In the December 2011/January 2012 issue of IFLR, the author's reported that Taiwan's Fair Trade Act was amended to increase administrative fines on material abuse of monopoly powers and material illegal cartel up to 10% of the offender's annual turnover in the preceding fiscal year. The Fair Trade Act mandates the competition authority, the Fair Trade Commission, to promulgate the criteria of the calculation of annual turnover of the preceding fiscal year, the determination of materiality, and the computation of administrative fines. Based on this mandate, the Rules for the Calculation of Administrative Fines on the Material Breach of Article 10 and Article 14 of the Fair Trade Act were released in April 2012 by the Fair Trade Commission (the Rules).
According to the Rules, material breach means material distortion of market competition order. In making its decision, the competition authority will take into account the scope, degree, and duration of the illegal activity, the offender's market position and the structure of the market where it competes, the sales amount and benefit accrued during the period of illegal activity, and the type of the illegal cartel. In addition, a material breach may be decided if the sales amount during the period of illegal activity exceeds NT$100 million ($3.4 million) or if the benefit accrued exceeds NT$25 million.
The amount of the administrative fine on a material breach will be decided based on the basic amount as increased or decreased by adjustment factors. The basic amount will be 30% of the sales amount during the period of illegal activity. The increased factors include whether the offender is a leader of the illegal activity, and whether it is a repeated offence.
On the other hand, the decreased factors include prompt cessation of illegal activity, cooperation with investigation, and compensation offered to the victims. The adjusted amount of the administrative fine should not exceed 10% of the annual sales amount of the offender in the preceding fiscal year, which is defined as the gross business income in the fiscal year preceding the year when the competition authority imposed the fine.
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