3. Which practices of “monopolistic” enterprises are subject to the regulation of the Fair Trade Act?

 A3:

According to Article 9 of the Fair Trade Act, “Monopolistic enterprises shall not engage in any one of the following conducts: 1) directly or indirectly preventing any other enterprises from competing by unfair means; 2) improperly setting, maintaining or changing the price for goods or the remuneration for services; 3) making a trading counterpart give preferential treatment without justification; and 4) engaging in other abusive conduct by using its market power.

If a monopolistic enterprise requests its upstream supplier not to provide materials to another business intending to manufacture the same products and thus makes it impossible for such a business to enter the market, it may be in violation of the regulation against “directly or indirectly preventing any other enterprises from competing by unfair means.” If a monopolistic enterprise sells its products at rates lower than the variable costs to force another business to withdraw from the market as a result of becoming unable to cope with losses, it may be in violation of the regulation against “improperly setting, maintaining or changing the price for goods or the remuneration for services.” Meanwhile, “making a trading counterpart give preferential treatment without justification” often occurs when the buyer is a monopolistic enterprise, such as an enterprise unilaterally determining its purchasing prices at rates lower than market standards and demanding that its trading counterparts sell their products at such rates. As for “other abusive conduct by using its market power,” it is an inclusive regulation mainly aimed at areas that the three preceding subparagraphs fail to cover. An evaluation has to be made according to the conditions of each case to decide whether there is any violation.

Relevant article(s) of law: Fair Trade Act, Article 9