Supreme Administrative Court judgment on the case brought by 10 Ilan County pre-mixed concrete suppliers including Yi Ku Co., Ltd. against the Fair Trade Commission

Taiwan

Case:

Supreme Administrative Court judgment on the case brought by 10 Ilan County pre-mixed concrete suppliers including Yi Ku Co., Ltd. against the Fair Trade Commission

Key Words:

pre-mixed concrete, concerted action

Reference:

Supreme Administrative Court Judgment (90) P'an Tzu No. 1316

Industry:

Pre-Mixed Concrete Industry (0621)

Relevant Law:

Article 14 of the Fair Trade Law

Summary:

1. The case originated with a complaint from a citizen in I Lan County that the rise in the retail price of pre-mixed concrete from NT$1,200 - NT$1,300 to NT$1,500 in June 1996 was likely the result of concerted action or monopoly. The Fair Trade Commission's investigation found that the concrete suppliers (the plaintiffs) entered into agreements to restrict competition by providing uniform quotations for pre-mixed concrete between February 1996 and July 1997, agreed among themselves on the quantities of production [of pre-mixed concrete], and engaged in price fixing on inter-supplier materials provision. The suppliers restricted competition by increasing the price of pre-mixed concrete. They also mutually restrained each other's activities by diminishing competition with respect to quantity and cooperating in mutual auditing of operations, in violation of Article 14 of the Fair Trade Law (FTL). The Commission made a disposition pursuant to the forepart of Article 41 of the FTL, ordering that the suppliers immediately cease such concerted action from the day next following the day of service of the disposition. The suppliers rebutted the disposition and instigated an appeal and second appeal but both were dismissed. The suppliers subsequently brought this administrative litigation.

2. In the investigation of this case, Mr. Huang, Hua-lung, the responsible person of Ching Ho Construction Co., Ltd., Mr. Li, Wang-chih, the responsible person of Hung Chiang Construction Co., Ltd. and Mr. Lan, Chien-hua, general manager of Shang Yi Construction Co., Ltd. all claimed that the unit price for 3,000-pound pre-mixed concrete is NT$1,250 per cubic meter. The price of the same concrete was raised to NT$1,300 - NT$1,350. The differences in the unit price for the same type of concrete were related to concerted measures adopted by pre-mixed concrete vendors in the Ilan area in order to monopolize market prices. Further, at the end of 1996, the unit price for 3,000-pound concrete went up to as high as NT$1,350 per cubic meter; after July 1997, the price was around NT$1,400 per cubic meter. This is supported by the Taiwan Pre-mixed Concrete Trade Association's report on concrete pricing and implementation and the sales figures provided by the plaintiffs. This shows that there was a uniform increase of the price of goods at issue in the area from the beginning of 1996 to July 1997. It also shows that there was obviously an agreement among the plaintiffs to fix prices and mutually restrict the quantity of production. The plaintiffs continued to form agreements among themselves with respect to the fixing of the price for 3,000-pound concrete in January, April, and July 1997: the prices were set at NT$1,400, NT$1,450, and NT$1,500 respectively. This is supported by the evidence provided by Yang, Yen-chao, the responsible person of Li Tai Pre-mixed Concrete Industrial Co., Ltd. and Chiu, Wen-chi, the deputy general manager of Mei Chou Concrete Industrial Co., Ltd. Because such evidence was submitted by the two above-mentioned individuals of their own volition and corresponds to the information obtained by the defendant, it carries the evidentiary weight necessary for this case. Further, Luo, Yen-hung, the responsible person of Yi Chien Co., Ltd. also admitted, during the course of investigation, that the industry operators often gathered to exchange information and the subject of their discussion included prevention of malicious competition, avoidance of low prices and reasonable pricing structures among operators in the same industry. It is obvious that the plaintiffs all participated in concerted action.

Yang, Yen-chao, the responsible person of Li Tai Pre-mixed Concrete Industrial Co., Ltd. and Chiu, Wen-chi, the deputy general manager of Mei Chou Concrete Industrial Co., Ltd. both stated that the industry operators had agreed among themselves to set the price for 3000-pound concrete at NT$1,400, NT$1,450 and NT$1,500 per cubic meter in January, April and July 2001 respectively. This further supports the finding that the plaintiffs did in fact restrict competition with respect to the concrete product at issue. The plaintiffs, Yang, Yen-chao, the responsible person of Li Tai Pre-mixed Concrete Industrial Co., Ltd., Chiu, Wen-chi, deputy general manager of Mei Chou Concrete Industrial Co., Ltd. and Chang, Cheng-yi, the responsible person of Chin Lung Premixed Concrete Co., Ltd. all admitted that the operators had agreed among themselves to set the unit price of raw materials that they purchased from each other at NT$1,400 for the first half of 1997. This is supported by the records of their respective questioning. This shows that the ten operators had already agreed on terms of inter-supplier provision of materials among themselves before they engaged in such inter-supplier provision. Such inter-supplier provision was intended to achieve increased, uniform prices. They further engaged in mutual auditing of operations to avoid price competition and raise retail prices.

3. Concerted action among enterprises is constituted when the agreement for concerted action is made before or at the time of provision of price quotations, irrespective of whether the enterprises actually offer the same prices or implement their price structures at the same time, and irrespective of whether there is a discrepancy between the quotations they provide each other and the actual transaction prices. Finding of concerted action cannot be based on price at the time of the transaction. A concerted action is formed when competitors agree among themselves to restrict competition and take concerted action sufficient to jeopardize market functions. Whether enterprises offer the same price is not a key element of a concerted action. The plaintiffs claimed that, based on the evidence provided by the three construction companies including Chin Ho Construction Co., Ltd., there was a certain degree of discrepancy among concrete prices rather than a fixed price in the Ilan area during 1996, so there was no agreement with respect to concerted action among plaintiffs. Such claim should be dismissed as explained above. Therefore, the defendant (the Fair Trade Commission) was correct in ordering the plaintiffs to immediately cease such concerted action from the day next following the delivery date of the disposition. The judgment in the first appeal was also upheld.

Appendix: Yi Ku Co., Ltd.'s Uniform Invoice Number: 22245401

Te Fu Concrete Industrial Co., Ltd.'s Uniform Invoice Number: 42042170

Fu Te Concrete Industrial Co., Ltd.'s Uniform Invoice Number: 23695241

Chiu Wu Construction Enterprise Co., Ltd.'s Uniform Invoice Number: 42067093

Hsiang Cheng Industrial Co., Ltd.'s Uniform Invoice Number: 22584176

Mei Chou Concrete Industrial Co., Ltd.'s Uniform Invoice Number: 86923307

Li Tai Pre-mixed Concrete Industrial Co., Ltd.'s Uniform Invoice Number: 84236655

Chin Lung Premixed Concrete Co., Ltd.'s Uniform Invoice Number: 84848607

Jung Hua Gravel Co., Ltd.'s Uniform Invoice Number: 86996624

Yi Chien Enterprise Co., Ltd.'s Uniform Invoice Number: 84216519

Summarized by Lai, Chia-Ching;

Supervised by Wang, Rong-Ging