Imposing restriction on the set-up of specialty stands, SOGO fined a NT$2.5bn fine by FTC for obstructing competition

In regard to the restriction imposed by SOGO Department Store, Pacific in its contract with the dealers to set up specialty stands in SOGO to restrict them from selling same or similar services or products in business area within 2 km radius of SOGO, the Fair Trade Commission of the Executive Yuan yesterday (May 23) reached a decision that SOGO should remove the clause on business area restriction from the contract and is fined a NT$2.5bn fine for imposing improper restrictions on its customers and downstream dealers by its superior market position.  It is considered that SOGO has imposed improper restrictions on the business activities of its trading counterparts as a condition to make deal with SOGO.  Such imposition is likely to obstruct competition. 

According to Vice Chairperson of the Fair Trade Commission Zheng You (鄭優), the terms and conditions of a contract must pay regard to the contracting parties' respective position.  If a contracting party imposes unreasonable restrictions on its contracting counterpart, it is considered as oppressing that counterpart using its superior market position.  By taking advantage of its superior position, SOGO unilaterally imposed such unfair competition clause to restrict its trading counterparts' business area and thus to impede potential competitors from joining in the competition.  Such restriction is likely to diminish competition for efficiency in violation of Article 19 (6) of the Fair Trade Law.

Source: Commercial Daily 05/24/2002