After the government lifted the ban on US pork imports containing traces of ractopamine on Jan. 1, a boxed meal restaurant posted a notice saying it was raising prices by NT$5 and NT$10 (US$0.18 and US$0.35) for two types of meals to reflect the higher cost of local pork. The price hikes caused public anger, as people suspected that it was using the situation as an excuse to raise prices.
Consumer protection officers promptly conducted an investigation, with preliminary results showing that the price increases were reasonable.
Nevertheless, the Cabinet is proceeding with caution, demanding that the Executive Yuan’s Consumer Protection Committee continue to monitor and control market prices, and that if irregular price hikes are found, the committee, related agencies and local governments should crack down on such irregularities.
From the perspective of supply and demand, as most consumers refuse to eat pork containing ractopamine, rising demand for local pork should lead to price increases. In that case, if businesses work together to drive up local pork prices, they would affect the market order.
To tackle such illegal concerted actions, the government could issue fines of up to NT$50 million in accordance with Article 40 of the Fair Trade Act (公平交易法).
The punishment for concerted action might seem heavy, but it is hard to prove, as Article 14 of the act states that evidence of any form of “mutual understanding” among competing companies is needed.
Companies mostly reach such agreements in closed-door meetings, and as they share liability, are tight-lipped, making it difficult for the Fair Trade Commission to collect evidence.
In comparison, it is easier for the Council of Agriculture to tackle pork price hikes in accordance with the Agricultural Products Market Transaction Act (農產品市場交易法). Under articles 3, 6 and 35 of the act, a company could face a fine of up to NT$300,000 for monopolizing the trade of agricultural products or manipulating prices.
Although a much lower fine than that of the Fair Trade Act, from a law enforcement perspective, the council could punish companies forcing up prices without proving a concerted action, making the council more able to deter the practice.
The government can also respond to artificial inflation of commodity prices by applying the Criminal Code’s Chapter 19: Offenses Against Agriculture, Industry, and Commerce.
Under Article 251 of the code, “a person disseminating false information with the intention of affecting the transaction price of products” could be sentenced to up to two years in prison and face a fine of up to NT$200,000.
Indeed, launching a criminal investigation can effectively deter unhealthy price hikes. However, by adhering to the basic principles of clearing the innocent, proving guilt and protecting human rights, how is it possible to presume that a person intends to affect the price of a product?
Perhaps the authorities could come up with a clear and definite standard.
The demand for proof is higher in criminal cases than in administrative cases. Even if a court finds a suspect not guilty, the council should look into the issue to see whether administrative penalties are applicable.
By constructing a comprehensive legal system of criminal investigation followed by administrative investigation, it would be possible to stabilize pork prices.
Yen Ting-tung is a professor in Ming Chuan University’s financial law department.
Translated by Eddy Chang
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