1. What are “restrictions on resale prices?” What are the corresponding regulations and penalties in the Fair Trade Act?
“Restrictions on resale prices” belong to vertical restrictions imposed by enterprises on their downstream distributors by setting the resale prices for products they supply and demanding that distributors sell the products accordingly. For example, when manufacturer A demands that wholesaler B resell the products from A to retailers at prices set by A when A sells B the products or if A directly imposes a restriction on the retail prices of its products, it is a “restriction on resale prices.”
According to Article 19 of the Fair Trade Act, “An enterprise shall not impose restrictions on resale prices of the goods supplied to its trading counterpart for resale to a third party or to such third party for making further resale. However, those with justifiable reasons are not subject to this limitation. The provision of the preceding paragraph shall apply mutatis mutandis to services provided by an enterprise.” In the meantime, it is also stipulated in Article 40 of the same act that the Fair Trade Commission may order any enterprise that violates Article 19 to cease or rectify its conduct or take necessary corrective measures within a given period as well as impose an administrative fine of between NT$100,000 and NT$50 million. If such an enterprise fails to comply, the Fair Trade Commission may continue to order the enterprise to cease or rectify its conduct or take any necessary corrective measures within a given period and also impose an administrative fine of between NT$200,000 and NT$100 million each time until the enterprise ceases or rectifies its conduct or takes necessary corrective measures.
Relevant article(s) of law: Fair Trade Act, Article 19