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Yahoo! faces antitrust probe in Taiwan
Is it playing a game of auction monopoly?

By Julie Lin

Published: Monday 31 July 2006

Taiwan's Fair Trade Commission (FTC) is investigating Yahoo! for possible antitrust violation after users complained about the company's new fee policy for its auction service.

The island's largest portal announced on Tuesday that starting on 10 August, it will charge users three per cent of transaction fees on most of the auction items, in addition to current fixed fees for listing and various functions.

The move comes one month after archrival eBay threw in the towel in a losing battle against Yahoo!, and instead formed a joint venture with PCHome, the third largest portal.

Reacting to complaints filed by dissatisfied users, the FTC said yesterday that it will look into the case and determine whether Yahoo! is monopolising the market and if it has manipulated prices.

Chen Rong-long, representative of the FTC, said: "We'll need to decide whether Yahoo! has a monopoly status in Taiwan's auction market.

"Yahoo! will be fined for a maximum of TWD$25m (US$780,000) if the commission determines the company is manipulating the price with its monopoly power."

According to local law, a company with an annual revenue of one billion Taiwan dollars (US$31m) and owning at least one third of a specific market will qualify as a monopoly. Yahoo! did not reveal its revenue number in Taiwan.

Defending Yahoo!'s move, Charlene Hung, Yahoo!'s director of ecommerce business service, said: "The new fee system will enable us to provide better service and more improvement to auction users."

As of July, Yahoo!'s auction site in Taiwan has more than 3.7 million items listed and the transaction value for 2005 was a total of TWD$22bn (US$ 687m), according to Hung.

Yahoo! started charging users listing fees on its auction site on April 2004. At that time, a lot of users turned to eBay, which was a distant second behind Yahoo! and did not charge fees.

Hung said: "Those who left for eBay started [coming] back to us in three months. [This shows] this is where the auction sales can really be made."

With eBay's exit from the market earlier last month, Yahoo! has become the biggest player on the market. Meanwhile, eBay has said the new co-brand site is scheduled to debut later this year.

Julie Lin writes for CNET Taiwan