A comprehensive study on the promotional activities of the domestic gasoline stations in order to find out whether the incomplete disclosure of price information is a violation of the Fair Trade Law

Chinese Taipei

Case:

Key Words:

gift and prize, lowering price for promotion

Reference:

Fair Trade Commission Decision of January 20, 2005 (the 689th Commissioners' Meeting)

Industry:

Other Petroleum and Coal Product Manufacturing (1990)

Relevant Laws:

Article 14 , Article 19 , Article 21 and Article 24 of the Fair Trade Law

Summary:

This case originated from the reports of general public that some gasoline stations at the central and southern area have conducted sales promotion of lowering XX dollar. The price information provided are incomplete and thus the consumers are not actually benefited. In order to determine whether such act involves the question of concealed and false advertisement, in addition to case by case disposition for each specific prosecution, as for the entire issue, this Commission initiated a study about the necessity of implementing regulation in response to the incomplete disclosure and transparency of oil price information during the sales promotion.
Upon the investigation, this Commission found that the gasoline station operators, in order to cope with the regional competition, have always advertised various promotional activities, including the programs mixing giveaways, cash discount, customer card discount and member's point accumulation. In the following cases, the form of "cash discount of XX dollar for gasoline fill-up" may have violated Article 21 or Article 24 of the Fair Trade Law:
(1) The gasoline station operators advertise that "cash discount of XX for gasoline fill-up", but, full deduction is not given to consumption paid with credit card. The consumptions, regardless of being paid by cash or credit card, are all of consumptive nature. However, for credit card consumption, the gasoline station has to pay certain charges to the Bank and thus the cost to the gasoline station operators is different. Therefore, most operators of gasoline stations only give cash discount to clients paying cash, whereas no discount or only partial deduction is given to consumption paid with credit cards.

(2) The operators advertise rebate of XX dollar, but, do not allow the consumers to directly deduct the aforementioned amount for the "current" gasoline fill-up. Instead, the consumers are given "discount coupon" so that they can use these coupons in next fill-ups. However, gasoline consumption is different from the regular consumption in that very often the consumers have visited the gasoline station only one time as passing by. The consumers are unlikely to come again and hence disputes may arise easily.

(3) The gasoline station operators, for a long time, have said they sell gasoline at "special price" or other similar reasoning, but in fact, they are selling at original price.

(4) The gasoline station operators advertise they have lowered XX dollar for each liter of gasoline without fully disclosing the market quotation for retail sales that they have increased earlier. As a result, the consumers are unable to compare the retail price after discount beforehand and do not have sufficient price information to select the best trading partner.

(5) The gasoline station operators advertise the price is lowered by XX dollar, but the deduction is not on per liter basis. Instead, the actual total payment is calculated as XX dollar deduction from the "total payment" of gasoline fill-up. Obviously, there is a discrepancy between both calculations that is intolerable by regular trading counterpart(s).

For the above circumstances, if either the price reduction promotion or the insufficient disclosure of related trading messages in the advertisement's content of the gasoline stations has falseness, misrepresentation and misleading or any deceptive and obviously unfair conduct that is able to affect trading manner, then there is a suspected violation of the provisions of Article 21 or Article 24 of the Fair Trade Law. This Commission thus examines each case separately.
In addition, the other sales promotion of the gasoline stations that may have violated the regulations of the Fair Trade Law are listed as such:
(1) The gasoline station that has any conducts of, by means of contract, agreement or any other form of mutual understanding, with any other competing enterprise, to jointly determine the price of goods or services, or to limit the terms of quantity, technology, products, facilities, trading counterparts, or trading territory with respect to such goods and services and thereby to restrict each other's business activities is suspected of violating Article 14 of the Fair Trade Law (for example, the gasoline station operators have jointly determine the price or the maximum value of gifts given away through trade association).

(2) The gasoline station promotes sales with "gifts and prizes", if the "gifts and prizes" program does not meet the Fair Trade Commission Guidelines on Cases Concerning Promotion by Means of Gifts and Prizes, then, a suspicion of causing the trading counterpart(s) of its competitors to do business with itself by inducement with interest, if any acts which is likely to lessen competition or to impede fair competition, a suspected violation of the provision of Article 19 (iii) of the Fair Trade Law (for example, the value of the gift is over half of the price of goods).

(3) If the gasoline station operator has made false or misleading representations or symbol as to content of gift and prize, price reduction promotion or gasoline prices, then there is a suspected violation of the provision of Article 21 of the Fair Trade Law.

(4) If the circumstances as stated in the aforementioned provisions are not found for the content of gift and prize, price reduction promotion or gasoline prices of gasoline station operators, but, in the event that there is any deceptive and obviously unfair conduct that is able to affect trading manner during the course of actual trading, then, there is a suspected violation of the provision of Article 24 of the Fair Trade Law.

Summarized by Yang, Chia-Hui
Supervised by Lin, Gin-Lan

Appendix:

None

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