Taipei High Administrative Court Judgment on the administrative litigation case brought by Chia Min Insurance Brokers Company against the Executive Yuan’s decision number Yuan-Tai-Su-Tzu-0920083719 (on the plaintiff’s petition regarding the complaint against other companies for their violation of the Fair Trade Law)

Taiwan

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Case:

Taipei High Administrative Court Judgment on the administrative litigation case brought by Chia Min Insurance Brokers Company against the Executive Yuan’s decision number Yuan-Tai-Su-Tzu-0920083719 (on the plaintiff’s petition regarding the complaint against other companies for their violation of the Fair Trade Law)

Key Words:

concerted price-setting, joint operation

Reference:

Taipei High Administrative Court Judgment (92) Su Tzu No. 1213

Industry:

Property and Liability Insurance (6420)

Relevant Laws:

Article14 of the Fair Trade Law

Summary:

1. On November 25, 1999, the plaintiff, Chia Min Insurance Brokers Company, filed a complaint against twenty eight domestic non-life insurance companies, alleging that they had jointly set the price of compulsory automobile liability insurance through premium rate regulations, co-insurance and joint operation, and had also jointly agreed on the products’ minimum premium. Such actions led to the uniformity of insurance products, and the prices tend to be higher and identical. The scale of the accused concerted action exceeds NT$ 50 billion every year and causes consumers to incur losses. The aforementioned companies were alleged to be involved in a concerted action as defined in Article 7 of the Fair Trade Law and violate Article 14 of the same Law that prohibits enterprises from conducting concerted actions. The complaint was filed with the Fair Trade Commission to investigate and ban the aforementioned concerted action. On November 10, 2000, the Fair Trade Commission replied to the complaint with a letter number (89) Kung-Yi-Tzu-88151261008, concluding that: the supposition of violating the Fair Trade Law is not found after the case was investigated. The plaintiff did not accept the investigation result and thus raised an appeal to the Executive Yuan, which appeal was rejected. Thereafter, the plaintiff filed an administrative litigation with Taipei High Administrative Court. The Court repealed the original appeal decision in its judgment number (90) Su-Tzu-4990, remanding the case to the Executive Yuan for a new and lawful disposition. However, the Executive Yuan ruled against the plaintiff’s appeal. Dissatisfied with the ruling, the plaintiff filed this administrative litigation.
    
2. According to the stipulation of Article 46 of the Fair Trade Law, “where there is any other law governing the conducts of enterprises in respect of competition, such other law shall govern; provided that it does not conflict with the legislative purposes of this Law.” Also for conducts as stipulated in the anterior paragraph of Article 12, the anterior paragraph of Article 144, Article 175 of the Insurance Law and the anterior paragraph of Article 25 of Regulations Governing the Administration of Insurance Enterprises, “The term [competent authority] as used in this Law means the Ministry of Finance”; “The competent authority shall prescribe formula used to calculate premium collected by insurance enterprises;….”, “The approval of the Ministry of Finance must be obtained prior to the implementation of various insurance premiums, insurance policy’s items, insurance application and the relevant information designated by the Ministry of Finance; the same procedure shall be applied in any alteration and amendment thereof”; “the enforcement rules of this Law and the Regulations Governing the Administration of Insurance Enterprises shall be drafted by the Ministry of Finance and submitted to the Executive Yuan for approval and promulgation.” Thus, the Ministry of Finance, in accordance with the aforementioned Insurance Law and Regulations Governing the Administration of Insurance Enterprises, shall aggressively and strictly ratify, supervise and manage different policy’s items and calculation of insurance premiums rates. Hence, to the extent of not conflicting with the legislative purposes of maintaining trade order and protecting consumers’ interests as prescribed in the Fair Trade Law, the aforementioned Laws shall prevail over the Fair Trade Law.
    
3. The establishment of premium rate regulations and system can be traced back many years ago, the policy background being the lack of relevant experiences and heavy regulation of the insurance industry. Considering the facts that the consumers of fire insurance and automobile insurance were less knowledgeable and informed than those of engineering, nuclear or other kinds of insurances, the Ministry of Finance established controls on major trading terms of basic premium, adjustment factors, preferences or premium reductions in automobile insurance, fire insurance and compulsory automobile liability insurance in order to ensure the consumers’ rights and interests. And, in accordance with the anterior paragraph of Article 144 of the aforementioned Insurance Law, the Ministry of Finance wrote to Insurance Association asking for the collection of payout data and statistical information. With these data, the conditions of risks and probabilities were also taken into consideration for drafting premium rate, based on actuarial study. The rates were submitted to the Ministry of Finance for auditing and became rates regulations abided by the whole industry after audited and ratified by the Ministry of Finance. The procedure is for the purpose of attaining fair and reasonable premium rates. The Ministry of Finance’s February 11, 2000 letter number Tai-Tsai-Pao-0890002451 and the Non-Life Insurance Association of the Republic of China’s April 27, 2000 enclosure for the original decision’s letter number (89)-Chan-Chi-Tzu-067 are provided as references. It is evident that the Non-Life Insurance Association was merely following the directions of the Ministry of Finance to study and draft the rates regulations. Therefore, the rate regulations for various types of non-life insurances are ratified and controlled by the Ministry of Finance in accordance with the regulations of the Insurance Law. In fact, the Non-Life Insurance Association has not directly determined the kinds and prices of products for insurance enterprises and thus was not involved in the concerted action for price-setting. Accordingly, the requirements of concerted action, as stipulated in the aforementioned Article 7 of the Fair Trade Law, are not met. The plaintiff persists in this argument that the Non-Life Insurance Association has drafted the aforementioned premium rate regulation and violated the prohibition against concerted action; such argument is not acceptable. In conclusion, the defendant’s decision on the appeal affirming the Fair Trade Commission’s non-disposition was consistent with the law, the reason being the lack of evidence to find prohibited concerted actions relating to the aforementioned premium rate regulation, co-insurance and joint operation, compulsory automobile liability insurance premium and agreement of the minimum premium for insurance products. Therefore, the plaintiff’s action to revoke the original disposition and petition resolution and to punish the aforementioned non-life insurance enterprises for concerted actions is groundless and is hereby dismissed.
    

Summarized by: Lai, Chia-Ching
Supervised by: Wang, Rong-Ging

Appendix:

None