The Fair Trade Commission (FTC) yesterday issued large fines to Party World and Holiday KTV for violating fair trade laws by merging and jointly managing much of their businesses despite having been explicitly warned against doing so.
Not only does Party World hold more than half of the seats on Holiday’s board of directors, it also has real control over Holiday’s management and hiring decisions, commission spokesperson Shih Hui-fen (施惠芬) said.
The commission said that its investigation showed that since the re-election of Holiday’s board on June 13, 2008, Party World now directly or indirectly holds three out of five director seats and two out of three supervisor seats on the board.
One of Party World’s members on the board of directors also serves as chief executive officer of Holiday, which shows that the two enterprises have entered into a mutual agreement to jointly own and operate their businesses, Shih said.
Aside from executives sharing management decisions, other activities were also probed by the commission, such as Holiday authorizing Party World to run its branch on Taipei’s Linsen N Road (林森北路) and office rent-lease contracts between the two companies.
The commission said that Party World and Holiday had filed more than one request with it requesting a merger, but that these had been rejected out of a desire to maintain a competitive market and concerns that a merger of the two companies could create a monopoly. Despite being prohibited by the FTC from merging their businesses, the two companies — while separate entities on paper — now conduct cooperative activities, Shih said.
The commission fined Party World and Holiday NT$3 million (US$94,000) and NT$1.5 million respectively for violating Article 11 of the Fair Trade Act (公平交易法). Shih said the heavy fines were issued after considering the relative size of each company, as well as market share and repeated offenses despite numerous warnings.
The commission also ordered executives and directors who hold positions at both firms to give up one of those jobs immediately.
Neither Party World nor Holiday returned calls seeking comment yesterday.
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