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A Study on the Amended Article 46 of the Fair Trade Law


To deal with the conflict between the Fair Trade Law and other Laws, Art. 46 of the amended Fair Trade Law(FTL, 1999)announced that all behaviors, authorized by the "other laws", employed by firms for competition are admissible only when the "other laws" are not incompatible with the legal intention of FTL. Following questions need to be answered:
1. Whether the FTL had thus become the "Constitution of economical affairs"?
2. How to explore the legislative intentions of the FTL?
3. How to implement the amended Art.46 of the FTL from the perspective of the FTC ?

We believe, the mere fact that the FTL is applicable in almost every economic area and that it is generally held in the era of liberalization and globalization as a model product of the Zeitgeist, would not raise it to the status of the Economic Constitution. Nevertheless, the FTL represents a set of "general rules" regarding the operation of market economy, rather than exceptions, as most trade regulations do. The 1999 amendment of the FTL has not changed its nature and status in Chinese Taipei's system of economic law. And since Art.46 is only one of the mechanisms channeling conflicts between the FTL and "other laws", its construction should not be made too much complicated. It has served as a general exemption clause to authorize the firms who have acted against the FTL prohibitions to call upon other laws. The new Art.46 renders the FTC the power to counter intervention of other laws by the enforcement of the FTL to keep competition as effective as possible.

The main task of this research lies in finding out the legislative intentions of FTL. Since analysis of Art.1 of the FTL, the purpose clause, leads to nowhere, we have traced back to the development of US and German competition laws, especially the practice of U.S. Supreme Court, which have been very often referred to by the FTL legislators. We come to the conclusion that as a result of regulatory reform Western countries tend to implant competition element in the reformed regulation laws to make reregulated markets contestable. And new tide of competition law in the nineties such as the FTL treats regulation not as something anti-competitive by nature. The FTC should then see that regulation laws be properly enforced, when it comes to exempt anti-competitive behaviors. Without the status of economic constitution, Art.46 of the FTL should not be construed as a general authorization to declare other laws void. Rather, it equips the FTC with the power to coordinate and balance the goals of other laws with that of the FTL and to guard against abusing.

We suggest that following factors should be taken into consideration, when FTC applies Art.46 to examine the enforcement of relevant laws:(1) extent of concentration and barriers to entry; (2) competitors and market performance; (3) scale of market; (4) quality of competition; (5) productive and allocative efficiency; (6) transaction cost; (7) consumer welfare, etc. By determing the density of control are relevant: (1) whether exemption is of economic nature; (2) whether the exemption rule was enacted before the FTL; (3) whether the law shows consciousness of competition policy; (4) whether the FTL is consulted with or engaged in enforcing the regulation law.

Updated at:2008-12-19 07:55:02