The Supreme Administrative Court rendered the 103-Pan-294 Decision of June 12, 2014 (hereinafter, the "Decision"), holding that when a court determines facts of illegal concerted action, the basis of such determination is not limited to direct evidence. Indirect evidence can also be used to substantiate the existence of a mutual understanding on concerted action.
In the facts underlying the Decision, three companies which hold as high as 80% share of the fresh milk market decided to jointly raise the prices over a short period of time. As a result, the Fair Trade Commission (hereinafter, the "FTC") imposed a fine on the ground that the three companies violated the Fair Trade Law for their concerted action. Dissatisfied, the three companies appealed after their complaint was rejected by the original trial court.
The first part of Article 14, Paragraph 1 of the Fair Trade Law provides that enterprises shall not engage in any concerted action in order to prevent multiple enterprises from limiting their mutual competition by agreeing to engage in concerted action. With respect to the criteria for concerted action, it is necessary to substantively determine if several enterprises form concerted behavior in an external market by reaching a legally non-binding consensus regarding their future market behavior with clear awareness and via intension liaison. It was pointed out in the Decision that the evidence relied on to determine facts of violation concerning concerted action is not limited to direct evidence, and indirect evidence is also included, because enterprises often avoid creating direct evidence for concerted action agreement through concerted behavior which is not legally or factual binding.
In this matter, the three companies are all fresh milk manufacturers in Taiwan. Their action to raise the list prices of fresh milk was objectively consistent in appearance. Although their cost and price adjustment factors were different, still they raised prices consistently. Such objective fact indicates that this was neither simple parallel behavior nor the outcome of market mechanism. Therefore, the appeal of the three companies was rejected in this Decision, which held that the three companies agreed to the concerted action.