Fair Trade Commission Disposal Directions (Guidelines) on Handling Cases Governed by Article 21 of the Fair Trade Law

Passed by the 151st Commissioners' Meeting on August 31, 1994
Amended by the 269th Commissioners' Meeting on December 24, 1996
Points 22(4) and 23(4), 23(5), 23(7) amended, Points 22(27), 22(28), 22(29), 22(30) and 23(11), 23(12), 23(13), 23(14) added, and Point 26 deleted by the 311th Commissioners' Meeting on October 15, 1997
Point 16(9) amended to 16(8) and Point 6(3) deleted by the 387th Commissioners' Meeting on April 6, 1999
Points 16(6) and 21(7) amended by the 417th Commissioners' Meeting on November 3, 1999
Amended by the 568th Commissioners' Meeting on September 26, 2002
Promulgated by Order (91) Kung San Tzu No. 0910010812 on November 5, 2002
Amended by the 688th Commissioners' Meeting on January 13, 2005
Promulgated by Order (94) Kung Fa Tzu No. 0940001278 on February 24, 2005
Promulgated by Order (94) Kung Fa Tzu No. 0940006949 on August 26, 2005
Amended by the 836th Commissioners' Meeting on November 15, 2007
Promulgated by Order Kung San Tzu No. 0960010188 on November 30, 2007
Amended by the 940th Commissioners' Meeting on November 11, 2009
Promulgated by Order Kung San Tzu No. 0980010463 on November 19, 2009
Amended by the 954th Commissioners' Meeting on February 10,2010
Promulgated Order (99) Kung San Tzu No. 0990001296 on February 25, 2010
Amended by the 986th Commissioners' Meeting on September 29,2010
Promulgated Order (99) Kung San Tzu No. 0990007339 on October 13, 2010

Chapter 1 General Provisions

  1. The Fair Trade Commission (hereinafter, the "Commission") has adopted these Case Handling Principles for purposes of ensuring fair competition among enterprises, protecting the rights and interests of consumers, effectively enforcing Article 21 of the Fair Trade Law (hereinafter, the "Law"), and prohibiting enterprises from making or using false or misleading representations or symbols on goods (or in connection with services), or in advertisements, or by any other means of making known to the public.
  2. The term "goods" (or services) in Article 21 of the Law refers to subject matters of trade having economic value and other trade-related matters that are not directly related to subject matters of trade but that have the effect of solicitation, including an enterprise's identity, qualifications, business condition, relationship to other enterprises, non-profit (philanthropic) organizations, or government agencies, gifts or prizes attached to such trade by the enterprise, and so forth.
  3. The term "other means of making known to the public" in Article 21 of the Law refers to any act of transmitting information that may directly or indirectly cause the non-specific general or relevant public to collectively see or hear of it.
    Examples of "other means of making known to the public" include [inter alia] all of the following: billboards, business cards, goods or services seminars/presentations, provision of information by an enterprise for publication by the media in the form of reportage, enabling enterprises to collectively see or hear of information by means of mailings, publishing information in publicly sold books, delivering publicity materials to consumers by way of promotion or introduction, and distributing product manuals to professionals for further dissemination of information to the public.
  4. "Representation or symbol" in Article 21 of the Law means an act sufficient to express or transmit information or ideas having commercial value by means of written or spoken language, sound, graphics, marks, numbers, images, colors, shapes, actions, objects, or other means.
  5. "False" in Article 21 of the Law refers to a representation or symbol that is inconsistent with facts, where the discrepancy is deemed unacceptable to the general or relevant public, and sufficient to cause concern about misunderstanding or erroneous decisions.
  6. "Misleading" in Article 21 of the Law refers to a representation or symbol, whether or not consistent with facts, that is sufficient to cause concern about misunderstanding or erroneous decisions by the general or relevant public.
  7. The principles for determining whether a representation or symbol is false or misleading are as follows:
    1. Determination of whether a representation or symbol is false or misleading shall be based on the basis of the general public exercising an ordinary degree of care.
    2. Where a representation or symbol, observed in isolation, is factual, but the overall impression and effect it gives, when observed in combination, is sufficient to cause concern about misunderstanding or erroneous decisions by counterparts involved in a relevant transaction, it shall be deemed misleading.
    3. Where the content of a representation or symbol is manifested by comparison or especially distinctive means, and where the major part that is especially distinctive could easily form the major factor contributing to a consumer's decision whether to transact, the especially distinctive major part may be observed independently in determining whether the content is false or misleading.
    4. A representation or symbol objectively having multiple reasonable interpretations shall not be deemed false as long as one of the meanings is true; however, this shall not apply when the intent to mislead is evident.
  8. The following factors shall be considered when applying the principles stated in Article 7:
    1. The degree of discrepancy between the representation or symbol and actual conditions.
    2. Whether the content of the representation or symbol is sufficient to affect reasonable judgment making and trading decisions of members of relevant trading counterparts possessing ordinary knowledge and experience.
    3. Effect on the economic interests of competing enterprises and trading counterparts.
  9. Whether an advertisement is false or misleading shall be judged on the basis of the objective circumstances at the time of use of the advertisement by the advertiser.
    Where an advertiser of an advertisement knew or was capable of knowing at the time it used an advertisement that it would subsequently not be able to deliver content consistent with the advertisement, the advertisement is false or misleading.
    "Objective circumstances" in paragraph 1 refers to the advertiser's ability to subsequently deliver, the prevailing laws and regulations, the supply of a product (or service)ˇKand so forth.

Chapter 2 Procedures for Case Handling

  1. When the Commission receives a complaint alleging a false or misleading representation or symbol of another enterprise, the complainant shall be requested to describe the specific details and to provide his or her full name and address in writing. Where an oral complaint is made, the Commission shall make a written record of the complaint and, after reciting it to or having it read by the complainant to verify the accuracy of the content, shall annotate the year, month, and day, and then have the complainant sign or chop it.
  2. When the Commission receives a complaint alleging employment of a false or misleading representation or symbol of another enterprise, basing on the necessity of investigation of facts and evidence, the complainant shall be required to provide relevant evidence and materials such as goods, packaging, and advertisements. The complainant shall also explain in what way the representation or symbol made by the other enterprise is sufficient to cause a relevant trading counterpart' reasonable suspicion that it is false or misleading and the caused damages. A person authorizing another to file a complaint shall execute a power of attorney.
  3. After receiving a written complaint or an e-mail, the supervisory department, in addition to following the procedures set forth in the Commission's Government Document Handling Manual, shall first conduct a review of the following matters in line with complaint reporting procedures:
    1. Determination of conformance with Article 11 or 12. If the complaint, or documents transferred from other agencies, does not contain specific details, the complainantˇ¦s name or address, the complaint shall not be accepted.
    2. Determination of whether or not the documents received are complaints in nature shall be done by ascertaining the intent of the party making the complaint. If the document received is of something in nature other than a complaint, such as an inquiry concerning the truthfulness of an advertisement, conjecture that an advertisement is untrue, or a request for an appraisal by the Commission, the responsible department shall reply by letter informing the reporting party that the case must be submitted in another form in order to comply with reporting procedures.
    3. Determination of whether or not the documents received fall under the authority of this Commission. If the documents received are involved in civil cases, under the authority of another agency or involve concurrence of articles of law and the result of negotiations between the Commission and the other agency is the case shall be handled by the other agency. The department handling the case shall respond by letter that the case is not under the authority of the Commission or forward the case to the relevant competent authority for handling.
    4. Determination of whether the complainant was harmed or disadvantaged by the alleged representation or symbol. If the complainant is not a competing business or a party involved in a related transaction, the Commission shall inform the complainant by letter that another written complaint must be submitted that provides specific evidence of the harm or disadvantage suffered by the complainant.
      Regarding the handling and reply of complaints that do not comply with the above reporting procedure, the head of the supervisory department is authorized make the final decision, then report monthly to the Commissioners' meeting for confirmation.
      Where the reported case involves the provisions of Article 21 and other articles, and possesses the subjects of paragraph 1, the case shall be handled in accordance with the provisions of the previous two paragraphs.
      The provisions of paragraph 1 shall not be applied where important public interest is involved in the complaint, and the Commission shall initiate an ex-officio investigation.
  4. Where the initial review of a complaint conducted by the supervisory department concludes that the alleged facts and reasons obviously do not meet the criteria of the Law, or is concerned with only the harm or disadvantage suffered individually by the complainant thus having no significant effect on transaction order or public interest, drafted suggestions, without conducting an investigation first, shall be provided to commissioner in charge for review. After signed approval by either the Chairperson or Vice Chairperson is given, the complainant shall be replied by letter and the case shall be included in the monthly report to the Commissioners' meeting for confirmation.
    Where the initial review of a complaint conducted by the supervisory department concludes that the one of the following conditions is present, the procedure set forth in the preceding paragraph shall be applied:
    1. Investigation is unable to proceed because the reported party is out of business, disbanded or has moved to an unknown location.
    2. The product selling the representation or symbol is still being sold and use of the representation or symbol has ceased or been corrected prior to the investigation of the reported party.
    3. The facts reported by the complainant have already been subject to disciplinary action by the Commission.
    4. Following the revocation of a reported case, no new evidence is submitted by the complainant; only the same incident is reported again.
      Following the initial review of a case by the supervisory department, it is determined that the contents of the complaint do not violate the provisions of the Law. The supervisory department submits opinion to the commissioner in charge for review.
      With either the Chairperson or Vice Chairperson's approval, the case shall either be filed away, or closed by written response letter, and submitted the following week to the Commissioners' meeting for confirmation.
  5. Under any of the following circumstances during a case investigation, the supervisory department may cease the investigation and, signing and attaching its opinion, forward the case for review by the commissioner in charge. With either the Chairperson Vice Chairperson's approval, the case shall either be filed away, or closed by written response letter, and compiled with other like matters for monthly presentation to the Commissioners' Meeting:
    1. If the language employed by an enterprise in a representation or supervisory symbol is ambiguous or vague (falls into a gray area as to its legality), and no interpretive or prohibitive provisions have been set forth by other competent authorities or in other applicable laws or regulations, and the general consumer public has not yet formed a widespread consensus concerning its content, for example as in cases involving commonly used non-statutory language or where there is a lack of specific criteria on which to base judgment, the undertaking Department shall reply by letter that the alleged facts should not be condemned.
    2. The product selling the representation or symbol is still being sold and use of the representation or symbol has ceased or been corrected prior to the investigation of the reported party.
    3. Investigation is unable to proceed because the reported party is out of business, disbanded or has moved to an unknown location.
    4. The facts reported by the complainant have already been subject to disciplinary action by the Commission.
    5. A same complainant has filed and withdrawn a complaint, and then subsequently without legitimate reason filed another complaint against the enterprise with respect to the same representation or symbol.
    6. The complaint is a civil matter that does not involve trading order or the public interest.
    7. The complaint involves a criminal case.
    8. The case influence trading order and public interests slightly, and both parties have been reconciled.
    9. The complainant has been requested by letter to make a supplementary report because of complaints that do not comply with the reporting procedure, but fails do it in time.
  6. The division of power between the Commission and other competent authorities is described as follow:
    1. Special laws take precedence over general laws.
    2. Strict laws take precedence over lenient laws.
      According to the preceding paragraph, the case types, which should refer to other competent authorities, are described in Table 1.
  7. The following principles shall be considered when determining "effect on trading order or public interest":
    1. Numbers of victims.
    2. Whether such a practice is a prevalent phenomenon in the given industry.
    3. Reprehensibility in terms of commercial ethics.
    4. Degree of impairment to effective competition.
  8. Concerning the examples that representation or symbol is "false or misleading", please refer to Table 2.

Chapter 3 Simplified Case Processing Procedures

  1. Unlawful advertisement cases that only have a slight effect on trading order or public interests, and conform to one of following conditions, shall be handled using simplified case processing procedures:
    1. Simple cases where it is clearly evident that the representation or symbol are inconsistent with fact.
    2. Disciplinary precedents exist, and the case is in violation of the policy statements or guidelines set forth by the Commission or falls under the unlawful behavior category in Article 17.
      Cases where there is suspected illegality but only a slight effect on trading order and public interests, and which conform to one of following conditions, shall be handled using simplified case processing procedures:
    3. Illegality is suspected but attention and correction can be requested through administrative guidance.
    4. Involves only individual harm or disadvantage to the complainant, only slight degree of illegality.
    5. Conforms to the cease investigation set forth in these Case Handling Principles.
      The simplified non-disciplinary case handling procedure shall be used for cases where there is no illegality.
  2. The disciplinary by simplified case processing procedures may be directly made a draft simplified disposition, response letter forwarding to be reviewed by the commissioner in charge After singed approval by either the Chairperson or Vice Chairperson is given, the disposition will be issued first and then submitted to the Commission's Meeting next week for affirmation.
    During the review process, if there is different opinions that need to be approved by the Commission's Meeting, the case shall be presented to the Commission's Meeting for further discussion.
  3. The contents set forth in the simplified (formative) disposition are as follows:
    1. The letters of " The Fair Trade Commission, Executive Yuan" and disposition No.
    2. Names and addresses of the condemned, his/her representative (person-in-charge) or agent.
    3. Text.
    4. Fact. Using succinct terms by listing type simply describe the unlawful facts considered by the Commission.
    5. Reason. Succinctly explains the reason of the important conditions for the fact to be affirmed. If the defendant applies for investigation or the rendered fact or evidence is not approved or adoption, shall enter its reason paragraph by paragraph.
    6. Evidence. Enter the related evidences obtained from investigation, such as complaint letter, name of the advertisement, the defendant's opinion, the defendant's rendered information, the information obtained from investigating the dependant's office, other information from the Commission's investigation (such as photos, statistic information, real commodities, and response letter to the Commission's inquiry of related organization and group), the information from other organization, group (such as judgment, indictment, appraisal opinions) .
    7. Applicable laws. Paragraphs 1, 2 and 3 of Article 21, and Article 41 of the Law.
    8. Notes. The instructions for appeals and other matters should be entered orderly.
  4. The simplified non-disciplinary case shall be submitted and to be reviewed by the commissioner in charge. After signed approval by either the Chairperson or Vice Chairperson is given, the decision letter will be issued first and then submitted a report to the Commission's Meeting next week for affirmation.
    During the review process, if there are different opinions that need to be approved by the Commission's Meeting, the case shall be presented to the Commission's Meeting for further discussion.
  5. If there is one of following conditions of a case, the case shall not be applied to the provisions of this chapter:
    1. The situation that applied for the later section of Article 41 of the Law.
    2. The fine amount exceeds NT$400,000.

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