Local Three Leading Dairy Suppliers Lost the Case over Collusive Price Hikes

In October 2011, the three leading dairy suppliers, Wei Chuan Corp., Uni-President Enterprise Corporation, and Kuang Chuan Dairy Co., Ltd. jointly raised the retail prices of milk products at the same time, a practice that violates the Taiwan Fair Trade Act, for which the Taiwan Fair Trade Commission (FTC) imposed fines of TWD30 million in total on the three companies, the highest fine amount on record of similar cases.  Wei Chuan, Uni-President, and Kuang Chuan disagreed with the FTC’s decision and therefore initiated administrative proceedings.  This case was finalized at the Taiwan Supreme Administrative Court which examined this case and upheld the FTC’s decision on the ground that the FTC’s decision is reasonable. 

The whole matter began with the National Animal Industry Foundation’s (NAIF) decision made in August 2011 to elevate the raw milk procurement price by TWD1.9 per liter and the price increase was to begin on October 1, 2011.  In response, the three companies jacked up the prices of fresh milk products simultaneously to cope with their cost increase.  According to the FTC’s investigation, accounting for more than 80% of the domestic milk supply in Taiwan, Wei Chuan, Uni-President, and Kuang Chuan’s joint price hikes would decrease the price competition and further affect the supply and demand in the dairy market.  Based on the foregoing reason, the FTC ruled that the three companies violated the prohibition against concerted action as provided in the first paragraph of Article 14 of the Fair Trade Act, and therefore, fined Wei Chuan TWD12 million, Uni-President TWD10 million, and Kuang Chuan TWD8 million, respectively.  Also, the three companies were ordered to immediately cease the collusive price raise from the second day beginning from their receipt of the FTC’s decision.  Wei Chuan, Uni-President, and Kuang Chuan thus challenged the FTC’s decision and fine imposition by filing an administrative appeal but the appeal was dismissed.  They also unsuccessfully initiated administrative proceedings with Taipei High Administrative Court and further appealed to the Supreme Administrative Court. 

The Supreme Administrative Court therefore examined this case and decided against the three companies on the ground that their simultaneous price hikes by the same or near-identical price are unreasonable as opposed to the supposedly complicated practice of price adjustment.  Further, their uniform price increase does not reflect their respective costs of purchasing the raw milk nor their price-fixing which is supposed to be made differently due to their respective pricing structures.  (June 2014)
/CCS