Newsletter
FAIR TRADE LAW ENFORCEMENT RULES REVISED
Following the amendments to the Fair Trade Law (FTL) promulgated on 3 February 1999, the Fair Trade Commission (FTC) has revised the FTL Enforcement Rules. The main changes are as follows:
In line with the removal from the FTL of the requirement for public announcement of monopolistic enterprises and enterprises with a market share of 20% or more, the provisions regarding the announcement of monopolies have been deleted from the Enforcement Rules. Under the revised Enforcement Rules, when determining monopoly status the following matters are to be considered:
1.The enterprise's market share in a particular market.
2.The substitutability of goods and services in the particular market, taking into consideration such factors as time and geography.
3.The enterprise's ability to influence price in the particular market.
4.Whether there are substantial barriers to other enterprises entering the particular market.
5.The situation as to imports and exports of the goods or services.
For conditions of economic oligopoly (two enterprises together enjoying a two-thirds share of a particular market or three enterprises enjoying a three-quarters share) to constitute a monopoly under the FTL, the following tests apply:
1.One enterprise enjoys a half share of a particular market.
2.Two enterprises together as a whole enjoy a two-thirds share of a particular market.
3. Three enterprises together as a whole enjoy a three-quarters share of a particular market.
Under a new provision, any act of a trade association to restrict the activities of enterprises, whether by its constitution, by resolution of a general meeting or of a meeting of its board of directors or board of supervisors, or by any other means, is a concerted action; the association's representative may be subject to various liabilities under the FTL.
Under a new provision, when the central regulatory authority approves a combination of enterprises, it may set a reasonable time limit or attach conditions or obligations in order to ensure that the overall economic benefit outweighs the disadvantages of restraining competition. However, the attached conditions or obligations should not be contrary to the purpose of the approval, and should have a proper and reasonable connection with the purpose of the approval.
Under a new provision, applications by trade associations for approval of concerted actions should be made to the central regulatory authority.
Because the latest amendments to the FTL substantially raised the upper limits on fines, a new provision of the Enforcement Rules requires that when determining the amount of a fine, the regulatory authority should weigh all the facts of the case, and consider the following matters:
1.The motive and purpose of, and expected improper gain from, the offence committed.
2.The extent to which the offence was detrimental to the orderly conduct of trade.
3.The period of time over which such detriment continued.
4.The gain obtained by the offence.
5.The size, operating status and market position of the enterprise.
6.Whether the regulatory authority has previously instructed or warned the enterprise with regard to the same type of offence.
7.The type, number and frequency of previous offences and the penalties imposed.
8.Attitude after the offence, including substantive evidence of contrition, and cooperation with investigations.
Under a new provision, an order under the FTL to suspend business operations is limited to a maximum period of six months each time.