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Yahoo faces antitrust probe in Taiwan

Government investigates after some users of Net giant's auction service complain about transaction fees.

Taiwan's Fair Trade Commission is investigating Yahoo for possible antitrust violations after some users complained about the company's new fee policy for its auction service.

Yahoo, Taiwan's largest Web portal, announced Tuesday that starting on Aug. 10 it will charge users a 3 percent transaction fee on most of the items auctioned on the site, 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 country's third-largest portal.

Reacting to user complaints, the FTC said that it would look into the case and determine whether Yahoo is monopolizing the market and if it has manipulated prices.

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

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

According to local law, a company with annual revenue of $31 million or more and at least a third of a specific market qualifies as a monopoly.

"The new fee system will enable us to provide better service and more improvement to auction users," Charlene Hung, Yahoo's director of e-commerce business service, said in defense of Yahoo's move.

As of July, Yahoo's auction site in Taiwan had more than 3.7 million items listed. Its transactions in 2005 totaled $687 million, according to Hung.

Yahoo started charging people listing fees on its auction site in April 2004. At that time, many consumers turned to eBay, which was a distant second behind Yahoo and did not charge fees.

"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," Hung said.

With eBay's exit, Yahoo has become the biggest player in the online auction market in Taiwan. Meanwhile, eBay has said the new co-branded site is scheduled to debut later this year.

Julie Lin of CNET Taiwan reported from Taipei.