Express Success, Inc., and its Chinese Taipei branch engaged in acts of multi-level sales in violation of the Fair Trade Law and the Supervisory Regulations of Multi-Level Sales
Case:
Express Success, Inc., and its Chinese Taipei branch engaged in acts of multi-level sales in violation of the Fair Trade Law and the Supervisory Regulations of Multi-Level Sales
Key Words:
multi-level sales, filing for record, foreign multi-level sales enterprise, return of goods upon termination of contract
Reference:
Fair Trade Commission Decision of November 24, 1999 (the 420th Commissioners' Meeting); Dispositions (88) Kung Ch'u Tzu Nos. 149 and 150.
Industry:
General Merchandise Wholesale (5110)
Relevant Laws:
Articles 23(2) and 42 of the pre-amendment Fair Trade Law ; Articles 23-4, 23-2(2), 42(2), 42(3), and the fore part of 41 of the amended Fair Trade Law; Articles 3(1) and 3(2) of the pre-amendment Supervisory Regulations of Multi-Level Sales
Summary:
1. In this era of lively international commerce, it is common for multi-level sales enterprises to implement their sales organizations or plans on a multi-national scale. When operating in a foreign country, such enterprises must abide by the laws of that country. Foreign multi-level sales enterprises operating in Chinese Taipei must abide by the relevant provisions of Chinese Taipei's Fair Trade Law (FTL). The US enterprise Express Success, Inc., had already begun engaging in multi-level sales activity in Chinese Taipei before it registered incorporation of its Chinese Taipei branch and filed a report of its operations with the Fair Trade Commission (the Commission) on December 28, 1998. It thereby violated Article 3(1) of the pre-amendment Supervisory Regulations of Multi-Level Sales ("Supervisory Regulations"). The acts occurred before the amendment to the FTL, so a fine of NT$300,000 was imposed pursuant to Article 42 of the pre-amendment FTL, based on the considerations that although the acts directly affected the competitive order in Chinese Taipei's direct sales market, the enterprise had only somewhat over 100 participants and NT$1 million in business revenues, so the case was not a severe one. 2. Express Success Inc., Chinese Taipei Branch ("Express Success Chinese Taipei") also went ahead and put into effect its revised "Operational Rules and Member Regulations" and launched a number of new products - "Millennium Bug Crisis Management Program," "Luxury Vacation Gift Certificates," and "Car Body Cleaning and Maintenance Series" - before filing a report of the changes with this Commission. It thereby violated Article 3(2) of the pre-amendment Supervisory Regulations. The contracts signed between Express Success Chinese Taipei and its members contained provisions for withdrawal from membership and return of goods upon rescission or termination of the contract as required by the Supervisory Regulations. The company, however, made excuses and shirked its obligation to buy back goods at 90% of the original purchase price within 30 days after the application date for termination of participant contracts terminated after the end of the rescission period. It thereby violated Article 23-2(2) of the FTL. The acts occurred after the amendment to the FTL, so a fine of NT$350,000 was imposed pursuant to Articles 42(3), the fore part of Article 41, and Article 42(2) of the amended FTL, after taking into consideration circumstances such as the number of participants, operating condition, and business volume. Appendix: US enterprise Express Success, Inc.'s Uniform Invoice Number: 16748144 Summarized by Yeh T'ien-fu; Supervised by Hsu Shu-hsing