Dell Taiwan Fined TWD2 Million for Restraining Competition

The Taiwan branch of Dell Inc. (“Dell Taiwan”) was fined TWD2 million by the Taiwan Fair Trade Commission (“Taiwan FTC”) for violating the 1st paragraph of Article 19 of the Taiwan Fair Trade Act applicable at the time of their act of boycotting and discontinuing supply and thus restraining competition.

Taiwan FTC found that Dell Taiwan violated the Taiwan Fair Trade Act by the act of boycotting.  According to the findings of Taiwan FTC’s investigation, after the southern branch of Chunghwa Telecom Co. (“Chunghwa southern branch”) had successfully secured a project contract of the Environmental Protection Bureau of Tainan City Government, Chunghwa southern branch appointed its cooperative supplier to purchase SonicWALL product, the anti-virus suite.  However, during a period from March through June 2013, when the cooperative supplier tried to purchase SonicWALL product from the local distributor thereof, Dell Taiwan had asked the local distributor not to make quotation nor supply for several times and therefore caused the supplier to be unable to purchase the said product in Taiwan.

Due to Dell Taiwan’s boycott, the said supplier was forced to purchase the SonicWALL product from abroad but the product further became invalid due to Dell Taiwan’s changes in its expiration date, which caused Chunghwa southern branch to miss the deadline for inspection & acceptance and also intimidated other potential tenderers. 

The SonicWALL product is an Internet security software product developed for servers by Dell Inc.’s US-based subsidiary, SonicWALL LLC. and has been distributed by Weblink International Inc. and Zero One Technology Co., Ltd. by contract in Taiwan.  Dell Taiwan does not sell the SonicWALL product directly in Taiwan but are responsible to assist the authorized local distributors to promote the product in Taiwan.  Moreover, the authorized local distributors have to make booking or request for the authorized reseller certificate with SonicWALL LLC. through Dell Taiwan.  Dell Taiwan has the authority to assist SonicWALL LLC. in deciding on the purchase price and issuing the authorized reseller certificate, the Taiwan FTC said.

In view of the foregoing, the Taiwan FTC determined that Dell Taiwan violated the Fair Trade Act for their action of restraining competition by causing another enterprise to discontinue supply, purchase or other business transactions with a particular enterprise for the purpose of injuring that particular enterprise as provided in the 1st paragraph of Article 19 of the Taiwan Fair Trade Act applicable at the time of their action.  (April 2015)
/CCS