Carrefour Co. Ltd.'s labeled prices did not correspond to actual sales prices in a violation of the Fair Trade Law

Chinese Taipei


Case:

Carrefour Co. Ltd.'s labeled prices did not correspond to actual sales prices in a violation of the Fair Trade Law

Key Words:

superstore, bar code pricing, sales promotion

Reference:

Fair Trade Commission Decision of May 19, 1999 (the 393rd Commissioners' Meeting); Disposition (88) Kung Chu Tzu No. 115

Industry:

Volume Retailing (5314)

Relevant Laws:

Articles 21 of the Fair Trade Law

Summary:

  1. A consumer complained that while shopping at Carrefour Co., Ltd.'s Hsichih branch ("Carrefour") on 24 November 1998, he selected a package of "Manhan Sausages" marked with a promotional price of NT$89. When he went to pay for his purchases however, the price was NT$95. Carrefour explained that the prices did not correspond because the company's computer pricing system could not be updated immediately to reflect promotional prices. Carrefour offered to refund the difference or the purchase.

  2. Amendments to the Fair Trade Law ("the Law") took effect on 5 February 1999. The incident in question, however, took place before the amended articles took effect, and is governed by the law in force at the time-i.e. the Law prior to its amendment. This is accordingly noted here in advance. Moreover, according to Article 21(1) of the pre-amendment Law, price checking is a major factor in consumer decisions. Consequently, if an enterprise makes representations that lead persons to believe that by paying a certain price that they may obtain the stated product but the true price actually exceeds the indicated price, then there have been false or misleading representations.

  3. The Fair Trade Commission (FTC) investigated and found that the two parties confirmed that the marked price of NT$89 and NT$95 were inconsistent. Given that the product's price was marked on the store floor such that any consumer might clearly apprehend it, this is a clear case of what [the Law calls] "any other way that is communicated to the public" and should be regulated under the Law.

  4. Although Carrefour stated that the error occurred because it was unable to change the price sign in time and that the error was caused by an computer operating glitch, these representations were inconsistent. Regardless of whether the prices were inconsistent because Carrefour did not change the price sign in time or because the computer was not updated, there is little doubt that the error occurred because of deficiencies in Carrefour's operations. Also, the fact that the product was simply marked as having a special price without indicating that price was only good on 22 November 1998 was sufficient to make the consumer trust and believe that the marked price was the purchase price.

  5. Carrefour also stated that it had refunded the customer's money as soon as the error occurred and posted a notice of apology at the location for one month. This, Carrefour stated, clearly showed that it had corrected the error before the FTC investigated and that there was no real value in making a disposition. However, the FTC investigated Carrefour's representation that it had immediately refunded the customer his money, the FTC asked the consumer to verify this, but the consumer stated that he had not received the difference and had kept the original receipt of purchase. Moreover, if we consider the special nature of the super store business, we find it would have been difficult for Carrefour to make consumers fully aware of this information in a timely manner. Super store consumers, who live in surrounding communities, usually go to super stores on weekends or during their leisure time to buy items sufficient for a considerable period of time. Visits to the superstore may be separated by a considerable period of time. Further, because consumers but many products each time they visit a super store, it is unreasonable to expect customers to verify each purchase in the total on the receipt. Also, compared with manual price entry in a cash register, the bar code pricing method used by Carrefour may create a certain degree of reliance on the part of the consumer that leads the consumer to reduce verification of his receipts. Consequently, it may be impossible for the consumer to be aware of the difference between the purchase price and what he believes to be the price. This affects his ability to take measures to save himself, and he must absorb the loss himself. In this case, a total of 93 packages of the product in question were sold between 23 and 24 November 1998. Nonetheless, Carrefour stated to the FTC that no consumers had applied for refunds. The small notice of correction it posted on 24 November 1998 could not erase the effects of the incorrect original price. This, consequently, is sufficient to be considered as making or using false representations as to price.

Summarized by Lin Ch'iu-miao
Supervised by Wu Ting-hung

Appendix:
Executive Office of Carrefour Taiwan's Uniform Invoice Number: 22662550


**: For information of translation, click here