Case:
PChome Online Inc. and Tsao Chee Co. Ltd. made false representation in the “Mutso Yaotiao Patch”, “Chutso Yuanchi Patch” and “Tanghsintzu Feet Patch” advertisements published on the Internet, a violation of Article 21 of the Fair Trade Law
Key Words:
e-Business, PChome online shopping for women, false advertisement
Reference:
Fair Trade Commission Decision of January 27, 2005 (the 690th Commissioners' Meeting); Disposition Kung Ch’u Tzu No. 094007
Industry:
Internet Information Supply Service (7321), Electronic Shopping and Mail-Order House (4811)
Relevant Laws:
Article 21 of the Fair Trade Law
Summary:
(1) The production and publication process of the advertisement in question: The investigation found that the “Cooperation Agreement for On-line Order” signed between Tsao Chee Company and PChome Online International Information Co. Ltd. (hereinafter referred to as PChome Online Company) was an agreement for a general mode and terms of cooperation, not on a specially designated and specific product. The agreement covered a general range of products, and would be confirmed after both parties have agreed and “uploaded” the “document files” of the designated good on to the sales website. Tsao Chee Company provided the aforementioned agreed document files (including “summary, feature, specification and instruction”).
(2) Trading manner with Tsao Chee Company:
(i) With regard to the profit allocation between PChome Online Inc. and Tsao Chee Company, in principle, Tsao Chee Company gave PChome Online Company the delivery price and suggested selling price of the designated good. The completed online transactions will be calculated monthly for the payment, computed as total sales at wholesale price, to Tsao Chee Company. Tsao Chee Company issued sales invoices to PChome Online Inc., the difference between the total payment and the total amount of invoice was profit for PChome Online Inc.
(ii) Secondly, with regard to the delivery procedure for the physical advertised goods in question, the investigation showed Tsao Chee Company checked consumers’ orders through “online system” as constructed by PChome Online Inc. and mailed the ordered goods to consumers according to their order records. In pursuant to Article 2 (1) of the aforementioned agreement, Tsao Chee Company cannot turn down any shipments. After the shipment, PChome Online Inc. issued invoices to consumers. In brief, from the consumers’ standpoints, PChome Online Inc was the final seller of the advertised good in question.
(3) PChome Online Inc. was the operator of on-line shopping mall: The advertised good in question was sold by PChome Online Inc., but, the advertised content in question was provided by Tsao Chee Company and uploaded on to the shopper web page constructed by PChome Online Inc. after confirmation. Generally speaking, there was no restriction on the duration of posting the advertisement in question except for the occurrence of incident as stipulated in the agreement; for example, the supplier was out of stock. Moreover, PChome Online Inc was responsible for the construction, maintenance and management of the trading platform and interface of the aforementioned website. Also, the website was facilitated with online electronic payment mechanism and the functions of retrieving and searching designated good or service. Next, the investigation showed that in accordance with Article 7 (6) of the Cooperation Agreement signed between PChome Online Inc. and the supplier, “during the valid period of the agreement, Party B (Tsao Chee Company) agrees to collaborate with Party A (PChome Online Inc.,) for the planned marketing strategy and the implementation of marketing plan.” In this case, the term “marketing activities” referred to the production of additional marketing advertisements (besides the web page in question) and holding additional promotion activities, for example, sending advertisement mail. In brief, PChome Online Inc. was the operator of the shopping website in question.
(1) PChome Online Inc. was the main entity responsible for the advertisement in question: PChome Online Inc. sold the advertised good in question on its own shopping website, provided Tsao Chee Company a web page to post product’s summary and instructions as disclosed in the disputed advertisement so as to increase the chances of trading with potential trading counterparts. Therefore, the aforementioned signs of trading manner between PChome Online Inc. and Tsao Chee Company indicated their relation was different from the traditional and simple commission relations between advertiser and the advertisement company. Both companies have cooperated and shared profits derived from the aforementioned advertisement. PChome Online Inc. has traded with consumers and thus should be considered as the main entity of the advertisement in question even though there was a [remark] in the advertised web page in question stating “The product’s documents, instructions and advertised information as found in this web page/advertisement are provided by the cooperative company for consigned publication. General agent: Tsao Chee Company Ltd.” However, the aforementioned remark only explained that the cooperative company has provided information for the aforementioned advertisement, it cannot be used as the basis to exclude PChome Online Inc. from bearing the responsibility of main entity for the disputed advertisement.
(2) Tsao Chee Company also was the main entity responsible for the advertisement in question: The investigation showed that although Tsao Chee Company was the supplier of the advertised good in question, the Company was not simply supplying goods to PChome Online Inc. for sales but also providing the advertised good and content in question to PChome Online Inc. for production of the advertisement in question. Furthermore, the Company shared profits derived from the sales of the advertised good in question with PChome Online Inc. Both companies cooperated with each other and were responsible for the advertisement in question together. Therefore, Tsao Chee Company was the main entity responsible for the advertisement in question.
(3) The Department of Health, Executive Yuan has concluded that the content of the disputed advertisement “beautify in the sleep”, “possesses the resonance of far infrared radiation that enable you to relax and beautify in the sleep….”, “…. the result of perspiration promotes blood circulation and assists metabolism and even attain the result of local body shaping…..” were exaggerated and false. It can be concluded that the aforementioned companies have published false and misleading representation Internet advertisement; in violation of the provision of Article 21, Paragraph 1 of the Fair Trade Law.
(4) After considering the PChome Online Inc.’s and Tsao Chee Company’s
motivation for the unlawful actions, the business scales, the circumstances
of violations, and the cooperativeness during the investigations, this Commission,
in accordance with the forepart of Article 41 of the Fair Trade Law, ordered
said enterprises to immediately cease their unlawful actions and imposed
administrative fines of NT$250,000 and NT$50,000 respectively on PChome
Online Inc. and Tsao Chee Company.
Summarized by Hsien, Cheng-Tu
Supervised by Yeh, Tine-Fu
Appendix:
PChome Online Inc.’s Uniform Invoice Number: 16606102
Tsao Chee Co., Ltd.’s Uniform Invoice Number: 84952349