C.S.M. Engineers S.E.A. PTE Ltd.'s private prosecution against Jui Chieh Enterprise Company Limited for violation of the Fair Trade Law
Chinese Taipei
Case:
C.S.M. Engineers S.E.A. PTE Ltd.'s private prosecution against Jui Chieh Enterprise Company Limited for violation of the Fair Trade Law
Key Words:
business reputation, compete in bidding
Reference:
Hight Court Judgment Ref. (86) Shang Yi Tzu No. 3209
Industry:
General Civil Engineering Industry (4501)
Relevant Laws:
Summary:
Wu Chia-p'eng (Wu) was the responsible person of the defendant, Jui Chieh Enterprise Company Limited (Jui Chieh) before and on 30 September 1996. Jui Chieh competed in bidding with the complainant, i.e., C.S.M. Engineers S.E.A. PTE Ltd. (CSM), for the contract to build the chimney of the FP power plant (the subject contract) owned by Formosa Plastic Corp. (the owner) in Mai Liao, which was eventually awarded to CSM. However, knowing this, Wu intended to make the owner withdraw the award, thereby impeding CSM from obtaining the subject contract. Knowing that no enterprise shall make any false representation sufficient to damage another person's business reputation for the purpose of competition, Wu addressed a letter to the owner on 10 May 1996 stating: "(1) Taiwan Power Company's Taichung Power Plant ... awarded the contract of its Chimney Nos. 1 through 4 to Tileman U.K. in 1988, which was later acquired by a Hong Kong company named Hope Well due to insolvency. Mr. Richard Hoare, the original manager of the contract...was dismissed from his position and Hope Well took over the contract...and dispatched personnel from Hong Kong to finish the construction. However, the quality of the work was very poor....(2) After Hoare was "dismissed" from the project, he formed CSM in 1990..." Such representations as Wu made in the letter were false and sufficient to damage CSM's business reputation and impede the trading order of market competition.
For the purpose of winning the subject contract, the defendant sent to the owner a letter with negative representations against its competitor in the bidding. Such an act constitutes unfair competition. The defendant argued that it merely wanted to alert the owner without any intention to defame its competitor. Nonetheless, according to Article 4 of the Fair Trade Law (FTL), "competition" refers to "the acts whereby two or more enterprises offer in the market more favorable price, quantity, quality, service or other terms in order to secure trading opportunities." In terms of bidding, whose offer is more favorable shall be decided by the owner's own judgment, and shall not be suggested by any other firms or competitors, which referred to the owner unconfirmed information against any specific bidder. If an enterprise would rather concentrate on collecting information to attack its competitors than enhance its own competitiveness and then recklessly provides such information to the owner without verifying the information, normal fair trade would not be established. Instead, the development of positive interaction in the market would be impeded. No competitor shall mislead the owner through unconfirmed representations, asserting that such information is helpful to the owner, otherwise, it shall be in violation of the FTL. The provisions of FTL Articles 19(1) and 22 are pertinent in this regard. FTL Article 22 provides that an enterprise shall not, for the purpose of competition, make or publicize any false statements that are likely to cause damage to another person's business reputation. The "another person" as used therein is not limited to corporate entities. This Court agreed that contemporarily, the image and ability of the business operator and the responsible person of the business are generally considered together with the business's reputation. The public takes them into account as well when evaluating the business. Therefore, the "another person" should include the responsible person and the person actually accounting for the operation of the business in order that the purpose of prohibiting damage to a business's reputation may be served. The defendant's argument that it had not made untrue representations against the complainant in violation of FTL Article 22 was rejected.
Wu, for the purpose of allowing his company to win the subject contract, violated FTL Article 22, which provides that an enterprise shall not, for the purpose of competition, make or publicize any false statements that are likely to cause damage to another person's business reputation. Therefore, he was punished in accordance with FTL Article 37. Jui Chieh was punished in accordance with FTL Article 38 and fined NT$150,000 in accordance with FTL Article 37. Wu was fined NT$150,000, which was commutable to labor, calculated at a daily rate of NT$900.
Summarized by Chen Hwei-pin
Appendix:
Formosa Plastics Co., Ltd.’s Uniform Invoice No.: 75708007
Taiwan Power Company’s Uniform Invoice No.: 03795904
Jui Chieh Enterprise Company Limited’s Uniform Invoice No.:
22018784