I am pleased to post this update by Dr. Andy C.M. Chen, a professor at Chung Yuan Christian University in Taiwan. Professor Chen is a graduate of Northwestern School of Law and was formerly a member of the Taiwan Fair Trade Commission. As you will see from Professor Chen’s post, cartels are defined quite differently in Taiwan than they are in the United States. Professor Chen’s personal web page can be found here.
Amendments to Taiwan Fair Trade Act
The recent amendments of the Taiwan Fair Trade Act were published by the Office of the President and officially took effect on February 4, 2015. The amendments cover nearly 70% of the provisions in the TFTA and are the most extensive revision ever since the Act was enacted in 1992. The main changes include the followings:
- Pre-merger notification
1.1. Shares held by or business turnover of the companies affiliated with the merging parties shall be included in the determination of whether the threshold for filing pre-merger notification has been crossed.
1.2. Individuals or groups who are not legal persons but enjoy de facto control of the merging companies could also be subject to the duty of filing pre-merger notification.
1.3. The Taiwan Fair Trade Commission is authorized to promulgate and apply individual business-turnover thresholds for selected industries.
2.1. A provision was added to allow the TFTC to infer the existence of collusive agreements from market structure, characteristics of products or service, cost and profit consideration, economic rationality of conduct under review etc.
2.2 The category of exemptible concerted actions was further expanded to include those that are beneficial to industrial developments, technical innovation or operational efficiency.
- Vertical restraints
Resale price maintenance and most non-price vertical restraints are re-characterized as “antitrust” (competition-restraining) rather than unfair-competition violations. Market power will therefore become a prerequisite for initiating investigations. Those types of violation are also to be reviewed under the rule of reason. Business or efficiency justifications for vertical restraints could be raised by the parties.
The amendments Incorporate a “suspension and termination” system under which the TFTC could suspend its investigation if the investigated enterprises promise to cease or take measures to correct the collusive conducts. If the promise is eventually implemented, the TFTC has the discretion to terminate the investigation.
The maximum administrative fines for “antitrust” violations are doubled. The statute of limitations for conducting administrative investigation has also been increased from 3 years to 5 years. For violations committed by business associations or organizations, participating individual members could also be punished.
The sanctioned parties could now appeal directly to the Administrative court without the need to undergo first the proceeding of administrative appeal.
To the disappointment of the TFTC, however, the proposal to empower the TFTC to conduct search and seizure failed to gain the approval from the congress.
For the amended provisions (Traditional Chinese), please refer to http://www.ftc.gov.tw/internet/main/doc/docDetail.aspx?uid=132&docid=167