Contributed By Formosa Transnational Attorneys At Law
Antitrust litigation in Taiwan has two prongs: “administrative litigation” (lawsuits initiated by parties against the regulator’s rulings) and “private enforcement” (lawsuits filed by injured parties against alleged infringers).
The prime focus of Taiwan’s antitrust litigation is administrative litigation, in which individuals/entities request judicial review of rulings made by Taiwan’s Fair Trade Commission (TFTC), the sole governmental agency with authority to regulate matters within the purview of Taiwan’s Fair Trade Act (TFTA).
Most administrative litigation cases arise from TFTC rulings that impose cease-and-desist orders upon individuals/entities found to have violated the TFTA. Such cease-and-desist orders usually come with fines and orders that compel individuals/entities to take mandatory actions to remedy harms resulting from the violations. Individuals/entities who do not accept these rulings may file administrative lawsuits with competent courts, requesting courts to revoke said rulings.
Another source of administrative litigation cases is TFTC denials of applications for TFTC approval. Under the TFTA, enterprises must apply to the TFTC for advance approval if the enterprises plan to engage in concerted practices. Enterprises must also seek TFTA approval for mergers that meet certain criteria, such as market share. Applicants whose applications are denied by TFTC may seek relief from the competent courts.
Jurisdiction over antitrust administrative lawsuits is determined by the subject matter. If IP matters (such as IP licensing) are the subject of a particular lawsuit, Taiwan’s Intellectual Property and Commercial Court (“IP Court”) will have first-instance jurisdiction. For matters that do not involve IP, the Taipei Administrative High Court (“High Court”) will be the venue for the first instance.
Private enforcement of antitrust law usually proceeds with civil lawsuits initiated by parties injured by alleged violations. Pursuant to Articles 29-33 of the TFTA, if an enterprise violates any provision of the TFTA and thereby infringes upon rights and interests of another, the aggrieved party may seek proper remedies from the civil courts. Available remedies include permanent injunctions requiring the infringing parties to cease the infringing activities, as well as compensatory damages.
Ordinary courts have jurisdiction over civil claims sounding in Taiwanese antitrust law. Plaintiffs may go to the IP Court if the subject matter of their claims involves IP issues.
Those who are familiar with Taiwanese antitrust law will definitely want to pay very close attention to the most recent developments in the independent power producer (IPP) cases.
In June 2022, the Administrative Supreme Court finally resolved the IPP cases after nearly a decade of litigation. The cases arose from the TFTC’s 2013 rulings that imposed cease-and-desist orders and fines upon nine private power plants. In the 2013 rulings, the TFTC found that the nine private plants jointly refused to negotiate with the Taiwan Power Company (a state-owned company and the exclusive supplier of electricity in Taiwan) on terms for the purchase agreements between the nine private plants and the Taiwan Power Company. The TFTC held that the nine private plants had engaged in concerted action. According to the TFTC’s rulings, the nine private plants established an association whose members were the nine private plants and subsequently reached an agreement not to negotiate with the Taiwan Power Company, their exclusive vendor.
The nine private plants initiated administrative lawsuits requesting the High Court to revoke the TFTC’s rulings. In 2014, the High Court respectively rendered judgments favourable to the nine private plants. The TFTC appealed to the Administrative Supreme Court, which remanded the cases back to the High Court. On remand, the High Court upheld its previous decision revoking the TFTC’s rulings. The TFTC filed a second appeal and obtained favourable judgments from the Administrative Supreme Court which instructed the High Court to reconsider the issues surrounding the definition of the relevant market. The High Court rendered its judgment, for the third time, in favour of the nine private plants. The TFTC appealed once again.
In 2022, the Administrative Supreme Court concluded the cases by rendering the judgments that dismissed the seven of the nine private plants’ lawsuits and sustained the TFTC’s rulings, and the other two private plants’ lawsuits were pending.
In this landmark decision, the Administrative High Court found that the sales of electricity by the nine private plants belonged to one market, in which the nine private plants were supposed to compete with each other by fighting for better deals with the Taiwan Power Company. According to the Administrative Supreme Court, the fact that the Taiwan Power Company was the only vendor for the nine private plants did not change the finding that the nine private plants were supposed to compete with each other for a better deal with the exclusive vendor.
The Administrative Supreme Court thus concluded the IPP cases by confirming that the TFTC correctly found that the nine private plants were engaging in concerted action.
These IPP cases have had a great impact on Taiwan’s antitrust law. The greatest impact is on the way in which the regulator will enforce the TFTA. Currently, Taiwan is developing its green energy industry, where many foreign investors have stepped in and made considerable investments. The lessons from the IPP cases should not be disregarded, especially for those who are interested in engaging in the industries related to power generation.
The TFTC’s Settlement with Qualcomm
In October 2017, the TFTC issued a ruling against Qualcomm, finding that Qualcomm breached the TFTA by misusing its market power. The ruling came with a fine of TWD23.4 billion (approximately USD774 million). Qualcomm filed an administrative lawsuit challenging the TFTC’s ruling.
In August 2018, while the administrative lawsuit was still pending before IP Court, the parties announced that the TFTC and Qualcomm had agreed to settle the matter. The published settlement's terms include that Qualcomm would pay TWD2.73 billion (approximately USD93 million) but the TFTC agreed to revoke the balance of the fine; in return, Qualcomm agreed to invest in Taiwan over the following five years.
The Qualcomm settlement is a rare case in the history of the TFTC’s enforcement of the TFTA. The last settled case was the TFTC’s settlement with Microsoft in 2003.
Statutory Legal Basis for Damage Claims
Articles 30 of the TFTA provides an express basis for a plaintiff to claim compensatory damages for breach of Taiwanese competition law. Under said provision, if an enterprise violates any provision of the TFTA and thereby infringes upon rights and interests of another, the aggrieved party may go to civil courts to seek compensatory damages.
Injured Parties Required to Establish Elements of Their Claims
Follow-on claims are not available in Taiwan’s legal system. Victims (plaintiffs) bear the burden of proof and must establish all the elements for their claims. Even in a situation where the TFTC finds a particular antitrust law violation, the party injured by the violation still has to prove to the courts that the defendant violated the provisions of the TFTA. In other words, the TFTC’s rulings do not control courts’ findings in relation to whether an alleged violation has in fact occurred.
No Specialist Competition Courts
There are no specialist competition courts or competition judges in Taiwan.
For administrative litigation, the High Court will have jurisdiction over cases where IP issues are not present; the IP Court takes jurisdiction over cases where IP issues are present. For civil claims, while ordinary courts will have jurisdiction, plaintiffs may go to the IP Court if the subject matter of their claims involves IP issues.
The TFTC’s Rulings Do Not Bind Courts
The TFTC’s rulings do not bind Taiwanese courts that hear cases where antitrust law issues are present.
In particular, even if the TFTC has issued a ruling that imposes sanctions upon an alleged offender, in a civil lawsuit initiated by a victim of the offender’s infringing activities courts will independently examine the plaintiff victim’s claim without being bound by the TFTC’s findings in its ruling.
Likewise, in situations where the TFTC finds no violation of antitrust law provisions, the TFTC’s findings do not preclude Taiwanese courts from rendering different decisions.
Similarly, decisions by foreign antitrust regulators do not bind Taiwanese courts.
The TFTC Does Not Intervene in Antitrust Damage Lawsuits
In most cases, the TFTC does not intervene in actions seeking compensatory brought by parties injured by violations of antitrust law.
Administrative Litigation Proceedings
Generally speaking, in administrative litigation proceedings, a party bears the burden of proof with regard to the facts that they allege in their favour, except either where the law provides otherwise or where the circumstances render it manifestly unfair. In addition, courts will look into the factual matters and request the parties or any other third parties to produce evidentiary materials that the courts deem necessary.
At the same time, the parties may request the courts to investigate factual issues and produce evidence that the parties would like the courts to take into consideration. In addition, the parties may request the courts to order the other parties or any other third parties to produce evidentiary materials that are relevant to the cases.
Plaintiffs in civil proceedings will have to produce evidence that suffices to establish each element required for a tort claim. The tortfeasor defendants usually will not have to establish any facts in relation to the elements required for a tort claim.
In situations where a party of a proceeding raises a “pass-on” defence, the party raising the defence must bear the burden of proof. In other words, said party needs to produce evidence that sufficiently establishes the facts supporting the “pass-on” defence.
Taiwan antitrust law is silent on whether or not an indirect purchaser may bring a claim for damages against an alleged violator. In other words, there is no provision explicitly preventing an indirect purchaser from bringing a claim for damages against the alleged violator.
Under Taiwanese tort law, however, one of the elements for a victim (plaintiff) to establish is causation. An indirect purchaser who does not have direct transactions with the alleged violator will need to establish that the alleged violation caused the resulting injuries that the indirect purchaser suffered.
It usually takes six months to one and a half years for courts to render first-instance judgments in administrative litigation cases.
In situations where an appeal is filed against a first-instance judgment, it usually takes one to two years for the Administrative Supreme Court to render its final judgment.
It usually takes six months to one and a half years for courts to render first-instance judgments in private enforcement cases (civil lawsuits).
The above timetable does not cover the time during which the appellate court and the Supreme Court render their judgments upon appeal.
In situations where there is a parallel investigation by the TFTC, parties may not apply for an order to stay the civil proceedings. This is because Taiwanese courts are not bound by the TFTC’s findings of facts and will make their own decisions on antitrust law issues in civil proceedings.
Class actions are available in Taiwan but are limited as follows:
Under the above-mentioned Acts, any of the victims may join a class action lawsuit on an opt-in basis. Meanwhile, a victim who has joined a class action lawsuit may withdraw from the action before the conclusion of the proceedings.
Collective actions are available in Taiwan as well. In accordance with Taiwan’s Civil Procedural Code, members of a public interest association may appoint the association as a plaintiff to file a civil action on their behalf.
Taiwanese antitrust law does not provide an ad hoc basis for a class/collective action. It is thus uncertain whether a class/collective action could be brought by indirect purchasers and/or direct purchasers.
Taiwan antitrust law does not provide an ad hoc basis for a class/collective action.
Under the Consumer Protection Act, an association advocating for consumer protection must be approved by regulators before it may bring a class action on behalf of consumers.
Under the Securities Investor and Futures Trader Protection Act, only the institution established in accordance with said Act could bring a class action. This institution is known as the Investors Protection Centre.
Please note that the two types of class action (under the Consumer Protection Act and under the Securities Investor and Futures Trader Protection Act) may not be relevant to antitrust law issues.
Taiwanese antitrust law does not provide an ad hoc basis for a class/collective action.
Under Taiwanese civil law, the parties may conclude a civil lawsuit by a private settlement or a settlement with courts involvement.
There is no strike-out/summary judgment available in civil proceedings in Taiwan.
A court hearing a civil lawsuit may dismiss a claim at an earlier stage without looking into the substance of the claim only if the plaintiff fails to fulfil the formal requirements, such as paying the court fees that are due at the moment of filing the lawsuit.
Generally speaking, a district court will have proper jurisdiction over a civil lawsuit if defendants have domiciles or residences in the territory subject to said court’s jurisdiction.
At the same time, when a civil lawsuit is based on tortious activities, a district court will have proper jurisdiction over the lawsuit if the harm or injury occurs within the territory subject to said court’s jurisdiction.
In a civil lawsuit where a foreign element is present (for instance, if any of the parties are foreigners or foreign companies), the courts will determine the applicable law. Generally speaking, the law of the country that is most connected to the subject matter will be the applicable law.
In a civil lawsuit invoking Taiwanese antitrust law, Taiwanese courts are most likely to apply the TFTA and the regulations that implement the TFTA, unless there are extremely exceptional circumstances.
A civil damage claim arising from a violation of the TFTA may be initiated only within one of the two following periods, whichever lapses earlier:
For background, discovery is not available in civil/criminal/administrative litigation proceedings in Taiwan.
Court Order to Produce Materials
A party to a civil litigation may file a motion to order the opposing party or a third party to produce specific materials as evidence. In making such a motion, the moving party shall specifically identify the requested materials; overly broad or vague requests will be denied. If the requested materials are relevant to a fact substantially related to the moving party’s underlying arguments, the court may grant the motion and order the requested party (or third party) to produce the requested materials.
Such a court order is different from a search warrant. As such, if the requested party (or third party) disobeys the court order, the court cannot compel the requested party (or third party) to produce the requested materials; however, the court may render a ruling imposing sanctions upon the requested party (or third party) in certain situations.
Court Order to Preserve Evidence
A party may also file a motion for an evidence-preservation order if there is a possibility that the evidentiary materials under the possession of the opposing party or a third party will be destroyed or altered. The moving party may file the motion before or during litigation proceedings.
The courts will grant such a motion when it is established that the requested materials are subject to the likelihood of being destroyed, hidden, or altered.
An evidence-preservation order, again, is different from a search warrant. While the courts may request the requested party (or third party) to produce the requested materials, failure to produce the requested materials will result only in court sanctions or in courts’ stipulation of a certain fact in the lawsuit proceeding.
The TFTC’s Investigation Power
When the TFTC is investigating an alleged violation, it may order the parties under investigation to produce materials that it finds relevant to said violation. Disobedience of said request will result in administrative penalties. The TFTC may also conduct an on-site search and may seize any materials that it finds relevant to any alleged violations.
Any parties that have interests in any of the TFTC’s current/past investigations may request the TFTC’s approval for access to the materials collected by the TFTC during its investigation. The TFTC will consider whether the requesting party has grounds to have access to the materials.
As noted earlier, there is no discovery in Taiwan’s legal system. When a party is requested to produce certain documents that are privileged, the requested party may refuse to obey the production order and explain to the courts the grounds for its refusal. It will be subject to the courts’ discretion whether or not to impose any sanctions in response to a party’s refusal to produce.
The TFTC will keep confidential materials that relate to leniency and/or settlement agreement. In particular, the TFTC may reduce sanctions on a member of a concerted action if said member actively reports the concerted action to the TFTC and helps the TFTC to investigate said concerted action. In this situation, the identity of the whistle-blower will be kept confidential.
In the TFTC’s history of enforcement of the TFTA, there are two cases where the TFTC settled with the investigated enterprises: Microsoft and Qualcomm. Except the published version of the settlement terms, the specific terms and conditions of the settlements for these two cases were protected from disclosure.
Witnesses are one of the five types of evidentiary methods under the Taiwan Code of Civil Procedure, the Code of Criminal Procedure, and the Administrative Litigation Act.
Pursuant to Article 302 of the Taiwan Code of Civil Procedure, Article 176-1 of the Code of Criminal Procedure, and Article 142 of the Administrative Litigation Act, every person is under a general duty to testify in a lawsuit proceeding if this person has witnessed a certain set of facts that are relevant to the proceeding. That is, witnesses are required to state their own observations to the court in the trial proceedings as ordered or summoned by the court.
Pursuant to Article 305 of the Taiwan Code of Civil Procedure and Article 143-1 of the Administrative Litigation Act, a witness may, by consent of the parties, make written statements that set forth their testimony.
In most cases, a witness of facts will be subject to direct examination by the party that calls the witness and cross-examination by the opposing party.
When being called to testify in a lawsuit proceeding, a witness may decline to answer any questions if the witness has proper grounds (such as self-incrimination) to do so. Otherwise, the witness will have to answer questions raised in the direct and/or cross examination, as well as questions raised by the presiding judge. Failure to give testimonies without due cause will result in sanctions.
Expert opinions are frequently relied upon by courts in antitrust law cases. In particular, when it comes to complicated economic issues or technology issues, courts tend to request institutions with relevant knowledge or experience to render expert opinions.
In most cases, expert opinions are made in the form of a written statement. Authors of said opinions will be called to testify only if the courts consider it necessary.
When testifying in court, an expert witness will be examined and cross-examined by the parties. The expert witness will also have to answer questions raised by the presiding judges.
In some cases, parties will appoint their own experts to produce expert opinions without the court’s prior permission. In this situation, the opposing party will usually dispute the qualifications of the expert. It will be subject to the court’s discretion whether or not to accept the opinions made by an expert appointed by one of the parties.
Article 30 of the TFTA stipulates that an enterprise that violates any of the provisions of the TFTA and thereby infringes upon the rights and interests of another shall be liable for damages arising therefrom. The amount of damages shall be assessed on the basis of actual injury suffered by the victim(s), and then, in practice, the court can possibly take the following factors into consideration:
Under Article 31.1 of the TFTA, courts may grant enhanced damages if the victim (plaintiff) has established that the infringer (defendant) committed the violation wilfully. In these circumstances, the court has the discretion to treble the amount of the victim’s established loss.
The TFTA does not expressly provide for a pass-on defence. Taiwan's courts have not yet directly addressed whether a pass-on defence will be viable when considering the amount of damages.
Pursuant to Article 203, Article 229 paragraph 2 and Article 233 paragraph 1 of Taiwan’s Civil Code, if an enterprise is found by courts to be liable for compensation of damages to the injured parties, the violating enterprise shall be held by the court to be liable for interest of 5% per annum from a designated date (usually the date that the defendant receives the copy of the plaintiff’s complaint) until the full settlement of the compensation.
Under Taiwanese law, when a tortious activity is committed with the involvement of multiple persons, then those persons will be held jointly and severally liable for the tortious activity.
While the TFTA allows the TFTC to reduce administrative penalties when a member of a concerted action directly reports to the TFTC and helps the TFTC to investigate the concerted action, such leniency does not prevent this reporting member from being sued by any person injured by a concerted action.
When multiple parties are held jointly and severally liable for a certain tortious activity, the internal share of said joint and several liability will be determined in accordance with the proportion of their contribution to the tortious activity and to the resulting injuries.
In a situation where the parties held jointly and severally liable for a certain tortious activity consider that there is a third party who also caused the same tortious conduct and/or the resulting injuries, the parties may file a lawsuit to request the third party to contribute a certain share of the joint liability.
Injunctive relief is available in both administrative and civil antitrust litigation.
To obtain an injunction, the moving party will have to establish facts showing that the injunction is needed to prevent the moving party from suffering severe and irremediable harm.
When hearing a motion for injunctive relief, courts will notify the opposing parties and request the opposing parties to make comments on the motion.
Courts usually will render orders upon a motion for injunction within one or two months.
The moving party will be responsible for any injuries that the opposing party suffers due to an injunction in situations where the injunction is later considered ungrounded by courts in ordinary lawsuit proceedings.
Alternative dispute resolutions are available but not mandated for antitrust cases. In both civil and administrative lawsuit proceedings, parties may settle the cases with the involvement of courts.
In administrative lawsuit proceedings, where the TFTC is a party, alternative dispute resolution is available only in extremely exceptional cases and is thus de facto unavailable.
Private litigation funding is prohibited in Taiwan. Public (government-sponsored) funding is available in certain fields as specified by special laws and regulations.
Courts will order the losing parties to bear the costs and/or expenses incurred from the lawsuit proceedings.
In most cases, each party will have to bear its own attorney fees. The prevailing party in a third instance proceeding, however, may request the Supreme Court to order the losing party to reimburse a limited amount of attorney fees for the third instance proceeding.
Under Taiwanese law, in a civil lawsuit initiated by a foreign plaintiff (a foreigner or a foreign company) who does not have residence in Taiwan, the defendant in the lawsuit may request the court to order the plaintiff to post a bond of a certain amount sufficient to cover the total amount of the court fees for the second and third instance and any other necessary litigation expenses. The same rule does not apply to administrative litigation.
Appeals are available for both administrative litigation and private enforcement.
Any parties who are not satisfied with the judgments by the first-instance court (either the IP Court or the High Court) will be allowed to appeal to the Administrative Supreme Court, whose rulings will be final and conclusive.
The appealing party may only argue issues related to matters of law. The Administrative Supreme Court will not examine the lower courts’ findings of facts except in some extremely exceptional situations.
Any parties who are not satisfied with the judgments by the first-instance court (either the IP Court or the High Court) will be allowed to appeal to the appellate court. In a case where the value of the subject matter exceeds TWD1,500,000, the party who does not accept the judgment of the appellate court may file an appeal to the Supreme Court.
At the level of the appellate courts (second instance proceedings), both parties may argue issues of fact and law. The appellate courts will examine the lower courts’ findings of facts and may render a judgment based on different findings of fact.
At the level of the Supreme Court (third instance proceedings), the appellant party may only argue questions of law. The Supreme Court will not examine the appellate courts’ findings of facts except in some extremely exceptional situations.