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Cablegate: Taiwan's Fair Trade Commission to Revise Fair

VZCZCXRO8327
RR RUEHCHI RUEHCN RUEHFK RUEHGH RUEHHM RUEHKSO RUEHPB
DE RUEHIN #2172/01 1740731
ZNR UUUUU ZZH
R 230731Z JUN 06
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC 0849
INFO RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION COLLECTIVE
RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMFIUU/DEPT OF JUSTICE WASHINGTON DC

UNCLAS SECTION 01 OF 02 TAIPEI 002172

SIPDIS

SIPDIS

STATE FOR EAP/RSP/TC, EB/TPP/IPE, STATE PASS USTR FOR
ALTBACH, USDOJ FOR CHEMTOB, USDOC FOR DUTTON

E.O. 12958: N/A
TAGS: ECON KIPR ETRD TW
SUBJECT: TAIWAN'S FAIR TRADE COMMISSION TO REVISE FAIR
TRADE LAW


1. Summary: Representatives from the U.S. Department of
Justice and the U.S. Federal Trade Commission met with
Taiwan's Fair Trade Commission (TFTC) on the margins of a
larger international competition seminar to discuss Taiwan's
plans to reform its Fair Trade Law and the benefits of
adopting a leniency system for those who report illegal
anti-competitive conspiracies. Taiwan officials praised
previous bilateral consultations between the USDOJ and TFCT
and urged that another meeting be scheduled in the near
future. AIT fully supports continuing this valuable
competition policy dialogue. End Summary.

============================================= ===
Taiwan FTC Proposes Amendments to Fair Trade Law
============================================= ===

2. U.S. Deputy Assistant Attorney General (DAAG) Gerald
Massoudi, Alden Abbott, Association Director for Policy and
Coordination from the U.S. Federal Trade Commission (USFTC)
and AIT Econ officers met June 19 with Hwang Tzong-leh,
Chairman of Taiwan's Fair Trade Commission (TFTC) to discuss
the U.S. Leniency Program for anti-competitive behavior and
Taiwan's proposed amendments to its Fair Trade Law. Chairman
Hwang was accompanied by Commissioners Wang Wen-yue, Chang
Li-chang and Hwang Mei-ying as well as senior staff from the
TFTC. This meeting took place on the margins of the
TFTC-organized International Conference on Competition Law
and Policy.

====================================
TFTC an Active Competition Authority
====================================

3. Taiwan's FTC was established in 1992, reviewing over
25,000 cases and imposing penalties in 2520 cases, including
fines of NT$1.73 billion (US$ 54 million). The TFTC has
recently pursued cases against Microsoft (2003) that resulted
in a negotiated settlement lowering software prices for
Taiwan consumers; Taiwan gasoline suppliers, including
state-owned China Petroleum, for illegal price fixing; Taiwan
sand and gravel suppliers for hoarding and anti-competitive
behavior; and 21 cement suppliers, including international
suppliers, for collusion and price fixing. The TFTC team
investigating this case was named Team of the Year for 2005
by the U.K. "Global Competition Review" magazine.

4. The TFTC is proposing amendments to the Fair Trade Law to
ease controls on mergers, adopt a leniency policy to
discourage collusion, provide exemptions to antitrust
regulations for some types of innovation promoting strategic
alliances, improve regulation of multilevel marketing, and
revise fines and penalties to better reflect economic
damages. DAAG Massoudi provided information on the U.S.
leniency program and recommended the TFTC consider similar
provisions in Taiwan.

5. Commissioner Wang noted that the TFTC scope for leniency
is limited because it currently cannot initiate criminal
prosecutions and must rely on administrative sanctions that
are not as effective a deterrent. Other TFTC senior staff
raised concerns about threats of violence against those
requesting leniency by other members of the conspiracy.
DAAG Massoudi replied that while threats of violence of this
sort were rare in the U.S., the U.S. RICO Act provides the
basis for criminal prosecution in those cases.

======================================
Asking for Continued Official Dialogue
======================================

6. Chairman Hwang closed the discussion by noting the
regular dialogue between the U.S. and Taiwan on competition
policy, first established in 2004 with the visit of U.S.
Deputy Attorney General Delrahim. Since that visit, there
have been annual dialogues hosted by each side, including a
digital video conference in March 2005. Hwang praised these
meetings as extremely useful for both sides and asked DAAG
Massoudi to help facilitate additional exchanges of this
nature.

7. The bilateral dialogue was a precursor to a larger
two-day international seminar on "The Role of Competition
Law/Policy in Socioeconomic Development", attended by experts
in competition policy and antitrust law, including
representatives of competition authorities from Germany, the
U.S., France, South Africa, New Zealand, Australia, Italy,

TAIPEI 00002172 002 OF 002


Japan, Korea, Malaysia, Mongolia, Indonesia, Vietnam and
Taiwan, as well as experts representing the WTO and OECD.

8. Comment: Taiwan is an observer of the OECD Committee on
Competition and is eager to demonstrate its ability to
participate in a productive and meaningful way in this
international forum. Conference delegates commented that the
event was extremely well organized and productive. Previous
bilateral dialogues between USDOJ and TFTC focused on a
discussion of the competitive effects of patent pooling
(specifically the Philips/Sony patent pool on CD-Rs) and
private sector responses to enforcement of competition laws.
The most recent meeting was a digital video conference in
March 2005. AIT believes such ongoing discussions are a
useful way to inform Taiwan competition authorities about
U.S. concerns and practices and supports continued dialogue
on this topic. End Comment.
KEEGAN

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