Applicability of the Fair Trade Law to Vertical Restraints in Industries –
by Reviewing Dairy, High Pressure Gas, Auto, and Cement Industries
Abstract
Since the entering into force of the Fair Trade Law in Chinese Taipei, several Vertical restraint cases relating to the application of Article 19, Section 1, Paragraph 6 of the Fair Trade Law have been adjudicated. When so did, how to apply the "rule of reason" and how to include the utility of economic analysis throughout the enforcement procedure were the major issues encountered by the Fair Trade Commission. Therefore, it has been the purpose of this research plan, after taking into account related foreign experiences, to propose on the role of economic analysis and to clarify the contents of the rule of reason pending the adjudication of a non-price vertical restraint case.
Basing on the record and data collected by the Fair Trade Commission, this study focuses on the non-price vertical restraints relating to marketing arrangements of Auto, Milk, Cement and Hydro-Air industries. The study also evaluates the legality of behaviors at dispute according to the NAAG Vertical Restraint Guidelines of U.S., 1995 and American judicial opinions as well as the related economic and marketing theories.
Several non-price vertical restraints are covered in the study. Those are tying, market division and exclusive distributorship. However, the research found that no evidence indicated the existence of illegal tying in the four industries. On the other hand, to those vertical restraints utilized in different industries, the study tried to find out whether or not the marketing channel has been unreasonably disturbed or blocked. In additions, the analysis was focused on the maintenance of fair use of marketing channel.
Finally, subject to the rule of reason, the study turns to the case study on the related behaviors of the four industries. The workshop type analysis takes both marketing theories and foreign legislative and adjudicating experiences into account, so as to propose the criteria for determining the legality of a vertical restraint, as well as the variables to be considered when applying the criteria.