OECD kpcdb

1. Competition Law

 

The Fair Trade Act (the “Act” or “FTA”) which came into effect on 4 February 1992 is the main legal instrument on competition policy in Chinese Taipei. The latest review of the FTA was made on the 14th of June 2017.

 

The purpose of the FTA is to maintain order in transactions, to protect the interest of consumers, to ensure free and fair competition, and to promote the stability and prosperity of the national economy. 

 

The Fair Trade Act regulates practices in restraints of competition (Chapter II) and unfair competition practices (Chapter III). Chapter II regulates concerted action (anti-competitive agreements), abuse of dominance and mergers. Chapter III regulates unfair competition practices such as false or misleading representations or symbols.

 

Chinese Taipei follows the civil law tradition.

 

General exclusion: There is no sector excluded from the application of the FTA. According to Article 46, the FTA has precedence over other laws with regards to the governance of any enterprise’s conduct in respect of competition. 

 

Extra-territorial application: The FTA is applicable to firms located outside Chinese Taipei whose behaviours directly affect competition and consumers in domestic markets. The merger control provisions are also applicable to foreign mergers.

 

2. The Fair Trade Commission

 

The Fair Trade Commission (the “FTC”) is responsible for the enforcement of the Act. 

 

The duties of the FTC, as provided for under the Organic Act of the Fair Trade Commission, include the following

 

(1) Formulation of fair trade policies and regulations; (2) Review of the Fair Trade Act; (3) Investigation of business activities and economic developments; (4) Investigation and disposition of cases in violation of the Fair Trade Act; (5) Formulation of policies and regulations, investigation, and disposition of related cases on multi-level marketing; (6) Indoctrination of fair trading policies and regulations; and (7) Other matters in relation to fair trade. 

The FTC also administrates and enforces the “Multi-Level Marketing Supervision Act”. 

 

Organisational structure of FTC: 

 

The FTC has 211 staff as of June 2017. 

 

The FTC has 5 departments, 5 offices: Department of Planning; Department of Service Industry Competition; Department of Manufacturing Industry Competition; Department of Fair Competition; Department of Legal Affairs; Information and Economic Analysis Office; Personnel Office; Civil Service Ethics Office; Budget, Accounting and Statistics Office; and Secretariat office.

 

According to Article 4 of the Organic Act of the Fair Trade Commission, the FTC shall consist of seven full-time commissioners to be appointed by nomination by the premier and approval of the Legislative Yuan for a four-year term. The commissioners may be reappointed when their terms expire. When making the appointment, the premier shall designate one of the commissioners as the chairperson and another as the vice chairperson. The number of commissioners affiliated with the same political party may not exceed one half of the total number of commissioners. Commissioners may be dismissed by the Premier in certain circumstances designated by law (Article 7 of the Organic Act), such as illness, committing illegal acts or indicted for criminal offences.

 

The commissioner appointees must have the knowledge and experience with regard to law, economics, finance and taxation, accounting, or management.

 

All commissioners shall be politically impartial and disallowed to participate in political party activities during terms of service as well as perform their duties independently according to related laws. 

 

Other regulators with competition powers: National Communications Commission (NCC) is responsible for regulations on telecommunications and broadcasting services. The Act has precedence over other laws with regards to competition. However, this stipulation shall not be applied to where other laws provide relevant provisions that do not conflict with the legislative purposes of this Act according to the rule that the special law shall prevail over the general law.

 

Competition advocacy: The FTC can advise on the impact of other policies on competition and the FTC co operates with other government bodies in this regard (Article 6).

 

The FTC has organised more than 2,700 advocacy activities over the past 25 years.

 

International co operation: The FTC concluded bilateral international co operation agreements with Australia, Hungary, Panama, and with New arrangement with Australia and New Zealand. The FTC also signed Memorandums of Understanding regarding the application on competition laws with Canada, France, Japan, and Mongolia.

 

3. Investigation

 

Initiation of investigation: Under Article 26, the FTC may conduct an investigation ex officio or upon complaints regarding any violation of the provisions of the FTA that harms the public interest.

 

Powers of investigation: According to Article 27, the FTC has the powers to request the parties and any related third party to appear to make statements, to submit books and records, documents, and any other necessary materials or exhibits.

 

The FTC may conduct an unannounced onsite administrative inspection of the office, place of business or other locations of the investigated firms and any related third party. The FTC may seize articles obtained from the investigation that may serve as evidence. The scope and duration of holding the seized articles are limited to the extent necessary for investigation, inspection, verification, or preserving evidence.

 

Failure to comply with investigation: Under Article 44, shall any person subject to any investigation, conducted by the competent authority pursuant to the provisions of Article 27, violate the provisions of Article 27 Paragraph 3, the competent authority may impose an administrative penalty of not less than fifty thousand and not more than five hundred thousand TWD. Shall such person continue to evade, interfere or refuse to co operate without justification upon another notice, the competent authority may continue to issue notices of investigations, and may impose consecutively thereupon an administrative penalty of not less than one hundred thousand and not more than NTD one million each time until such member accepts the investigation, appears to respond, or renders relevant materials like books and records, documents, or exhibits.

 

Procedural fairness: The FTC’s case handlers shall abide by the “Administrative Procedure Act” when conducting investigative procedure. The FTC provides the parties under investigation with opportunities to consult with the FTC with regard to significant legal, factual or procedural issues during the course of the investigation. Parties have the right to be heard and present evidence before the imposition of any sanctions or remedies for having committed a violation of the FTA.

 

To protect business secrets gathered during the case investigation, the FTC investigators shall also comply with relative regulations, such as “Trade Secret Law” and “Personal Information Protection Act.”

 

4. Remedies and Sanctions

 

The FTC has the power to investigate as well as the power to adjudicate on competition law matters. 

 

Remedies and administrative sanctions: Under Article 40, the FTC may order any party in violation of Articles 9 (relating to monopolistic enterprise), 15 (relating to concerted action), 19 (relating to resale price maintenance) and 20 (relating to other acts in restraint of competition) to cease, rectify its conduct or take necessary corrective action within a time prescribed.

 

In addition, enterprises concerned may be subject to an administrative penalty from NTD 100,000 to NTD 50 million. For serious violations of Articles 9 and 15, the FTC may impose, without being subject to the limit of administrative penalty set forth, an administrative penalty up to 10% of the total sales income of an enterprise in the previous year. According to Article 2 of the Regulations for Calculation of Administrative Fines for Serious Violations of Articles 9 and 15 of the Fair Trade Act, conducts leading to one of the following circumstances may be deemed serious violations:

 

a) the total product or service sales achieved during the violation period by a monopolistic enterprise exceeds NTD 100 million; or

b) the total profits obtained from the unlawful conduct exceed the upper limit for administrative fines specified in Article 40(1) of the Act.

 

Criminal sanctions: Under Article 34, criminal sanctions may be imposed where an enterprise fails to comply with the order issued by the FTC under Article 40(1) within a prescribed time or engages in similar violation to prior violations. Parties concerned may be subject to imprisonment for up to three years or a criminal fine up to NTD 100 million or by both.

 

5. Appeal

 

Under Article 48, the decisions of the FTC may be appealed in accordance with the procedures for administrative litigation. They can be appealed to the Taipei High Administrative Court and the Supreme Administrative Court for judicial review.

 

6. Private Enforcement

 

Damage claims: Under Articles 30 and 31, private parties can apply for civil compensation, including treble damages, for competition law violations. In such cases the FTC may provide the court with the requirements of competition law, although it does not act as final decision-maker in such cases.

 

Private actions for damages may take the form of follow-on or stand-alone actions pursuant to Article 29 and Article 30 of the Act, an approach which makes the private 

litigation itself quicker and easier to conclude successfully.