Leniency Program as a Tool for Detecting Anticompetitive Behaviors: A Case about Capacitors

Transcription

1 Leniency Program as a Tool for Detecting Anticompetitive Behaviors: A Case about Capacitors Hsuan HUNG and Li-Ya WU Taiwan Fair Trade Commission Oct 3,

2 TFTC s Leniency Program Before November 2011 Non-leniency Obtaining substantive evidence of concerted actions has become increasingly difficult Corresponding to international trends in competition law After November 2011 Creating the legal basis Article 35 of the Fair Trade Act (FTA): The Fair Trade Commission (FTC) may grant exemption from or reduction of fines to be imposed in violation of Article 15 of the FTA Enacting the leniency procedure Regulations on Immunity and Reduction of Fines in Illegal Concerted Action Cases ( Leniency Regulations ) 2

3 TFTC s Leniency Program Who can apply for leniency? When is the effective time for applying? Enterprises which have partaken in concerted actions and with concrete evidence Before FTC initiates an investigation / During the investigation period What kind of evidence should be provided? How many appliers may gain the leniency? Concrete details of the concerted action Five applicants at most Extent of the reduction of fines? The 1 st applicant: Full immunity The 2 nd to 5 th applicants: 50%~10% reductions 3

4 TFTC s Leniency Program Immunity of Fines: For the 1 st applicant The evidence provided shall allow FTC to be aware of the concerted action or initiate a cartel investigation Reduction of Fines: in the period of investigation 1 st applicant: 30%~50% off 2 nd applicant: 20%~30% off 3 rd applicant: 10%~20% off 4 th applicant: 10% or less off Marker System: allowing the 1 st enterprise to come forward applying for full immunity even though it has inefficient evidence, provided it can gather sufficient evidence within a specified time period 4

5 TFTC s Leniency Program All applicants are required to provide concrete content of the violation and evidence that the applicants have already obtained at the time of application Evidence that is capable of proving the violation of the concerted action Content and evidence being able to facilitate FTC to initiate the investigation Statement and evidence that are able to significant assist FTC in the investigation on the concerted action in question or able to enhance the probative value of the evidence FTC has already obtained Giving an outline of the concerted action in question as well as the time and location where the mutual understanding has been established and the content of the mutual understanding 5

6 TFTC s Leniency Program After examining the evidence provided by the applicants, FTC would issue a conditional consent to approve the applications from enterprises The attached conditions include: Immediately ceasing all participation in the concerted action Following the instructions of FTC and provide honest, full, and continuous assistance during the investigation Do not disclose to any other parties about filing the application Final decision: When the investigation is concluded, the applicant who complies with the conditions in the FTC s conditional consent shall grant full fine immunity or fine reduction according to their application order 6

7 Overview of Capacitors Industry Cartel Product Electrolytic capacitors aluminum capacitors tantalum capacitors Involved companies At least 10 Japanese companies involved include their Taiwan and Honk Kong subsidiaries Place Japan, Hong Kong, Taiwan Duration How to reach an agreement 2005~2014 Through multilateral meetings Bilateral communications( s telephones ) Infringement: Paragraph 1, Article 14 of the Fair Trade Act at the time (No enterprise shall engage in any concerted action)

8 The Applications of Capacitors Aluminum Capacitors Larger electronic products PCs Household Appliances Home Video Game Consoles Power Supplies Tantalum Capacitors Thin and small electronic products Notebooks Mobile Phones Handheld Game Consoles

9 Market Structure of the Industry Market share of aluminum capacitors Market share of tantalum capacitors The market share of the involved companies is about 40% The involved companies are the main producers in this market 9

10 How Did They Reach the Agreements Method Meeting Name Duration Meeting Place Frequency Involved Companies Discussion Multilateral Meetings Market Study Meeting (MK Meeting) Japan Every Month Aluminum/ Tantalum Companies Arrangement for mainly Japan Markets Capacitors Up Meeting (CUP Meeting) Japan Every Month or Every 2 Months Aluminum Companies Arrangement for Taiwan and Japan Markets Sales Manager Meeting (SM Meeting) Hong Kong Every 3 Months Aluminum Companies Arrangement for Taiwan and China Markets Bilateral Communications Japan Taiwan Irregular Aluminum/ Tantalum Companies Conspired with competitors to fix prices for electrolytic capacitors sold to customers

11 Content of the Agreement Exchange sensitive business information to reach agreements Have great impact on Taiwan electronic product market Price Output Capacity Loading Terms of Trade

12 Impacts on Taiwan Market SM meeting MK meeting CUP meeting Aluminum Capacitors Total sales revenue > NTD 50 billion Main Taiwan customers include Delta, Liteon, Foxconn Taiwan aluminum capacitor companies are far smaller Tantalum Capacitors Total sales revenue > NTD 16 billion Main Taiwan customers include Foxconn, Wistron, Compal, Quanta No Taiwan tantalum capacitor companies

13 Administrative Surcharge (Before Leniency Reduction) Aluminum Capacitors Companies Companies Nippon Chemi-Con Corp. Hongkong Chemi-Con Ltd. Taiwan Chemi-Con Co., Ltd. Surcharge(NTD) 1,868,300,000 82,900, ,800,000 Rubycon Corp. 1,248,000,000 ELNA Co., Ltd. 76,600,000 Sanyo HK Ltd. 842,000,000 Nichicon HK Ltd. 111,300,000 Tantalum Capacitors Companies Companies Surcharge(NTD) NEC TOKIN Corp. 1,218,200,000 Vishay Polytec Co., Ltd. 31,200,000 Matsuo Co., Ltd. 24,300,000 Total amount: NTD 5,796,600,000 (Approx. $ 173 million)

14 Define the Relevant Product Market (Immunity)A Electrolytic Capacitor After a Dawn Raid Aluminum Tantalum Film Conductor Electrolytic Capacitor (Reduction) B (Reduction) C (Reduction) D (Reduction) E 1 (Immunity) A (Reduction) B 2 (Reduction) 1 C (Immunity) A (Immunity) D (Reduction) E

15 Conclusion- The Introduction of Leniency program helps a lot For companies: Evaluate whether they should apply or not Secure the qualification first, even not enough evidence For competition authorities: Save time and cost Efficient human resource arrangement

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