight collusive price fixing by proposing new legislation and revising regulations after enactment.
Simultaneous Price Increases by Three Major Dairies
On 25 October 2011, Taiwan’s Fair Trade Commission imposed administrative fines ranging from NT$8 million (c. US$267,000) to NT$12 million (c. US$400,000) on Taiwan’s three largest dairies for raising their fresh milk prices simultaneously in violation of the Fair Trade Act’s prohibition against concerted action. § 14(a).
Simultaneous Increase of Take-out Coffee Prices by Four Major Convenience Store Chains
On 2 November 2011, the Fair Trade Commission fined Taiwan’s four largest convenience store chains (7-11, Family Mart, et al.) NT$500,000 (c. US$17,000) to NT$16 million (US$530,000) for simultaneously raising the prices for take-out coffee in violation of the Fair Trade Act’s prohibition against concerted action. § 14(a).
Analysis (Take-out Coffee Case)
- All four chains increased prices for the same product(s) by an identical amount (NT$5) even though the chains have different operating costs and management efficiencies. This permits an inference that the consistency in this price-raising conduct was the result of a meeting of the minds between the chains.
- The price increases all occurred during the same week between 4 October and 6 October. This closeness in time supports the inference of meeting of the minds.
- The price increases affected the functioning of supply and demand in the market for take-out brewed coffee.
Amendments to Laws and Regulations
Shortly after imposing these fines, Fair Trade Commission proposed a bill to amend the Fair Trade Act, which was passed by Taiwan’s Legislature and promulgated on 23 November 2011. The bill added an amnesty clause to the Act allowing the Commission to reduce or eliminate fines on participants in concerted action if the participant reports prohibited concerted action including price-fixing to the Commission. §35-1. It also empowered the Commission to fine businesses up to 10% of their annual sales for price fixing. § 41.
The Commission was also authorized to issue regulations on, inter alia, eligibility for amnesty, criteria for fine reductions or elimination, and the evidence that the participant needs to produce to support his allegations.
The Commission duly issued its Regulations on Immunity and Reduction of Fines in Illegal Concerted Action Cases on 6 January 2012.
On 12 March 2012, the Commission also issued revised administrative Directions on Applications by Small and Medium Sized Enterprises for Concerted Pricing.
Today’s Chinese-language media reported that the Commission has formed a task force to investigate 23 consumer products for collusive pricing including beverages, alcohol beverages, sugar, and automobiles.