Tough love in Taiwan

Published On 25/03/2013 | By Emily Gentle | Cartels, Enforcement, Reform

Over the years, several Taiwanese companies have been fined substantial amounts by foreign antitrust authorities for their involvement in international cartels.  For example, a US court imposed a $500 million fine on Taiwanese LCD manufacturer AU Optonics for its involvement in a price fixing scandal.

Up until recently, however, there was little to deter cartel conduct in Taiwan and no incentive for cartel participants to cooperate with Taiwan’s Fair Trade Commission in cartel investigations.   The situation changed at the end of 2011, when Taiwan introduced a leniency regime under the Fair Trade Act, under which full immunity from administrative fines may be granted to the first party to a cartel agreement that self-reports and adduces incriminating evidence.  Further, the maximum level of fines that could be imposed for serious anticompetitive conduct was increased by more than fortyfold, to 10% of the parties’ annual turnover.

These changes, implemented in 2012, aim to deter cartel conduct and encourage self-reporting of existing cartel conduct in Taiwan, and are in line with Australia’s leniency policy and penalties for cartel conduct, as contained in the Competition and Consumer Act 2010 (Cwlth).

In September 2012, Taiwan’s Fair Trade Commission announced its first decision under the new leniency regime.  Several manufacturers of optical disk drives used in personal computers engaged in bid-rigging practices at least between September 2006 and September 2009.  They contacted one another by email, telephone or by meeting to exchange information regarding their quotations and expected priority sequencing either before or during the bidding for the optical drive tenders held by Dell and Hewlett-Packard. On several occasions between September 2006 and September 2009, the companies even reached an agreement on the final winning bid and expected priority sequencing.  They also exchanged other sensitive information such as that related to their productivity and production. The conduct affected the supply and demand of the domestic optical drive market and was in violation of the competition provisions of the Fair Trade Act.

Whilst most of the manufacturers received fines of between 5 and 25 million New Taiwan dollars (approximately between A$ 160,000 and A$ 810,000), the Commission announced that it had granted full immunity to one of the participants.  Further, it explained that the cartel was worldwide in nature, and that it had cooperated closely with the US Department of Justice and the European Commission in the investigation.

Separately, in January 2013, 9 private auto LPG station operators in the greater Taipei area were fined a total of over 2 million New Taiwan dollars (approximately A$ 66,000) for breaching the competition provisions of the Fair Trade Act.  The operators had reached an agreement to cancel the discount given to cash-paying customers beginning in April of the same year. The conduct was able to affect the auto LPG market function in the area in violation of Article 14 of the Fair Trade Act.

The new leniency regime, fines, and increased international co-operation, should all combine to reduce cartel conduct in Taiwan, with more cartel participants self-reporting to the Fair Trade Commission in order to gain immunity.

Photo credit: Images_of_Money / Foter.com / CC BY

 

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