Fair trade enforcer faces massive backlog of cases

Taipei Times: Foreign companies have been complaining about barriers to and a lack of transparency in bids for government procurement contracts in their white papers for years. What is the commission's role in this area?

Hwang Tzong-leh (黃宗樂): One of the commission's major tasks is to remove the limitations and barriers to the market since our establishment. And we have been putting much of our focus into this aspect.

Before the Government Procurement Act (政府採購法) went into effect in 1998, we did take charge of some government procurement issues, such as bid-rigging. After the law was implemented, government procurement was placed under the authority of the Cabinet's Public Construction Commission.

But we still look after issues that are not included in the government procurement regulations and involve fair-trade stipulations, such as unfair competition between the bid winners and competitors or subcontractors.

TT: Take the liquid natural gas (LNG) supply contract for Taipower's Tatan power plant in Taoyuan County. There have been queries about bidder qualifications made by the government at the time.

Hwang: Basically, the managing agency in this case is the Ministry of Economic Affairs and I think they have their own ways or procedures for making requirements. The commission respects the managing agency's authority, with the precondition that there is no violation of the Fair Trade Law (公平交易法).

I am not clear if the government agency intended to rule out foreign bidders in this case. But this was not such a violation of fair trade rules. If there exist illegal actions such as bid-rigging, which infringes the fair trade regulations, we will then step in.

TT: Then does the Fair Trade Law extend protection to foreign investors in Taiwan?

Hwang: Foreign companies are undoubtedly under the protection of the Fair Trade Law. We treat them equally without discrimination in this respect. They have the same rights and, of course, bear the same obligations as their local peers in complying with the regulations.

Take Esso Petroleum Taiwan Inc (台灣埃索) [A joint venture between ExxonMobil and Pan Overseas Corp (匯僑)]. The company complained to us around two years ago about barriers to the local oil market, where Chinese Petroleum Corp (中油) and Formosa Petrochemical Corp (台塑石化) are the two major suppliers with a nearly 70 percent and 30 percent share of the market, respectively.

We then undertook to investigate whether the local suppliers had unduly reduced prices to hinder newcomers from entering the market. But after an investigation, we found that the scale of the price cuts by the two local refiners did not exceed legal limitations. [Editor's note: Esso Petroleum withdrew from Taiwan last year because of increasing losses and the small-scale of the local market.]

TT: Taiwan's two major oil refiners almost always adjust their wholesale oil prices at the same time, with the same markup or reduction. Would this qualify as collusion under the Fair Trade Law?

Hwang: Oil prices are an issue that most people are concerned about, as well as being the focus of media and legislative attention. The most critical concern is whether there exists a "concerted action" between the two oil suppliers to jointly raise prices.

The two companies have raised oil prices 17 times between 2002 and last month. We have also probed the price hikes twice over the same period. The result of our investigations suggested that there was no clear evidence, no form of obvious agreement or tacit understanding, in the joint price hikes. However, given the timing and scale of the previous price hikes, we did warn the companies against acting as an illegal cartel.