News Brief: Fair Trade Commission criticised over coffee fines

Following the imposition of fines recently by the Fair Trade Commission on convenience store chains for coordinated raising of coffee prices, a legislator yesterday criticised the FTC in the legislative Yuan, the Liberty Times reports today (Chinese-language article here).

Democratic Progressive Party legislator Li Jun-yi (李俊毅) said that since it was unable to make vendors return prices to their original levels, the FTC should join Premier Wu Dun-yi's (吳敦義) list of "incompetent" government agencies.

FTC chairperson Wu Shiow-ming (吳秀明) responded that forcing vendors to lower prices would be degenerating into populism (淪為民粹).

                                                                                              Text and photos © Jiyue Publications 2011

News Brief: Convenience stores fined for price-fixing coffee

Taiwan's "Big Four" convenience store chains were fined for price-fixing by the Fair Trade Commission, the Taipei Times reported today (full article here)

7-Eleven was fined NT$16 million (ca. US$500,000), FamilyMart NT$2.5 million, Hi-Life  NT$1 million and OK Mart NT$500,000.

(See earlier NOMM reports here and here)

News Brief: “Coffee Clause” passes first legislative hurdle

The first review of the so-called Coffee Clause (咖啡條款) amendment to the Fair Trade Act (公平交易法) was passed yesterday by the Economics Committee (經濟委員會) of the Legislative Yuan (立法院; Taiwan’s legislature) the United Daily News (聯合報) reported today (full Chinese-language article here). If the amendment passes its third reading, which could happen as early as December, this will raise the maximum penalty for collusion in price fixing from NT$25 million (ca. US$800,000) to as much as 10 percent of annual sales of the product concerned. Estimates of sales by the “big four” convenience stores chains—which have been accused of colluding to raise prices of milk-containing coffees—suggest that around 100 million cups are sold each year. At an average cost of NT$40 (US$1.30) per cup, this would indicate annual sales of around NT$4 billion (US$130 million) and therefore potential fines of NT$400 million (US$13 million). The Fair Trade Commission under the Executive Yuan (行政院公平會) is due to make its report into price fixing on coffee by convenience stores by November 6.                                                                                                                       Text and photos © Jiyue Publications 2011

News Breif: Milk companies fined

The Executive Yuan's Fair Trade Commission (行政院公平交易委員會) imposed fines totalling NT$30 million (ca. US$1 million) on the nation's three largest milk sellers for colluding over the increase in the prices of their products, Taiwan's 'independent' news agency CNA reported yesterday (see Chinese-language article here).

FTC Vice Chairwoman Shi Hui-fen (施惠芬) said that whereas the purchase price for a liter of domestically produced milk had been raised NT$1.9, the price of a one-liter container of milk from Wei Chuan (味全) rose from NT$77 to NT$83, from Uni-President (統一) rose from NT$76 to NT$82, and that of Kuang Chuan (光泉) rose from NT$76 to NT$82, in other words, an across-the-board rise of NT$6. In addition, Wei Chuan raised the price of its 2-liter bottle of milk by NT$12, while Uni-President and Kuang Chuan added NT$11 to their bottles.  Shi said the three companies offered different explanations for their increases, with Wei Chuan saying it was reflecting the cost of raw materials (原料價格), and Kuang Chuan saying it was due to a rise in the cost of paper pulp (紙漿價格), and Uni-President blaming the NT$2-rise in milk prices (生乳收購調升近2元). In deciding the levels of the fines, Shi said that the FTC took into consideration the market share and operating model of each company. Wei Chuan, which has almost 40% of the market, was fined around NT$12 million, Uni-President, with almost 30%, was fined NT$10 million, and Kuang Chuan, with between 10 and 20%, being fined NT$8 million.                                                                                                                       Text and photos © Jiyue Publications 2011