Fri, Mar 04, 2011 - Page 2 News List

Tobacco dealers and firms fined for price fixing: FTC

SMOKEY MOVES:Investigators found that dealers under JT International Distributors met last May and then raised prices for Mild Seven cigarettes and other items in June

By Shelley Huang  /  Staff Reporter

The Fair Trade Commission (FTC) yesterday said 31 tobacco dealers would be fined a total of NT$21.9 million (US$743,000) for price fixing and interfering with fair trade.

The commission has been investigating the case since June last year, questioning suspects, checking banking records and tracing communication among those suspected of conspiring to raising prices, Vice Commissioner Shih Hui-fen (施惠芬) said.

Investigators said they had evidence that representatives of the 31 tobacco dealers under JT International Distributors met several times in May last year to discuss price fixing and then raised the prices of Mild Seven cigarettes and other tobacco products starting in June.

The commission also found that the dealers hired an outside accounting firm to supervise the operation and make sure that the 31 member firms went through with transferring funds, as agreed upon during their secret meetings.

“During the investigation, we found that the 31 tobacco dealers had close relationships,” Shih said. “There is evidence that the companies’ joint actions were very structured and the dealers were fully aware their actions broke the law.”

Shih said the dealers controlled about 20 percent of the market, so their actions hampered fair trade.

The price fixing also took advantage of consumers who were addicted to cigarettes or loyal to certain brands, creating an uneven playing field, she said.

Shih said 16 dealers were fined NT$900,000 each and 10 companies were fined NT$600,000 each, while five firms were each fined NT$300,000, depending on each dealer’s violations and whether the companies cooperated during the investigation.

The commission also warned businesses against attempts to negotiate prices with competitors.

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