Lawmakers urge FTC to probe oil refiners’ pricing

By Chris Wang  /  Staff reporter

Fri, Mar 15, 2013 - Page 3

Lawmakers yesterday urged the Fair Trade Commission (FTC) to investigate CPC Corp, Taiwan, and Formosa Petrochemical Corp (FPC) over potential monopoly pricing following the commission’s decision to fine independent power producers for collusion.

The FTC on Wednesday fined nine independent power producers a total of NT$6.32 billion (US$213.08 million) for collusion after they rejected requests by Taiwan Power Co to renegotiate electricity prices.

Recognizing the commission’s efforts, the Democratic Progressive Party (DPP) caucus called for the independent agency to look into potential monopoly pricing by the nation’s only fuel distributors “that has been going on for far too long.”

DPP Legislator Pan Men-an (潘孟安) said the two companies have always implemented the same price increases and decreases, an obvious sign of a price cartel, and added that the commission has been inactive on the matter despite the Legislative Yuan’s Economic Committee demanding that the FTC probe possible collusion last year.

Article 41 of the Fair Trade Act (公平交易法) stipulates that the commission may impose an administrative fine of up to 10 percent of the total sales income of an enterprise which is found to be involved in monopoly activity, he said.

According to the regulation, Pan added, CPC could be subject to a fine of NT$34.2 billion and FPC NT$9.3 billion if convicted.

DPP Legislator Gao Jyh-peng (高志鵬) said the FTC should consider the practice as monopoly pricing rather than as collusion or cartel activity because it would take more substantial evidence to prove the firms had colluded on fuel pricing.

Insufficient evidence would result in a rejection of a fine by the Administrative Court or the Ministry of Economic Affairs’ Petitions and Appeals Committee, Gao said.

As CPC must adjust its prices in line with government policies and the two companies have different oil refining formulas and costs, pricing of their products should be different, DPP Legislator Hsu Chih-chieh (許志傑) said.

“However, that is not the case, as the companies have been selling their products at the same price and adjust pricing almost always at the same time,” he said.