Newsletter
Taiwan Fair Trade Commission Strictly Crack Down on Price-Fixing Conspiracies
In response to the recent fluctuations in the prices of everyday items, the Taiwan Fair Trade Commission (“TFTC”), as the gate keeper for fair competition, has adopted certain policies and kept a close eye on market dynamics to maintain a free and fair market trading environment and to establish economic rules that meet modern needs.
Investigate proactively and encourage reporting of collusive conduct
The TFTC pointed out in its press release dated November 22, 2021 that, although the prices of raw materials have increased recently, if any enterprise takes advantage of the opportunity and engages in price-fixing that disrupts the market supply and demand functions, it may violate the cartel regulations and be subject to a fine up to NT$ 50 million. If the violation is deemed to be material, a fine up to 10% of the sales amount of the previous fiscal year may be imposed. Currently, the TFTC has opened price-fixing investigation on certain products including instant noodles, industrial paper, flour, steel, etc.
Meanwhile, the TFTC has also cooperated with the Ministry of Justice (“MOJ”) to investigate cases of price-fixing, abnormal hoarding and intentional price inflation. In this regard, the Investigation Bureau of the MOJ has set up a 24-hour hotline for the public to report unreasonable price increases or cases of price gouging. If any anticompetitive collusion is suspected, the TFTC will investigate such case immediately after receiving the report. In addition, the TFTC will also refer to the platform activated by prosecutors for combating people’s livelihood crimes, and if any person stocks up staple merchandise and refrains from selling them to the market without justification but rather with the intention of raising the trade price or they disseminate false information to influence the trade price of staple merchandise, then the TFTC will forward such case to the judicial authorities for further investigation in accordance with Article 251 of the Criminal Code.
Participate in inter-ministerial Price Inspection Team
In December 2021, the Executive Yuan instructed the MOJ to set up an inter-ministerial “Price Inspection Team” to monitor price inflation and to promptly conduct an in-depth investigation for any unreasonable price increase. This Price Inspection Team is composed of officers from the MOJ, TFTC, Ministry of Economic Affairs, the Council of Agriculture, Ministry of Finance, Consumer Protection Committee, etc. The Price Inspection Team prioritizes the first wave of inspections on major chain brand operators that have recently increased prices, including hot pot restaurants, fast food restaurants, and specialty restaurants, etc. The Price Inspection Team will ask the operators to provide a specific explanation for the price increase, the items that have gone up in price, the rate of price increase, the list of suppliers and relevant supporting information, and will also request them to cooperate with on-site inspections. In addition, the Price Inspection Team will not only investigate the restaurants themselves but also trace the supply chain of ingredients back to the suppliers, distributors and manufacturers, so as to identify the enterprises which have unreasonably increased prices or conducted tacit collusion.
If the Price Inspection Team determines the presence of concerted actions under Article 14 of the Taiwan Fair Trade Act, deceptive acts under Article 25, or the hoarding of goods with the intention of raising transaction prices under Article 251 of the Criminal Code, the TFTC or the prosecuting agencies under the MOJ will investigate and impose fines or penalties on such illegal acts.
Increased incentives for whistleblowers
As one of the tools to combat collusive conduct, the TFTC announced the Measures for the Payment of Reward for Reporting Illegal Joint Acts (“Measures”) in 2015 to encourage citizens who have evidence of concerted action to report such acts to the TFTC. In order to increase the incentives for reporting and to facilitate a more effective investigation of collusion, the TFTC had amended the Measures in November 2021. A summary of the key points of the amendments is as follows:
(1) Increased maximum amount of the reward and the amount of the reward every whistleblower is entitled to: the maximum amount of the reward has been doubled from NT$50 million to NT$100 million; and the basis of the reward has been amended from "per case" to "per whistleblower" and any reward below NT$1 million is paid in one lump sum.
(2) Reward may still be paid even if the case does not lead to sanctions: If the alleged case is determined to be of illegal concerted conduct, even if no fine is imposed due to minor circumstances, a reward of NT$50,000 to NT$1 million per whistleblower may still be awarded to each whistleblower depending on the value of the provided evidence.
Combating illegal collusive conduct is one of the main enforcement objectives of the TFTC
The TFTC has repeatedly reminded enterprises that they should not conduct price-fixing, whether written, verbal or other means of mutual agreement, or engage in other illegal concerted actions with their competitors. The TFTC also appeals to the public to provide relevant evidence to the TFTC in exchange for rewards. It is stated in the TFTC’s 2022 Annual Policy Objectives that it will pay close attention to the market competitive dynamics and coordinate with the competent authorities to protect market order, and it will actively cooperate with the “Price Stabilization Team” of the Executive Yuan to monitor the supply and demand status in the staple merchandise market, aiming to regulate the conducts for competition and create a more suitable competitive environment in Taiwan.
If you have any questions or would like to learn more details on the above and/or other relevant laws and regulations, please feel free to contact us.