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Enforcement Rules of Fair Trade Act of 1999

Enforcement Rules of Fair Trade Act of 1999 

 

Promulgated on 24 June 1992;
Amendments Promulgated on 30 August 1999

Article 1
 

These Enforcement Rules are adopted pursuant to the provisions of Article 48 of the Fair Trade Act (hereinafter referred to as the "Law").
 

Article 2
 

The following factors shall be taken into consideration when determining whether an enterprise constitutes a monopoly as referred to in Article 5 of the Law:
 

  1. the market share of the enterprise in a particular market;
  2. the possibility of substitution of the goods or services in a particular market, giving regard to considerations of time and place;
  3. the ability of the enterprise to influence prices in a particular market;
  4. whether formidable difficulties exist restricting other enterprises in entering a particular market;
  5. import and export status of the goods or services.

Article 3
 

Absent any one of the circumstances set forth in the following subparagraphs, no enterprise shall be considered as a monopoly provided for in the preceding article:
 

  1. the market share of an enterprise reaches one-half of a particular market;
  2. the combined market share of two enterprises reaches two-thirds of a particular market; and
  3. the combined market share of three enterprises reaches three-fourths of a particular market.

Even though there is one of the circumstances as set forth in the preceding paragraph, in case the market share of an individual enterprise does not reach one-tenth of the particular market or in case its total sales in the preceding fiscal year are less than one billion New Taiwan Dollars, such enterprise shall not be considered as a monopoly.

Despite the existence of the circumstances specified in the preceding two paragraphs, under which an enterprise shall not be considered as a monopoly, the central competent authority may nevertheless determine that such enterprise constitute a monopolistic enterprise where its establishment or its provision of goods or services to a particular market is subject to legal or technological restrictions or where other circumstances exist that would affect market supply and demand and might impede the ability of others to compete.

Article 4
 

Production, sales, inventory, and import/export value (volume) data for the enterprise and the particular market shall be taken into account when calculating the market share of an enterprise.

Data necessary for the calculation of the market share may be based on that obtained upon investigation by the central competent authority or that recorded by other government agencies.
 

Article 5
 

Concerted action under Article 7 of the Law is limited to horizontal one among enterprises at the same stage of production and/or marketing, through which the market functions of production, trade in goods, or supply and demand of services are capable of being affected.

"Other form of mutual understanding" in Article 7 means communications of intents other than contract or agreement that, irrespective of whether any binding effect exists, could in fact lead to joint action.

Restricting activities of enterprises by a trade association through its charter, a resolution of a member meeting or a directors/supervisors meeting, or other means shall also be considered as a horizontal concerted action as set out in the first paragraph of this article; the representative of such trade association may be deemed as the actor.
 

Article 6
 

"Sales amount" in subparagraph 3, paragraph 1, Article 11 of the Law means the total sales amount of an enterprise.

Calculation of the "total sales amount" referred to in the preceding paragraph shall be based on data obtained through investigation by the central competent authority or recorded by other government agencies.
 

Article 7
 

An application for approval of a merger of enterprises required by paragraph 1, Article 11 of the Law shall be filed with the competent central authority by the following enterprises:
 

  1. all the enterprises participating in the merger, where two enterprises are merged into one, where an enterprise is assigned by or leases from another enterprise, or where an enterprise operates jointly with another enterprise on a regular basis or is entrusted by another enterprise to operate the latter''s business;
  2. the holding or acquiring enterprise, where an enterprise holds or acquires shares or capital contribution of another enterprise; and
  3. the controlling enterprise, where an enterprise directly or indirectly controls the business operations or the appointment or discharge of personnel of another enterprise.

Article 8
 

An application for approval of a merger of enterprises required by paragraph 1, Article 11, of the Law shall be filed with the central competent authority with the following documents attached:
 

  1. an application form specifying the following information:
    (1) the type and substance of the merger;
    (2) personal name and residence or domicile of each participating enterprise, or the name of each participating company, sole proprietorship or partnership, or organization, and the location of office or place of business for each participating enterprise;
    (3) the scheduled date of merger;
    (4) the name of the agent, if any, and the supporting document therefor,
    (5) other necessary information;
  2. basic data on each participating enterprise:
    (1) the name and residence or domicile of the representative or administrator, if any, of each enterprise;
    (2) the capital and scope of business of each participating enterprise;
    (3) the turnover in the preceding fiscal year of each participating enterprise and any enterprise with which it has a relationship of control or subordination;
    (4) the number of employees of each participating enterprise.
  3. the financial statement and operating report for the preceding fiscal year of each participating enterprise;
  4. data such as the production or operating costs, sales prices, and production and sales values (volumes) of each enterprise''s goods or services related to the merger applied for;
  5. an explanation of the benefits of the merger for the overall economy;
  6. other documents as specified by the central competent authority.

The form of the application referred to in the preceding paragraph shall be set by the central competent authority.
 

 

Article 9
 

Where the materials submitted with the application for approval of merger are incomplete or are deficient in content, the central competent authority may require supplementation or correction of the application within a specified period of time, stating the reasons for such requirement, and may dismiss the application for failure to comply within the specified period.

Supplementation or correction referred to in the preceding paragraph is limited to one time.

The two-month period referred to in paragraph 2, Article 11, of the Law is calculated beginning from the date of receipt of the application by the central competent authority; provided, where the materials submitted by the enterprise or the information therein are incomplete or deficient in content and the central competent authority has notified the applicant to make supplementation or correction within a specified time, the period shall be calculated from the date of receipt of the supplementation or correction.
 

Article 10
 

When approving a merger pursuant to Article 12 of the Law, the central competent authority may prescribe, for a reasonable duration, additional conditions or burdens to ensure that the benefits for the overall economy outweigh the disadvantages resulted from competition restraints.

The additional conditions or burdens made in accordance with the preceding paragraph may not contradict the purposes of the approval, and shall furthermore bear justifiable and reasonable relevance to such purposes.
 

Article 11
 

When considered necessary, the central competent authority may publish approvals for mergers in the government gazette.
 

Article 12

To conduct a concerted action pursuant to the proviso of Article 14 of the Law, an application for approval shall be jointly filed with the central competent authority by all the enterprises participating in such action.

An application for approval of a concerted action by a trade association as referred to in paragraph 3, Article 5 shall be filed with the central competent authority by such trade association.

The applications in the preceding two paragraphs may be made through an attorney-in-fact.
 

Article 13
 

An application for approval filed pursuant to the proviso of Article 14 of the Law shall be accompanied by the following documents:

 

  1. an application form that sets forth the following:
    (1) the names of the goods or services to which the concerted action applies;
    (2) the type of concerted action;
    (3) the implementation period and area of the concerted action;
    (4) the name of the attorney-in-fact, if there is one, and the supporting document;
    (5) other necessary information;
  2. the document showing the contract, agreement or other form of communication of intents in the concerted action;
  3. the concrete substance and implementation methods of the concerted action;
  4. basic data on the participating enterprises:
    (1) personal name and residence or domicile of each participating enterprise, or the name of each participating company, sole proprietorship or partnership, trade association, or organization, and the location of office or place of business for each participating enterprise;
    (2) the name and residence or domicile of the representative or administrator, if any, of each enterprise; and
    (3) the scope of business, capital, and turnover in the preceding fiscal year of each participating enterprise.
  5. quarter reports for the past two years on the prices and production and sales values (volumes) of those products or services relevant to the concerted action, of each participating enterprise;
  6. financial statement and operating report of each participating enterprise for the preceding fiscal year;
  7. an assessment report on the concerted action; and
  8. other documents as specified by the central competent authority.

The form of the application referred to in the preceding paragraph shall be set by the central competent authority.
 

Article 14
The assessment report on the concerted action referred to in subparagraph 7, paragraph 1, of the preceding article shall specify the following:
 

  1. cost structure before and after the concerted action and analytical data on forecasted changes;
     
  2. the impact of the concerted action on non-participating enterprises;
     
  3. the impact of the concerted action on the structure, supply and demand, and pricing of the relevant market;
     
  4. the impact of the concerted action on upstream and downstream enterprises and their markets;
     
  5. concrete benefits and detrimental effects of the concerted action for the overall economy and public interest;
     
  6. other necessary information.
     

Article 15

The concerted action assessment report accompanying an application filed pursuant to the provisions of subparagraph 1 or 3, Article 14, of the Law shall set out in detail the anticipated concrete results in cost reduction, quality improvement, increased efficiency, or rationalization of operations.
 

Article 16

The concerted action assessment report accompanying an application filed pursuant to the provisions of subparagraph 2, Article 14, of the Law shall specify the following information:
 

  1. the difference between the funding required for individual research and development and that required for joint research and development;
  2. the anticipated concrete results in technology upgrading, quality improvement, cost reduction, or increased efficiency.

Article 17

The concerted action assessment report accompanying an application filed pursuant to the provisions of subparagraph 4, Article 14, of the Law shall specify the following information:
 

  1. the export value (volume) of each participating enterprise for the most recent one-year period, the percentage of the total export value (volume) of the same product for which it accounts, and the enterprise''s ratio of exports to domestic sales; and
  2. the anticipated concrete results in promoting exports. 

Article 18
 

The concerted action assessment report accompanying an application filed pursuant to the provisions of subparagraph 5, Article 14, of the Law shall specify the following information:

 

  1. the export value (volume) of each participating enterprise for the most recent three years;
  2. a comparison of the costs required for import by the individual enterprises versus those required for concerted import;
  3. the anticipated concrete results in strengthening trade.

Article 19

The concerted action assessment report accompanying an application filed pursuant to the provisions of subparagraph 6, Article 14, of the Law shall specify the following information:
 

  1. a monthly comparative breakdown for the preceding three years of the average fixed costs, average variable costs, and pricing of specified goods of each participating enterprise;
     
  2. a monthly breakdown for the preceding three years of production capacity, equipment utilization rate, production and sales value (volume), import/export value (volume) and inventory levels of each participating enterprise;
     
  3. changes in the number of businesses in the relevant industry over the preceding three years;
     
  4. market prospects for the relevant industry;
     
  5. adopted or contemplated self-help methods, other than concerted action, to turn around the business; and

     
  6. anticipated results of the concerted action.

In addition to those enumerated above, the central competent authority may request the provision of other related materials.
 

Article 20

The concerted action assessment report accompanying an application filed pursuant to the provisions of subparagraph 7, Article 14, of the Law shall specify the following information:
 

  1. supporting document showing that the enterprise conforms to the criteria for recognition as a small or medium-sized enterprise.
     
  2. anticipated concrete results in achieving improved operational efficiency or strengthened competitiveness.
     

Article 21

Where the materials submitted with the application for approval of concerted action are incomplete or are deficient in content, the central competent authority may require supplementation or correction of the application within a specified period of time, stating the reasons for such requirement, and may dismiss the application for failure to comply within the specified period.
Supplementation or correction referred to in the preceding paragraph is limited to one time.
 

Article 22

The identification of a small or medium-sized business as referred to in subparagraph 7, Article 14, of the Law shall be made in accordance with the criteria set forth in the Statute for the Development of Small and Medium-Sized Enterprises.

Article 23
 

To obtain an extension pursuant to paragraph 2, Article 15, of the Law the enterprises shall file an application with the central competent authority attaching the following materials:

 

  1. an application form;
  2. a copy of the original approval;
  3. the reasons for applying for the extension; and
  4. other documents or materials designated by the central competent authority.

Article 24

The following factors shall be taken into consideration when determining whether a justification exists as referred to in subparagraph 2, Article 19, of the Law:
 

  1. supply and demand conditions in the market;
  2. cost differences;
  3. transaction amounts;
  4. credit risks; and
  5. other reasonable grounds.

Article 25
 

"Limiting" as used in subparagraph 6, Article 19, of the Law refers to tying arrangement, exclusive dealing, restrictions on territory, customers or use, and other restrictions on business activities.

In determining whether the restrictions mentioned in the preceding paragraph are reasonable, the totality of such factors as the intent, purposes, and market position of the parties, the structure of the market to which they belong, the characteristics of the goods, and the impact of carrying out such restrictions on market competition shall be considered. 

Article 26

In cases where actions of an enterprise violate the provisions of paragraphs 1 or 3, Article 21, of the Law, the central competent authority may order the enterprise to publish corrective advertisements pursuant to Article 41 of the Law.

The methods, number of appearances, and duration of the advertisements shall be determined by the central competent authority, taking into consideration the degree of impact of the original advertisements.

Article 27

"Participant" as used in paragraph 3, Article 23-1, and paragraph 2, Article 23-2, of the Law means the party to a contract that has been rescinded or terminated, and does not extend to other participants.
 

Article 28

The central competent authority, when giving notice as prescribed in subparagraph 1, Paragraph 1, Article 27 of the Law, shall do so in writing.

The written notice in the preceding paragraph shall specify the following information:
 

  1. name and residence or domicile of the recipient of the notice, or, if a company, sole proprietorship or partnership, trade association, or organization, the name of its responsible person and the address of its office or place of business;
  2. subject matter of the case;
  3. date, time, and place of required appearance;
  4. credit risks; and
  5. provisions concerning punishment for failure to appear without proper reason.

 

The notice shall be served no later than 48 hours prior to the date when appearance is required, provided this restriction shall not apply in cases where urgent circumstances exist.

Article 29

A person notified pursuant to the preceding article may retain an attorney-in-fact to appear and make statements on its behalf; provided, when the central competent authority deems necessary, it may give notice requiring appearance in person.
 

Article 30

Statements made by the person notified pursuant to the provisions of Article 28 shall be recorded into a written Statement, to be signed by the notified person. If the notified person is unable to sign the Statement, he or she may seal or fingerprint it instead; if the notified person refuses to sign, seal, or fingerprint the Statement, such facts shall be recorded.
 

Article 31

When issuing notice pursuant to subparagraph 2, Paragraph 1, Article 27 of the Law, the central competent authority shall include the following items in writing:
 

  1. the name and residence or domicile of the notified person, and in the case of a company, sole proprietorship or partnership, trade association or organization, the name of the responsible person and the location of the office or place of business;
  2. the subject matter of the case;
  3. books and records, documents, or other materials or evidence to be submitted;
  4. the time limit for submission;
  5. provisions concerning punishment for refusal to submit without proper reason. 

Article 32

The central competent authority shall issue a receipt upon receiving books and records, documents, and other required materials and evidence submitted by relevant agencies, organizations, enterprises, or individuals.
 

Article 33

When assessing fines in accordance with the Law, all circumstances shall be taken into consideration, and the following items shall be noted:
 

  1. motivation, purpose, and expected improper interests of the illegal acts;
  2. the degree of the illegal act''s damage to trading order;
  3. the duration of the illegal act''s damage to trading order;
  4. interests derived on account of the illegal act;
  5. scale, operating situation, and market position of the enterprise involved in the illegal act;
  6. whether or not the type of illegal acts involved in the violation has been the subject of correction or warning by the central competent authority;
  7. types of, number of, and intervening time between, past violations, and;
  8. remorse shown for the act and attitude of cooperation in the investigation.
     

Article 34

The duration for which an enterprise is ordered to suspend business pursuant to the Law shall be limited to six months each time.

Article 35

These Enforcement Rules shall take effect from the date of announcement.
 

 

Updated at:2014-08-18 17:33:01
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