Prescribed by the 470th Commissioners' Meeting of November 9, 2000

1. Purpose of these Principles

These Principles have been specially adopted to prevent distribution businesses from abusing advantageous positions in the market by improperly charging suppliers additional fees, and thereby to maintain the market trading order and ensure fair competition.

2. Definition of distribution business

The term "distribution business" as used in these Principles refers to volume retailers, convenience stores, super/hyper markets, department stores, cooperative stores, and all other businesses engaging in the retail sale of assorted goods.

3. Definition of additional fees

The term "additional fees" as used in these Principles, with the exception of amounts payable for goods by the distribution businesses, refers to fees charged to suppliers by distribution businesses, or to deductions made from amounts payable for goods, or to all kinds of fees demanded of suppliers by distribution businesses by other means.

4. Factors to be considered in determination of advantageous market position

In determining whether a distribution business holds an advantageous position in the market, the following factors must be considered: the comparative scales and market shares of the distribution business and supplier; the supplier's degree of dependence on the distribution business; the supplier's ability to change its sales channel; and supply of and demand for the goods.

5. Entering into written agreements

When a distribution business asks a supplier to bear additional fees, it should first negotiate with the supplier with respect to the type of additional fee, its use, and the amount of the fee (or the method of its calculation), and enter into a written agreement with the supplier.

6. Provision of information for direct debiting of additional fees

When a distribution business charges its supplier additional fees by directly debiting its account payable for goods purchased, it must provide information regarding the deduction prior to deducting the additional fees.

7. Practices constituting improper charging of additional fees

Under the following circumstances, a distribution business shall be deemed to be improperly charging additional fees:
(1) the fees charged are not directly related to promoting the sale of the goods;
(2) the fees charged are contributions to equipment, research and development, or promotional activities, and while of benefit to the supplier in promoting sale of goods or reducing operating costs, the amount of the fees exceeds in value the tangible benefit that the supplier may reasonably expect to derive from paying such contributions;
(3) the fees charged are for the sole purpose of achieving target figures or other accounting measures at the end of a fiscal year;
(4) when, despite the supplier being under no obligation, a reduction in the purchase price is demanded by the distributor for already-delivered goods; or
(5) fees are charged in a manner contrary to normal trading principles or commercial ethics.

8. Violation of these Principles

If a distribution business having an advantageous market position charges suppliers additional fees in a manner not in accordance with Points 5 and 6 of these Principles or is found to be in violation of Point 7 such that the distribution business market order is impacted, the distribution business shall possibly deemed to be in violation of Article 19(1)(vi) or Article 24 of the Fair Trade Act.

Privacy Policy Security Policy Fair Trade Commission, Executive Yuan, R.O.C Address:12-14 F, No. 2-2 Jinan Rd., Sec. 1, Jhongjheng (Zhongzheng) District, Taipei City 100, Taiwan (R.O.C.) Tel:886-2-23517588 E-mail: ftcpub@ftc.gov.tw Best browse in 800*600 pixel with IE6.0 or above

(Last Modified：2005/12/10 15:08:14 )