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Taiwan Fair Trade Commission Announces "Guidelines on Concerted Actions in the Context of Environmental Sustainability"
Taiwan Fair Trade Commission Announces "Guidelines on Concerted Actions in the Context of Environmental Sustainability"
To assist enterprises in understanding whether their business practices on environmental sustainability constitute concerted actions under the Taiwan Fair Trade Act (the "TFTA"), and to ensure free and fair competition in the market, the Taiwan Fair Trade Commission (TFTC) has established the Guidelines on Concerted Actions in the Context of Environmental Sustainability (the "Guidelines"), which was passed at the 1738th Commissioners Meeting on February 12, 2025 and then promulgated on February 19, 2025.
Based on the key strategies for achieving the 2050 net zero emissions target, the Guidelines map out likely scenarios of future business practices in this regard, identify the potential competitive issues, and then lay out the determination process for such issues. The Guidelines also identify the following three types of business activities as examples for enterprises to consider in order to reduce the risk of violations:
I. Activities involving no mutual restraint of trade and no concerns of concerted actions:
1. Sharing information on environmental sustainability and delivering materials that are irrelevant to business operations or competition, such as exchanging the latest government policies and information on subsidies from industry authorities for environmental sustainability transformation.
2. Advocating environmental sustainability achievements and holding relevant joint training sessions and awareness promotion activities for employees on topics such as energy conservation and reduction of greenhouse gas emissions.
3. Conducting research on environmental sustainability issues and jointly establishing databases of relevant information on products or services.
4. Issuing joint statements on cooperation with government policies on environmental sustainability.
II. Activities that would likely constitute concerted actions, but may be specifically approved in accordance with the law if the enterprises involved believe that such activities are conducive to environmental sustainability:
1. Joint procurement of equipment for the purpose of increasing energy efficiency and operational efficiency.
2. Unification of the specifications of products or components for the purpose of increasing resource recovery rates and reducing costs.
3. Joint research, development, and technology innovation for the purpose of encouraging the recycling of resources and improving the quality of energy-saving products.
4. Joint procurement of raw materials that are less harmful to the environment or joint efforts on reducing the use of products made from environmentally unfriendly raw materials for the purpose of reducing environmental pollution.
5. Other activities that involve mutual restraint of competition but are beneficial to environmental sustainability.
The TFTC explains that when deciding whether to grant a special approval of a concerted action of which the purpose is for environmental sustainability, the key lies in the balance between the impact that such action will have on market competition and the benefits that such action will bring to environmental sustainability. Therefore, it is advisable for enterprises to provide explanations on the following issues to expedite the TFTC's review:
1. Where there are anti-competition concerns, the enterprises must explain why such concerted actions are necessary for sustainable environmental development and that there is no other alternative with less impact on competition.
2. The enterprises must explain why the concerted actions are beneficial to environmental sustainability in terms of production, sales, quality, technological advancement and other related matters, and that any adverse competitive impact has been minimized.
3. The enterprises must describe the concerted actions' specific expected effects on achieving environmental sustainability, as well as their specific benefits and adverse effects on the overall economy and public interest of upstream and downstream businesses and their markets.
III. Activities that would likely constitute unlawful concerted actions and threaten market competition:
1. Price-fixing: jointly determining the price of goods or services on the grounds that they are environmentally sustainable.
2. Allocation of transaction counterparties: jointly agreeing to divide up sales territories, only work with certain transaction counterparties, or not compete with each other for certain transaction counterparties on the grounds of reducing costs on environmental sustainability.
3. Quantity-fixing: jointly determining the production and sales quantity as well as production capacity.
4. Joint procurement or sales strategies: jointly agreeing to only procure or sell certain goods or services on the ground of promoting environmentally sustainable goods or services.
5. Joint foreclosure: preventing other enterprises from entering the market in the name of developing environmental sustainability.
Nevertheless, the TFTC has also emphasized that the Guidelines only provide examples of business practices on environmental sustainability that may constitute concerted actions. Whether a specific business practice is illegal will need to be determined by the TFTC based on the actual circumstances of the case.
In addition, the TFTC has also released a Self-Assessment Checklist to help enterprises conduct a preliminary check on whether their environmentally sustainable practices comply with the TFTA, and further assess whether they need to apply for a special approval for their concerted actions.
If you have any questions on the Guidelines or wish to learn more about relevant issues, please do not hesitate to contact Lee and Li's Competition and Antitrust Practice Group.