| The Trade Competition Act (the “Competition Act”) which came into effect on April 30, 1999, replaced the Price Fixing and Anti-Monopoly Act 1979 and attempts to find a new balance between encouraging the efficiency of monopolies, while at the same time ensuring there are sufficient checks to prevent unfair trade and competition. Under the Competition Act, the regulators have shifted their attention from controlling prices to controlling operator practices. Generally, all restrictive trade practices which create or may create a monopoly or reduce competition in the trade of goods and services are prohibited under the Competition Act. The Act does, however, permit certain practices which have the appropriate approval from the Trade Competition Committee. The Competition Act addresses specific anti-competitive activities such as (I) an abuse of dominant position; (II) mergers and acquisitions; (III) restrictive trade practices jointly undertaken by two or more operators; (IV) restrictive trade practices undertaken with an overseas business operator; and (V) other restrictive practices. Contravention of the Competition Act carries penalties including the imposition of restrictions and compulsory restructuring.
The Competition Act requires companies that had acted in a monopolistic manner or in a manner which, in relation to certain specific activities, reduced or eliminated competition, to submit a request to the Trade Competition Commission for the approval of such action. Requests relating to actions prior to April 30, 1999 were required to be submitted by July 28, 1999. The board of directors of TrueVisions believed that the activities of TrueVisions did not fall within the ambit of the Competition Act and, accordingly, that TrueVisions was not required to submit such request.
On September 4, 2000, the Trade Competition Commission ruled that the acquisition of TrueVisions Cable in 1998 by TrueVisions and the increase of TrueVisions’ subscription fee by 23% following the acquisition did not violate the Competition Act. The Commission concluded that there was legitimate ground for TrueVisions to increase its subscription fees as it was having financial difficulties and the operation of TrueVisions and TrueVisions Cable was considered to be the same unit. |
