Direct evidence may be required in a concerted action case for a guilty verdict

June 2, 2014

On April 18, 2014, the Supreme Administrative Law Court (the “Court”) reversed an important decision made by the Fair Trade Commission (the “FTC”).  In 2011, the FTC discovered a uniform, contemporaneous, NTS$5 rise in the prices of 48 coffee latte drinks sold in convenient stores throughout Taiwan, varying in size and temperature.  In view of the expected difference in the costs and efficiency of those businesses, and also the identical change in price, the FTC fined those businesses NT$20,000,000 in total, under Article 41 of the Fair Trade Act. The businesses requested a review of the foregoing decision, which resulted in the Court to reverse the FTC’s decision by a ruling rendered on April 18, 2014 (Case No. 2014 Pan Tze No. 195). The Court pointed out that, considering the rising prices of milk and coffee beans, there was no direct evidence that the uniform rise in the price of milk coffee must have been effected by an agreement in advance but a mere following of one another’s price increase.  The Court also noted that fact that it was customary for a NT$5 increase in price in practice for these products. Accordingly, all the fines have thus been nullified.  While the FTC expressed their respect for the Court’s decision, they stressed that direct evidence of collusive agreements is frequently difficult to obtain, and any finding of violation should be allowed to be based on indirect evidence, and given the facts of the case through economic analysis, there ought to have been a collusive agreement in place between the competitors.