Taiwan Cellular Corporation placed false advertisements in violation of the Fair Trade Law

Chinese Taipei

Case:

Taiwan Cellular Corporation placed false advertisements in violation of the Fair Trade Law

Key Words:

base station, Iridium satellite, mislead

Reference:

Fair Trade Commission Decision of June 2, 1999 (the 395th Commissioner's Meeting); Disposition (88) Kung Ch'u Tzu No. 060

Industry:

Communications (6320)

Relevant Laws:

Articles 21 and 41 of the Fair Trade Law

Summary:

1. A complaint was filed that Taiwan Cellular Corporation ("Taiwan Cellular") had falsely claimed to have "2496 base stations + 66 Iridium satellites" in an advertisement appearing on page 16 of the 12 October 1998 edition of The Liberty Times. In an earlier advertisement appearing on 11 September 1998, Taiwan cellular had noted in a smaller font that "Completion of the bases is estimated by 31 July 1999...The satellites begin testing on 23 September...Expect satellite bi-frequency cards and Iridium phones soon." However, the advertisements in question omitted these explanatory phrases. Taiwan Cellular asserted that this advertisement's copy omitted the explanatory phrase "The base stations are expected to finished by 31 July 1999" because of a proofing error. Taiwan cellular also asserted that after it discovered the error, it immediately corrected the omission the following day by placing the original explanatory note in a more obvious position in the upper half of the advertisement and enlarging the font. As evidence Taiwan Cellular cited its advertisements appearing between 1 October and 29 October 1998. The Fair Trade Commission (FTC) investigated and found, however, that Taiwan Cellular had changed only some of the advertisement's copy. Most of the copy remained unchanged. Consequently, the claim that Taiwan Cellular corrected the advertisements the day after it discovered the omission may be disregarded.
   
   
2. In advertisements prior to 11 September 1998, Taiwan Cellular's advertising copy stated, "[We] estimate that we will have completed 2,496 base stations by 31 July next year..." In the advertisement at issue, however, this was changed to "Now with a leading 2,496 base stations...." [Emphasis added.] The FTC investigated and found that the company's mobile phone system only had approximately 1,800 operating base stations, not the 2,496 advertised. Changing 'estimated' to 'now' and omitting the explanatory "completed by 31 July next year," portions of the advertisement caused consumers to think that Taiwan Cellular actually had 2,496 base stations in operation.
   
   

3. Upon a careful reading and investigation of what Taiwan Cellular termed written evidence from Iridium Inc. (USA), the FTC found that the document was a press release from Iridium. The text stated that:

   Five additional Iridium satellites were successfully launched on September 23rd, 1998...Iridium is developing a global digital wireless communications network that will combine the worldwide reach of 66 low-earth-orbit satellites with land-based wireless systems to enable subscribers to communicate using handheld telephones and pagers virtually anywhere in the world. [Emphasis added.]

   Iridium merely stated that it "was developing" a global digital wireless communications network that "will" combine the worldwide reach of 66 satellites. This confirms that the "Iridium Project" had not been completed at that time. Taiwan Cellular also admitted that at the time it placed the advertisement, it was unable to provide access to Iridium's satellite mobile phone network. Nonetheless, Taiwan Cellular cut the explanation offered in its 11 September 1998 advertisement: "expect bi-frequency satellite cards and Iridium Satellite hand phone soon." Hence this section of the advertisement caused consumers to erroneously think that Taiwan Cellular's "66 satellite project" was in operation at the time of the advertisement.

   In summary, Taiwan Cellular made false and misleading claims in its 12 October 1998 Liberty Times advertisement regarding the number of its base stations and satellites as well as the quality of the mobile phone network it provided. This was a violation of the Fair Trade Law Article 21(1) prior to the Law's amendment. In the 395th Commissioners' Meeting, the FTC resolved to order Taiwan Cellular to immediately cease its false and misleading claims in accordance with the Article 41 of the Law.

   Summarized by Tai Mei-ch'in
   Supervised by Chu Wei-ching

   Appendix:
   Taiwan Cellular Corporation's Uniform invoice number: 9717620

**: For information of translation, click here