Fair Trade Act in Taiwan
The Taiwan Fair Trade Act (“TFTA”) provides basic rules for all kinds of competitive behaviours of enterprises. The TFTA can be divided mainly into two big sections: restraints of competition and unfair competition. The content of the TFTA covers almost every area of business competition. In addition, due to continuous innovations of industries and competitive behaviours, when the legislators enacted the TFTA, in view of the dynamic developments in the future, they have used a lot of indefinite legal concepts in the provisions of the TFTA such as “overall economic benefits”, “impacts on the market function”, “economic rationalization”, “just causes”, “improper restrictions”, obviously unfair”, “affect trading order”, etc. Therefore, it is difficult to interpret these terms in accordance with solely the literal meaning of the provisions, and this have caused companies difficulties in judging the compliance of the TFTA when they employ competitive strategies. The legal services provided by our law firm includes but not limited to the following:
The term “mergers” under the TFTA refers to where an enterprise controls the operation of the business or the appointments and dismissal of another enterprise by means of mergers, acquisitions of shares, or co-operations, etc. The control of mergers under the TFTA has adopted prior notification/objection mechanism. Our law firm is able to assist you in planning the shareholding structure of the enterprises that intend to merge, filing reports with the Taiwan Fair Trade Commission, preparing reports with respect to the competition considerations such as market definitions, the effects of restricting competitions, and overall all economic interests and seeking the optimal way of merger for your business.
The term “concerted actions” under the TFTA means competing enterprises determine jointly the prices, quantities, specifications, trading counterparts and other business activities by agreements or any manners of mutual understanding. This is usually called “cartel behaviours”. According to the TFTA, concerted actions are prohibited in general, unless permitted by the Taiwan Fair Trade Commission. Our law firm assists clients in negotiations with competitors to avoid concerted actions, or filing applications for permissions of concerted actions, and dealing with reports and answers in the investigation procedures related to concerted actions and applying for an application to the Leniency Program.
Monopolies and Other Restraints of Competitions
Monopolies regulated under the TFTA do not only include the situation where there is no competition in the market, but also include the situation where an enterprise uses its dominant position to eliminate competitions. The TFTA does not prohibit monopolies, however, it bans on abuses of dominant positions to conduct anticompetitive behaviours. Various restrictions on enterprises’ business activities such as resale price maintenances, boycotts, discriminations, low price inducements, tie-ins, exclusive dealings, and restrictions on distribution regions or customers often occur during the procedures of negotiations on transaction conditions between enterprises. These behaviours are not completely prohibited or permitted under the TFTA, and the Taiwan Fair Trade Commission determines the legitimacy of the behaviours based on whether the enterprises have just caused. Many negotiations on distributor agreements are likely to involve anti-competition. Our law firm helps clients in analyzing potential anti-competitive issues and provides advice to clients during the contract drafting phase and represents clients to report any forms of anti-competitive behaviours to the Taiwan Fair Trade Commission, respond to investigations and relevant civil procedures, criminal procedures and administrative procedures.
False Advertisements or Other Unfair Competitions
Advertisements are the most often used methods of marketing when enterprises compete in markets. The TFTA has regulated many kinds of advertisement such as false or misleading advertisements, endorsements and testimonial advertisements, comparative advertisements, keywords advertisements, etc. For enterprises, awarding prizes is also an important way to attract customers. The TFTA has also set the maximum values of prizes, the aggregate annual cap amounts of prizes, and the cap amount of the biggest prize for enterprises to follow.
The Infringements of Intellectual Property Rights
In addition, when an enterprise encounters infringement of patents, trademarks, or copyrights, it often sends warning letters to, or receives warning letters from rivals. The Taiwan Fair Trade Commission has established related procedures and judgement standards with respect to warning letters. Our firm provides clients with professional legal advice when clients take competition actions and assists clients in avoiding violations of the TFTA and evaluating appropriate legal responses when clients faced with challenges as a means of competition by competitors.
Brain Trust knows how to give clients the best practice suggestions because our antitrust and competition team member served as a senior officer in the Fair Trade Commission.
We know because we were part of them.