It has been more than 20 years since the enactment of the Taiwan Free Trade Act (hereunder “TFTA”) on February 4, 1991 and its promulgation on February 4, 1992. In response to the drastic changes in the social and economic environment in and outside of Taiwan, the Taiwan Free Trade Commission (hereunder “TFTC”) actively sought to  promote the passage of this amendment.  Originally containing 58 articles in total, the TFTA now contains a total of 50 articles after the passage of this amendment.  All but two articles were modified to varying degrees.  Consequently, the latest amendments represent the most significant changes to the TFTA since its first enactment.

This amendment conferred on the TFTC the power to suspend investigations.  The TFTC may suspend an ongoing investigation when the enterprise being investigated promises to adopt specific measures to cease and correct the allegedly illegal act within the time period set by the TFTC.  Suspending an investigation would also toll the applicable statute of limitations.  This new power to suspend investigations provides the TFTC with a significant amount of discretion in its administrative investigations, and is one of the most important changes in this amendment.

According to the TFTC, the purpose of having the power to suspend investigations is to enourage the speedy eradication of the acts or behavior that may be detrimental to the proper functioning of the marketplace, through the self-initiative of the accused enterprises to cease or correct such acts or behavior.  The power to suspend investigations should improve the flexibility and efficiency of the TFTC’s enforcement efforts.

The new TFTA’s suspension of investigation provision is modeled on German law. This provision may indeed avoid administrative inefficiencies and strengthen the TFTC’s effectiveness.  However, the new TFTA does not  set forth in detail the circumstances under which it may exercise such power.  Thus, for example, will the TFTC’s power to suspend investigations be used in all cases, or only in specified types of cases?  Should an accused enterprise seek to initiate negotiations with the TFTC in order to reach an agreement on the suspension of the investigation?  Under what circumstances may the TFTC still continue to investigate, even when the accused enterprise has already agreed to adopt concrete measures to cease and correct the allegedly illegal act?  Such problems as discussed above remain to be clarified by the TFTC.

As the power to suspend investigations is within the discretion of the TFTC, the exercise of such discretion is by nature an administrative act.  Pursuant to the Administrative Procedure Act, administrative acts shall not result in differential treatment.  Further, all administrative acts shall be performed in good faith and shall protect the trust that people may legitimately and reasonably place in administrative agencies.  The TFTC should further clarify the standards upon which it will determine whether to exercise the discretion to suspend investigations, so as to avoid unnecessary disputes in the future.

Ben Cheng