Fair Trade Commission Disposal Directions (Guidelines) on Concerted Petroleum Purchasing by Individual Petrol Stations
Passed by the 733rd Commissioners' meeting on November 24, 2005
Promulgated by Order Kung Er Tzu No. 0940010699 on December 16, 2005
Amended by the 1057th Commissioners' Meeting on February 08, 2012
Promulgated by Order Kung Zhi No. 10113601291 on March 07, 2012
Amended by the 1245th Commissioners' Meeting on September 16, 2015
Promulgated by Order Kung Zhi No. 1041360571 on September 29, 2015
Amended by the 1278th Commissioners' Meeting on May 04, 2016
Promulgated by Order Kung Zhi No. 10513602711 on May 17, 2016
- Objectives: Whilst respecting existing contracts between individual petrol stations and fuel suppliers for the provision of petroleum, in order to safeguard the capacity of individual petrol stations for negotiating the price of fuel purchases, so as to achieve free and fair market competition with related businesses in the retail market and protect the rights and interests of consumers, these guidelines are established.
- Legal basis: Pursuant to Article 15 (vii) of the Fair Trade Law (hereinafter referred to as the FTL), enterprises may file with the Fair Trade Commission (hereinafter referred to as the FTC) for authorization of an exemption "to joint acts for the purpose of improving operational efficiency or strengthening the competitiveness of small-medium enterprises." that are beneficial to the overall economy or public interest.
- Definition of market: Petrol station enterprises fall under the market scope covered by these guidelines in the following two areas: 1) The petroleum product wholesale market; and 2) the petrol station retail market. The former is comprised of petroleum suppliers and petrol station operators, whose scope is defined as the entire geographic national market; the latter must lend consideration to the product provided by the petrol station operators or the region in which the operator competes with its services, as well as the distinguishing characteristics of the petroleum products and the likelihood of consumer exchange, that being geographical demarcation as an important factor defining a given market.
- Applicability: Individual petrol station operators not previously belonging to any chain alliance, and which conform to the standards for defining small- and medium-sized enterprises.
- Scope of Application
- Individual petrol stations that are party to concerted petroleum purchases from upstream suppliers.
- Parties to concerted purchases may engage in price negotiation as individual entities with petrol suppliers, not subject to restriction by concerted purchasing. Any business involved in other concerted action, in such forms as retail pricing agreements, regional allocation, essentially constitutes obstruction of market competition and is subject to disposal under the FTL and relevant regulations.
- Application Requirements
- Concerted action exemption application: any joint petroleum purchase consisting of individual petrol stations that collectively account for greater than five percent (5%) of the market, based on the number of petrol stations nationwide listed for the current month by the Bureau of Energy, Ministry of Economic Affairs.
- Materials required for concerted action exemption application: pursuant to Article 13 of the Enforcement Rules of Fair Trade Law, an application for approval pursuant to the proviso of Article 15, Paragraph 1 of the FTL shall be accompanied by the following documents:
- application form.
- the contract, agreement, or other documentation evidencing agreement to the concerted action.
- detailed description of the contents and methods for conducting the concerted action.
- basic information for each participating enterprise.
- quarterly reports for the preceding three years on pricing and production and sales value (volume) for merchandise or services relevant to the concerted action of each participating enterprise.
- financial reports and operation reports for the preceding fiscal year of each participating enterprise.
- information on the market structure related to horizontal competition or upstream and downstream enterprises for each participating enterprise.
- concerted action assessment report.
- other documents specified by the FTC.
- Pursuant to Article 20 of the Enforcement Rules of Fair Trade Law: except for the items listed in Article 14 of the Enforcement Rules of Fair Trade Law, an application for approval filed pursuant to the provisions of Subparagraph 7, Paragraph 1, Article 15 of the FTL shall also specify the following information:
- materials in support of meeting the criteria for recognition as a small or medium-sized enterprise.
- anticipated concrete results in achieving improved operational efficiency or strengthened competitiveness.
- Pursuant to Article 12 of the Enforcement Rules of Fair Trade Law, an application for approval of concerted action filed pursuant to the proviso of Article 15, Paragraph 1 of the FTL shall be jointly filed for approval with the FTC by each participating enterprise in such action. Applications filed by a trade association or agent must be accompanied by identification documents for that agent.
- Review of Applications
- Pursuant to Article 22 of the Enforcement Rules of Fair Trade Law, when an applicant for approval of concerted action filed pursuant to the proviso of Article 15, Paragraph 1 of the FTL submits materials that are incomplete or deficient in content, the FTC may issue notice to require supplementation or correction of the application within a specified period of time, with the reasons stated for such requirement. If such supplementation or correction is not made within the specified time period or is so made but the submitted materials remain deficient, the application will be rejected.
- In accordance with Article 23 of the Enforcement Rules of Fair Trade Law, the three-month period specified in Article 15, Paragraph 2 of the FTL shall be calculated from the day next to the date on which the FTC receives the application. However, where the materials submitted by the enterprise are incomplete or deficient in content and the FTC has issued a notice to require supplementation or correction within a specified time, the period shall be calculated from the next day following the date of receipt of the supplementation or correction.
- Concerted petroleum purchases comprised of individual petrol station operators not meeting the criteria set forth in preceding Section VI Item A, may notify the FTC in advance, so as to review whether said purchase is prohibited under the proviso of Article 14 Paragraph 1 of the FTL, sufficient to affect the market function within a specified area. In cases where no prior written notification is submitted to the Commission, the FTC shall proceed with review on a per-case basis.
- Fines and legal responsibility for violations of regulations governing concerted action:
- Pursuant to Article 40 of the FTL, the FTC may order any enterprise that violates Article 15 of the FTL to cease therefrom, rectify its conduct or take necessary corrective action within the time prescribed in the order; in addition, it may assess upon such enterprise an administrative penalty of not less than one hundred thousand nor more than fifty million New Taiwan Dollars. Shall such enterprise fail to cease therefrom, rectify the conduct or take any necessary corrective action after the lapse of the prescribed period, the FTC may continue to order such enterprise to cease therefrom, rectify the conduct or take any necessary corrective action within the time prescribed in the order, and each time may successively assess thereupon an administrative penalty of not less than two hundred thousand nor more than one hundred million New Taiwan Dollars until the enterprise ceases therefrom, rectifies its conduct, or takes necessary corrective action. The Central Competent Authority may impose an administrative fine up to 10% of the total sales income of an enterprise in the previous fiscal year without being subject to the limit of administrative fine set forth in the preceding paragraph if the enterprise is deemed by the FTC as in serious violation of Article 15 of the FTL. The FTC shall enact the regulations with regard to the calculation of the total sales income of the previous fiscal year, definition of seriousness, and calculation of administrative fines.
- Pursuant to Article 34 of the FTL, any enterprise in violation of the provisos of Article 15 of the FTL that is ordered by the FTC pursuant to Article 41 paragraph 1 to cease therefrom, rectify its conduct, or take necessary corrective action within the time prescribed in the order, and after the lapse of such period, shall such enterprise fail to cease therefrom, rectify such conduct, or take any necessary corrective action, or after its ceasing therefrom, shall such enterprise have the same violation again, the actor shall be punished by imprisonment for not more than three years or detention, or by a fine of not more than one hundred million New Taiwan Dollars, or by both.
- The Commission may review and amend the relevant standards for these guidelines in accordance with changes to the market structure of domestic petroleum product channels.