On January 22, 2015, the Legislative Yuan passed the amendment of Fair Trade Act. This amendment is the most dramatic and influential one in the history that comprises 70 percent of revision. Under the amendment, the legal system of market competition becomes more comprehensive which helps to further maintain competitiveness of the market and regulate business practices. The key components of the amendment are summarized as follows:
- Regulations on Merger:
- Shares and sales price of affiliated enterprises (sister companies included) shall be jointly calculated;
- When the controlling interest ofa natural person or a groupisto be incorporated into the scope of the merger, a report shall be filed to the Fair Trade Committee (FTC) in advance;
- The threshold amount of the sales for each industrywill be publiclyannouncedby FTC.
- Regulations on Concerted Action:
- The Inference of Mutual Understanding clauses:
In reference to provisions under Paragraphs 1 and 3 of Article 14 of the newly amended Fair Trade Act, the term "concerted action" means that two or more enterprises by any form of mutual understanding jointly determine the price, quantity, technology, etc. of goods or services, and thereby restrict each other's business activities, which in terms affect the market functions of production, trade in goods, or supply and demand of services. Due to the difficulties in obtaining direct evidences on concerted actions, theInference of Mutual Understanding clause was added in the new amendment that will allow the court toidentify concerted actions in accordance with related criteria such as the market conditions, features of goods or services, costs and profits considerations, economic rationality of enterprise behavior, etc.
- Exceptions to prohibition of concerted actions:
Due to the diversity of modern economic activities, in order to avoid unreasonable and inflexible enforcement, it is stipulated under Subparagraph 8, Paragraph 1 of Article 15 of the newly amended Fair Trade Act that any concerted action that is beneficial to the economy as a whole and in public interest is allowed after the approval by FTC via application.
- Exoneration clauses:
Any participant enterprisethat informs the competent authority and assists in investigation of concerted act may be alleviated or exonerated from its administrative liabilities.
- Regarding Privilege of Investigation:
- Investigation Termination:
This system is an establishment in reference to Germany. If any enterprise subject to investigation due to violation of law promises the competent authority to cease, rectify its conduct, or take corrective action within the prescribed time, the investigation will be suspended temporarily in order to prevent further disruption to the market order.
- Regarding Punishment:
- Different types of violation are fined accordingly by judging the severity of damage caused the order of market competition. Because violation acts such as monopoly and concerted acts, abuses of dominant market position, and restriction on resale prices exert great influence on market competition, the administrative penaltyfor such violation has been doubled under the current provisions, and the period for the right to claim sanction has been extended from 3 years to 5 years.
- In order to prevent evasion of liabilities in respect of individual enterprises, in addition to the penalty imposed upon the association or organizations involved in violation, member participated in such violation shall also be subject to punishment.
- Increase in fines on acts of restrictive competition: Any enterprise that is suspicious of concerted acts or restricting competition may be ordered to cease, rectify its conduct, or take necessary corrective action within the time prescribed, in addition to an administrative penalty between NT$ 100,000 and NT$ 50,000,000.If the said enterprise fails to act accordingly to the order within the time prescribed, the enterprise may be ordered continuously with an administrative penalty between NT$ 200,000 and NT$ 100,000,000 until it ceases, rectifies its conduct, or takes necessary corrective action.
- Exemption of appeal proceeding:
In the future, remedies shall be filed directly with a judicial authority for any decision rendered by the FTC under the provisions of the Fair Trade Act.