The Supreme Administrative Court rendered the 104-Pan-54 Decision of January 29, 2015 (hereinafter, the "Decision"), holding that when a customer fails to sign a quarterly contract as usual to the extent that the seller selects another distributor under such circumstances, this is a normal and reasonable commercial consideration rather than an abuse of dominant market position.

According to the facts underlying the Decision, the Appellant had held, according to its investigation conducted according to a complaint, that the Appellee, which was the upstream supplier supplying the chemical raw materials for caustic soda to Ho Yi Enterprise Co., Ltd. (hereinafter, the "Complainant"), leveraged its monopolistic position in the domestic caustic soda market and unilaterally discontinued the supply of caustic soda products to the Complainant without justified commercial reasons. Since this constituted an act of a monopolistic enterprise to abuse its dominant market position in violation of Article 10, Subparagraph 4 of the Fair Trade Law, the Appellant demanded the Appellee via the original disposition to desist from such illegal act immediately and imposed a fine of NT$2 million in accordance with the first part of Article 41, Paragraph 1 of the same law. Dissatisfied, the Appellee filed administrative appeal, which was rejected, before bringing administrative action. After the decision on administrative appeal and the original disposition were reversed by the original trial court, the Appellant was dissatisfied and filed this appeal.

According to the Decision, a transaction of goods is a contractual act which is established only with the agreement between the parties. If both parties transact business by having the customer wire the goods payment in cash first and sign a quarterly contract as usual before the seller provides goods, such agreement and practice between the seller and the customer with respect to the trading of goods does not violate the legislative objectives of Article 1 of the Fair Trade Law. Therefore, there is no justification for imposing unconditional limitation on such practice just because a seller enjoys a dominant market position.

It was further pointed out in the Decision that if a customer fails to sign a quarterly contract as usual to the extent that the seller cannot commit to any sale of goods, the seller should be found to have the right to choose a better suited distributor or arrange for export under such circumstances. Since this is a normal and reasonable commercial consideration rather than an abuse of dominant market position, this is not illegal. In addition, even though the customer sent a registered demand letter to order goods to no avail, this can only be construed as the seller's indication of the intent not to sell due to the customer's failure to follow the past practices and can hardly be used as evidence that shows the seller will "cut off the supply of goods" in the future.

It was further pointed out in the Decision that if a customer fails to sign a quarterly contract as usual to the extent that the seller cannot commit to any sale of goods, the seller should be found to have the right to choose a better suited distributor or arrange for export under such circumstances. Since this is a normal and reasonable commercial consideration rather than an abuse of dominant market position, this is not illegal. In addition, even though the customer sent a registered demand letter to order goods to no avail, this can only be construed as the seller's indication of the intent not to sell due to the customer's failure to follow the past practices and can hardly be used as evidence that shows the seller will "cut off the supply of goods" in the future.