The Fair Trade Commission promulgated the Regulations for the Calculation of Administrative Fines for Serious Violations of Articles 9 and 15 of the Fair Trade Law (hereinafter, the "Regulations") (previously known as the Regulations for the Calculation of Administrative Fines for Serious Violations of Articles 10 and 14 of the Fair Trade Law) via the Gong-Fa-10415601941 Directive of March 6, 2015. The Regulations came into effect on the day of their promulgation.
Article 40, Paragraph 2 of the Fair Trade Law provides: "If an enterprise violates Articles 9 and 15 in material aspects as determined by the competent authority, a fine equivalent to up to ten percent of such enterprise's sales revenue for the previous accounting year may be imposed and is not subject to the fine limit set forth in the preceding paragraph." Paragraph 3 provides: "The calculation of the sales revenue of the enterprise in the previous accounting year as set forth in the preceding paragraph, the determination of material aspects, and the rules for calculating the fines shall be set by the competent authority." These are the provisions for aggravated fines for monopolistic acts which violate Article 9 and concerted action which violates Article 15. The Regulations are set pursuant to such authorization. The Regulations are highlighted as follows:
- Definition of material violations and their consideration criteria under Article 2 of the Regulations:
The material aspects under Article 2 of the Regulations refer to any unlawful conduct that has seriously undermined market competition and order. The competent authority shall take into consideration the following: (1) the scope and extent of competitive order affected; (2) the duration of the damage caused by illegal acts to competitive order; (3) the market status of the enterprise in violation and the structure of the corresponding market; (4) the total sales and profits obtained from the unlawful conduct during the violation period; (5) the type of concerted action – joint decision of product or service price, or quantity, trading counterpart or trading area restriction. In addition, that "the total product or service sales achieved during the violation period by a monopolistic enterprise or one of the participating enterprises in the concerted action exceeds NT$100,000,000" and that "the total profits obtained from the unlawful conduct exceed the limit for administrative fines specified in Paragraph 1, Article 40 of the Law" may be deemed material violations.
- Methods for calculating the fines and consideration factors for aggravating or reducing fines under Articles 3 through 7 of the Regulations:
- Under Article 3 of the Regulations, the total sales revenue of an enterprise in the previous accounting year refers to the total sales revenue of the enterprise in the accounting year before the year in which the competent authority finalizes the sanction.
- Articles 4 and 5 stipulate that a fine may be set based on thirty percent of the sales amount of the goods or services obtained through the illegal act during the period of the legal violation as the base amount and adjusted according to adjustment factors. Under Article 7, the fine shall not exceed ten percent of the sales revenue of the sanctioned enterprise in the previous accounting year.
Pursuant to Article 6, the so-called "adjustment factors" include reasons of aggravation or reduction. Aggravation reasons include the circumstances where an enterprise concerned oversees the concerted action or has been sanctioned for any violation in five years, while reduction factors include the circumstances where an enterprise immediate discontinues an illegal act, has shown remorse and cooperated with investigation, has reached an agreement on damage compensation with the victim(s) or conducted remedial measures for damages, was forced to participate in concerted action, was approved or encouraged by any other agency to do so, or is subject to any other law or regulation.