Shih Kong Mitsukoshi dissatisfied with the Fair Trade Commission’s disposition and filed an administrative litigation with regard to the violation of the Fair Trade Law by causing the boutique operators discontinued business transactions with a particular enterprise, for the purpose of injuring such particular enterprise and lessen competition or impede fair competition

Taiwan

Case:

Shih Kong Mitsukoshi dissatisfied with the Fair Trade Commission’s disposition and filed an administrative litigation with regard to the violation of the Fair Trade Law by causing the boutique operators discontinued business transactions with a particular enterprise, for the purpose of injuring such particular enterprise and lessen competition or impede fair competition

Key Words:

lessening competition, impeding fair competition, boycott

Reference:

(2004) Taipei High Administrative Court’s Decision (93) Su Tzu No. 2973

Industry:

Department Stores (4751)

Relevant Laws:

Article 19(i) of the Fair Trade Law

Summary:

1. A complaint filed with the accused indicated that when Idee Department Store was about to open its Taichung branch near the plaintiff’s branch in Taichung during May 2003, the plaintiff’s branch in Taichung told its boutique operators that they would be penalized and their boutiques would be removed for opening counters inside the Idee Department Store Taichung branch. The boutique operators were compelled to suppress their resentments. The accused’s investigation found that the plaintiff has caused the boutique operators discontinued business transactions with a particular enterprise, for the purpose of injuring such particular enterprise, and the act was likely to lessen competition or to impede fair competition. Such act has violated the provision of Article 19 (i) of the Fair Trade Law (FTL), and a disposition was rendered in accordance with the fore part of the Article 41 of the FTL. The plaintiff was dissatisfied with the Fair Trade Commission (FTC) original disposition and filed an appeal. However, the appeal was dismissed and thus this administrative litigation is filed.
2. According to the provision of Article 19 (i) of the FTL, the act of an enterprise (boycott initiator) to cause another enterprise (person being induced to carry out boycott) discontinues supply, purchase or other business transactions with a particular enterprise (boycott target) for the purpose of injuring such particular enterprise which is likely to lessen competition or to impede fair competition, is prohibited. The aforementioned boycott is reprehended as the boycott initiator has induced another enterprise to discontinue business transaction with a particular enterprise, for the purpose of injuring and preventing such particular enterprise from competing with it. Therefore, from an objective standpoint, it can be concluded that the “impelling” conduct of the boycott initiator has the implication of “shirk responsibility to, induce or instigate” another enterprise to refuse business transactions with a particular enterprise which is likely to lessen competition or impede fair competition and thus is reprehensible. The boutique operators will consider the prosperity of the commercial circle, the extent of crowd gathering, and the status of client groups in its decision of establishing boutique counters at a department store. The department store will become an important end-user channel for the boutique operators if the said department store has met the requirements of counters establishments. Idee Department Store Taichung branch opened in the beginning of May 2003 and is approximately 600 meters away from Shin Kong Mitsukoshi Taichung branch; both belong to the same commercial circle and are competitors. Both parties did not deny this fact and the newspaper clipping of industrial report enclosed in the original disposition can verify this fact as well.
3. The senior staff of the plaintiff’s Taichung branch verbally hinted the boutique operators that they were not permitted to set up counters at Idee Department Store Taichung branch, such act of verbal hint has come to an extent that Aso Company has made a decision to cancel the plan of setting up a counter at Idee Department Store Taichung branch. From the objective standpoint, it is sufficient to conclude that the said conduct has caused the boutique operators to discontinue business transactions with Idee Department Store Taichung branch. Moreover, the plaintiff’s Taichung branch and Idee Department Store Taichung branch were competitors in the same commercial circle. The aforementioned improper competition measure hindered Idee Department Store Taichung branch’s solicitation for boutique operators. The objective of such measure was for Idee Department Store Taichung branch to withdraw from the Taichung department store market. The said conduct in essence has attained restrictive result; the boutique operators have discontinued business transactions with Idee Department Store Taichung branch. In consideration of its market position and the extent of influence in Taichung area department store market, the conduct of the plaintiff’s Taichung branch has constituted restriction and damages to Idee Department Store Taichung branch that has strive for business transactions with the boutique operators. It is likely that the said conduct is unfair or reducing market competition, and hence violating the provision of Article 19 (i) of the FTL. Therefore, the original disposition of the accused is not groundless.
4. To sum up, the decision and law quotation of the original disposition are legal and correct; the appeal decision should be kept. The plaintiff’s appeal to rescind the appeal decision and the original disposition as well as a request for the accused to return the paid New Taiwan Dollars (NT$) 800,000 fine plus the interest calculated starting from the next day of fine payment is groundless and shall be dismissed.

Appendix:
Shin Kong Mitsukoshi’s Uniform Invoice Number: 23525871

Summarized by: Huang, Chian-Mei; Supervised by: Lee, Wen-Show