April 2023
Oli Wong
The Taiwan Fair Trade Commission (the “TFTC”) issued the Gong-Chu-Zi 112008 Disposition of February 20, 2023, holding that 3 nationwide suppliers and 15 regional suppliers in Taoyuan City had agreed to engage in the concerted action of jointly distributing the trading counterparts for ready-mix concrete and avoiding mutual competition in violation of the provision of Article 15, Paragraph 1 of the Fair Trade Act (the “Act”), and imposing fines ranging from NT$500,000 to NT$50,000,000 and totaling NT$213,100,000.
Grounds of the FTC’s findings
The TFTC found after its investigation that 15 ready-mix concrete suppliers in Taoyuan City started to meet in November 2018 and decided to establish the Taoyuan Ready-Mix Concrete Association (the “Taoyuan RMC Association”) to meet regularly to discuss and coordinate the distribution of ready-mix concrete supply projects in Taoyuan. The 15 ready-mixed concrete suppliers mutually exchanged quotation and trading information for individual projects with competitors in the same industry through a WeChat group, or disclosed their own quotes, or asked their competitors whether they could provide a quote before it was submitted and how much should be quoted so as to reach a tacit agreement not to bid for projects at lower prices. The 15 ready-mix concrete suppliers indeed mutually restrained each other from poaching customers and avoided competition.
In addition, the 15 ready-mixed concrete suppliers checked each other’s shipments by forming a market research team to perform the crosscheck, paying a fee, and installing monitors collectively to confirm each other’s compliance with the concerted action.
Although the three nationwide industry players, namely Goldsun, TCC, and Ya Tung, were not involved in the market research team, the WeChat group, or the installation of monitors, since the three nationwide industry players attended meetings of the Taoyuan RMC Association and participated in the coordination and allocation of projects, price quotation, etc., the TFTC still concluded that the three nationwide industry players did discuss and coordinate with the 15 ready-mixed concrete suppliers.
In view of the high homogeneity of ready-mixed concrete products and the price-oriented nature of competition among operators, the TFTC concluded that the 18 operators coordinated the allocation of trading counterparts, avoided poaching customers, and engaged in other conduct that avoids competition, which obviously undermined the operation of the competition mechanism in the ready-mix concrete market in Taoyuan and constituted an illegal concerted action.
Brief analysis
If the information exchange between companies in the same industry involves sensitive trading information such as the subject matter of a price negotiation, price quotation and closing price, trading volume, etc., so that they can jointly decide on prices, customer allocation, and agreement not to compete, regardless of whether they are mutually binding, this may run the risk of being concluded as an illegal concerted action for the likelihood to weaken competition activities. The TFTC has already made highlighted this focus of investigation in cases such as the “CD-ROM procurement bid rigging” case[1] and the “scallop importers’ price hike” case.[2] Therefore, it is advisable for enterprises to avoid exchanging competitively sensitive trading information on occasions where they may communicate with competitors in the same industry (whether it is in a association event or a communications group) in order to reduce the risk of constituting concerted action in violation of the Fair Trade Act.
[1] The Gong-Chu-Zi 101132 Disposition of September 19, 2012 from the TFTC.
[2] The Gong-Chu-Zi 111022 Disposition of May 10, 2022 from the TFTC , and please refer to Lee, Tsai & Partners Alert in June 2022, titled TFTC Penalized Dried Scallop Importers for Concerted Action to Hike Prices.
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