Our thinking

Strategies for protecting Taiwanese businesses from cross-border risks

What's inside

Current approaches for managing global growth

Executive summary

Managing efficient global growth requires Taiwanese corporate leaders to make a series of strategic decisions. Understanding key legal developments worldwide can help you plan your company's next steps.

For technology companies focused on cross-border growth and expansion, vital issues often include defending business innovations that you invested time and money to develop and avoiding problems with global regulatory authorities.

We have chosen topics for this publication to reflect key changes in multiple jurisdictions that offer new opportunities for Taiwanese businesses, along with updated guidance on how to manage potentially damaging legal issues.

Protecting your innovations has never been more important. Since the US market serves as a vital source of revenue for many Taiwanese businesses, this makes it critical to understand how the patent system is evolving in the United States. "A patent system at an inflection point: Start of a new era at the USPTO" reviews how changing rules may create stronger patent rights in the US and affect patent litigation strategies for Taiwanese companies. "Using US trade secret litigation to protect your business innovations" explains how the 2016 US Defend Trade Secrets Act and trade remedies at the US International Trade Commission can provide powerful remedies to help Taiwanese companies with business in the US protect their proprietary information.

As any company's business grows globally, inevitably the company becomes subject to regulatory oversight and litigation in a variety of countries for anti-corruption, antitrust and many other aspects of its business operations. "How to manage multijurisdictional compliance investigations" shows practical steps that Taiwanese businesses operating in a global context can take to conduct complex compliance investigations in multiple jurisdictions effectively. "Seeking amnesty internationally for cartel allegations" discusses whether, when and how Taiwanese corporations should request leniency from government prosecutors for potential antitrust violations and cartel conduct allegations. "European Commission fines for resale price maintenance in e-commerce" describes the risks for Taiwanese businesses when imposing fixed or minimum resale prices on distributors in Europe. Finally, "Trends in international arbitration for Taiwanese companies" highlights several results from a 2018 White & Case survey for Taiwanese companies interested in international arbitration as a dispute resolution mechanism.

We look forward to discussing these and other issues with you.

A patent system at an inflection point: Start of a new era at the USPTO

Changing rules may start moving the pendulum toward stronger patent rights and affect patent litigation strategies for Taiwanese companies

Woman usng Virtual Reality technology

Using US trade secret litigation to protect your business innovations

Powerful US remedies can help protect valuable proprietary information, even if your business is headquartered in Taiwan


How to manage multijurisdictional compliance investigations

Taiwanese businesses operating in a global context need strong mechanisms to investigate and manage potential cross-border misconduct

server room

Seeking amnesty internationally for cartel allegations

Whether, when and how Taiwanese corporations should request regulatory leniency for potential antitrust violations

Cryptocurrency Mining Machine

European Commission fines for resale price maintenance in e-commerce

The risks for Taiwanese businesses when imposing fixed or minimum resale prices on distributors

large distribution warehouse

Trends in international arbitration for Taiwanese companies

Highlights from White & Case's recent survey results

manufacturing equipment

European Commission fines for resale price maintenance in e-commerce

The risks for Taiwanese businesses when imposing fixed or minimum resale prices on distributors

4 min read

The European Commission (the Commission) recently imposed steep fines on four consumer electronics companies—including Taiwanese electronics company Asus—for imposing fixed or minimum resale prices on their distributors.

This was the first time in 15 years that the Commission imposed penalties for resale price maintenance in vertical agreements.

A recent decision signals a focus on increased enforcement in the European Union, with serious consequences for the companies involved.


Resale price maintenance under EU competition law

European Union (EU) competition law prohibits resale price maintenance (RPM), which it defines as "agreements or concerted practices having as their direct or indirect object the establishment of a fixed or minimum resale price or price level."

EU competition law prohibits both direct and indirect forms of RPM, which are considered hardcore restraints on competition. Examples of indirect forms of RPM include: fixing margins; making the grant of rebates or reimbursement of promotional costs subject to the observance of a given price level; intimidation; warnings; and similar practices.

By contrast, the EU allows maximum resale prices, since they act as a ceiling for prices, thereby benefiting consumers. The EU also allows recommended resale prices, provided that they do not result in a de facto fixed or minimum sale price as a result of pressure from, or incentives offered by, any of the parties.


Penalties imposed on e-commerce companies

In February of 2017, the Commission initiated competition proceedings against four companies—Asus, Denon & Marantz, Philips and Pioneer—following information obtained during an e-commerce sector inquiry. The Commission's sector inquiry report had identified RPM as an area of competitive concern. In particular, it highlighted these companies' increased use of automated software for monitoring and setting resale prices.

In July of 2018, the Commission imposed a total of €111 million in fines1 on the four consumer electronics corporate groups for restricting online retailers' ability to set their own retail prices for widely used electronics products (including notebook computers and headphones).

By far, the steepest fine was the €63.5 million penalty imposed on Asus.2

The Commission found that Asus had monitored retailers' resale prices for certain computer hardware and electronics products. Specifically, Asus had intervened with retailers in two EU Member States (Germany and France) that were selling their products below Asus's recommended resale prices, and had asked them to increase their prices. The Commission concluded that this practice had had the effect of limiting effective price competition, thus leading to higher prices for consumers.

This is the first Commission decision that has considered the use of pricing algorithms.

The Commission specifically pointed to the fact that the companies had used sophisticated algorithms to monitor the prices set by distributors, thereby allowing them to intervene quickly when there were price decreases. The Commission noted that in today's online world, "Many, including the biggest online retailers, use pricing algorithms which automatically adapt retail prices to those of competitors. In this way, the pricing restrictions imposed on low-price online retailers typically had a broader impact on overall online prices."

Until this decision, the Commission had not adopted a decision condemning a company for RPM since 2003.3

So, this decision signals a focus on increased enforcement against vertical arrangements in the EU. It also serves as a reminder that a general sector inquiry by the Commission can lead to the opening of individual cases—with serious consequences for the companies involved.

Finally, this decision underlines how important it is that companies carefully review their contractual provisions and their operational practices, when it comes to "recommended" prices, to ensure that they are not running any risk of competition law scrutiny in the EU. Companies also should examine how they use algorithms or other automated software of varying degrees of complexity when setting prices, since using these tools may prompt increased examination by competition authorities.4


1 The companies obtained significant fine reductions in exchange for their cooperation ranging from 40% (for Asus, Denon & Marantz and Philips) to 50% (for Pioneer).
2 A summary of the Asus decision is available at: https://eur-lex.europa.eu/legal-content/EN/TXT/ PDF/?uri=CELEX:52018XC0921(01)&from=EN.
3 Yamaha was fined €2.56 million for fixing the minimum retail price of musical instruments for distributors who engaged in parallel imports (Commission Decision of 16 July 2003 in COMP/37.975 – Po/Yamaha).
4 See, for example, the UK competition authority decision that found an illegal agreement between two online poster sellers not to undercut each other, relying on automated repricing software and specific pricing algorithms, which they configured to automatically enforce the agreement (CMA decision, Case 50223, 12 August 2016, Online sales of posters and frames).

This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.
© 2018 White & Case LLP