A complaint was filed that Hsun Yi Satellite Communications Co., Ltd. violated the Fair Trade Law through false advertisement
Case:
A complaint was filed that Hsun Yi Satellite Communications Co., Ltd. violated the Fair Trade Law through false advertisement
Key Words:
Satellite mobile, Type I Telecommunications, concession, license
Reference:
Fair Trade Commission Decision of July 27, 2000 (the 455th Commissioners' Meeting); Disposition (89) Kung Ch'u Tzu No. 132
Industry:
Information Software Services Industry (7501)
Relevant Laws:
Article 12 of the Telecommunication Law and Articles 21 and the fore part of Article 41 of the Fair Trade Law
Summary:
1. On 21 July 1999, Hsun Yi Satellite Communications Co., Ltd. (the respondent) placed an advertisement in the newspapers Commercial Times for "The Hsun Yi Satellite Communications Franchising System and New Product Launch." The first service listed in this advertisement fell under the scope of satellite mobile communications. According to Article 12(1) of the Telecommunications Law, "Type I Telecommunications Operators shall operate only after obtaining special approval and a license from the Ministry of Transportation and Communications (MOTC)." Satellite mobile communications is also one of the telecommunications services that require public announcement by the Executive Yuan pursuant to Article 12(4). The Fair Trade Commission (the Commission) investigated and found that the respondent cannot lawfully operate satellite communication services until the MOTC has reviewed, approved, and issued an Establishment Permit and a Concession License for satellite communication services. In light of these circumstances, the Directorate General of Telecommunications demanded in its letter of 27 July 1999 that the respondent immediately cease its advertising and operation of satellite telecommunications services. ACeS Taiwan Telecommunications Co., Ltd ("ACeS Taiwan"), an interested party in this case, is one of the three firms that have received Satellite Mobile Communications Services Establishment Permits. The other two firms are Chunghwa Telecom and Iridium. After receiving its Establishment Permit on February 5, 1999, ACeS Taiwan filed an application for permission to deploy a satellite communications network on August 25, 1999 but was rejected on grounds of program deficiency. Under the law, ACeS Taiwan must complete deployment of its network within the three-year establishment period (extendable by one year). Otherwise, its permit would be revoked by the competent authority. 2. The Commission made a written inquiry to the Directorate General of Telecommunications regarding the services ACeS Taiwan could lawfully operate during the period of its Establishment Permit and those it could not. The Directorate indicated that pursuant to Article 12(1) of the Telecommunications Law, Type I Telecommunications Operators were required to obtain a concession and a license from the MOTC and that ACeS Taiwan has obtained only the Establishment Permit to date. The Directorate also indicated that if an enterprise wishes to obtain a Satellite Mobile Communications Services Concession License, it is required to complete network deployment within three years under regulations relevant to satellite mobile communications services. Although these regulations do not explicitly prohibit the recruitment of business partners or other preparatory activities, the respondent is merely one of the three resellers who had obtained an Establishment Permit. Moreover, even if the principal of the adverti sement had been ACeS Taiwan, it would have been unable to foresee at the point that it placed the advertisement whether it would be able to complete network deployment within the three-year period and consequently obtain a Concession License. Therefore recruitment of business partners under these circumstances would very likely place franchisees at great risk. The Respondent claimed that it held one seat on the ACeS Taiwan Board of Directors and served as one of the Supervisors respectively. It also noted that the two parties had signed a memorandum of understanding on February 25, 2000. Notwithstanding, ACeS Taiwan cannot officially do business because it has only obtained a Satellite Mobile Communications Services Establishment Permit and has not yet filed any application for a Concession License. The respondent of course lacks even this qualification. The Commission was thus able to determine that by placing the controversial advertisement without having the qualifications required to operate satellite mo bile communications services, the Respondent made false and misleading presentations 3. After consideration of the respondent's motivation, object, and the degree of the threat to market order posed by it above acts, the Commission ordered the Respondent to immediately cease its false and misleading presentations and imposed a fine of NT$200,000 pursuant to the fore part of Article 41 of the Fair Trade Law. Appendix: Hsun Yi Satellite Communications Co., Ltd.'s Uniform Invoice Number: 96956734 Summarized by Wu Hung Guan; Supervised by Ju Wey Jing