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