A complaint against HoellMueller Asia Ltd. alleging that it used improper means (deceptive claims regarding its trading counterpart's company name) to cause its competitors' trading counterparts to engage in trade with it, in violation of the Fair Trade Law
Case:
A complaint against HoellMueller Asia Ltd. alleging that it used improper means (deceptive claims regarding its trading counterpart's company name) to cause its competitors' trading counterparts to engage in trade with it, in violation of the Fair Trade Law
Key Words:
coercion, improper means
Reference:
Fair Trade Commission Decision of July 27, 2000 (the 455th Commissioners' Meeting); Disposition (89) Kung Ch'u Tzu No. 141
Industry:
Other Electronic Components Production Industry (3179)
Relevant Laws:
Article 19 of the Fair Trade Law
Summary:
1. The complainant, exclusive Chinese Taipei agent of Hans HoellMueller Maschinenbau GmbH & Co. ("HHMG"), held the exclusive right to import into Chinese Taipei product produced by HHMG, sold the product in Chinese Taipei, and provided after-sales service of the product in Chinese Taipei. Chang Min-hui, the respondent company's responsible person and a former employee of the complainant, organized the respondent company shortly after leaving the complainant company. He aggressively visited the complainant's customers by presenting himself as HHMG's Chinese Taipei agent. On January 15, 1999, he swayed and secured many orders that the complainant was in the process of negotiating. On April 7 of the same year, the respondent sent faxes to the complainant company's customers declaring itself as the Chinese Taipei agent of HHMG, and that it would be responsible for sales and after-sales service of HHMG's product in Chinese Taipei. This fax had misled the complainant's customers into believing that the co ntract between the complainant and HHMG and its exclusive right had been terminated. The misunderstanding had further caused the complainant's customers to redirect their orders to the respondent, and resulted in the complainant's losing more than half of its business. However, as was shown in the company information on record, the respondent was still a domestic company incorporated under the laws of the Republic of China. It was not the Chinese Taipei agent of HHMG. Therefore, the respondent company's responsible person took advantage of the opportunities of being employed by the complainant to obtain orders from the complainant's customers. He also falsely claimed that the respondent was HHMG's Chinese Taipei agent. 2. The Fair Trade Commission (the Commission) investigated and found that the purpose of the authorization in dispute was to authorize Chang Min-hui to engage in market development and evaluate the possibility of establishing a Chinese Taipei agent of HHMG. It was not to authorize him to poach the agent's trading counterparts, nor empower him to establish another Chinese Taipei agent of HHMG. This conclusion could be inferred from the contract itself which stipulating that "The purpose of this contract is to establish one Chinese Taipei branch office of Hans HoellMueller Maschinenbau GmbH & Co. For the starting period, the office shall be operated as a "directly operated office", be named "Hung Shun," and be operated in the same way as the current agent system. Application to the Chinese Taipei government for incorporation as a Chinese Taipei branch of Hans HoellMueller Maschinenbau GmbH & Co. would be considered after a certain period of time expired." Based on this, and according to the scope of the authorization of the aforesaid contract with HHMG, the Commission interpreted this to mean that the respondent was to directly operate an office in Chinese Taipei, engage in affairs as an agent, and after expiry of a specified time period, apply for registration and establishment of a Chinese Taipei branch. However, on December 31, 1998, after the respondent left the complainant company, he took advantage of his former employment relationship [with the complainant] and his familiarity with its customers to poach the complainant's trading customers. Shortly thereafter, on March 1, 1999, he established HoellMueller Asia Ltd. and declared that the company was the Chinese Taipei agent of HHMG, and that it would be responsible for sales and after-sales service of HHMG's product in Chinese Taipei. From this, it is evident that the respondent intended to commit the improper act of falsely claiming to be the Chinese Taipei agent of HHMG, causing trading counterparts to mistakenly believe that it was the Chinese Taipei agent of a Germany-based company, that the complainant had lost its exclusive agent rights, and to cause the trading counterparts to engage in trade with the respondent so that it could obtain orders from the complainant's existing customers. According to the respondent company's Chinese name and its registered information recorded in the import registration card, there was no so-called "Germany-based Company Te Shun International Co., Ltd. Chinese Taipei Branch Office" claimed by the respondent. Yet, the respondent still sent faxes to its trading counterparts and engaged in trading with them under the name of "Germany-based Company Te Shun International Co., Ltd. Chinese Taipei Branch Office." It is obvious that the respondent had used improper means to compete for trading counterparts. Therefore, the respondent's act of using unreal company name had constituted a use of other improper means to cause trading counterparts' competitors to engage it in trade. This act is culpable under principles of bu siness ethics. The Commission found that the respondent was in violation of Article 19(iii) of the Fair Trade Law. Therefore, the Commission made a disposition in which it ordered the respondent to immediately cease its unlawful act pursuant to the forepart of Article 41 of the Fair Trade Law. After taking into consideration the respondent's attitude after committing the act, including the fact that it was remorseful and that it cooperated with the investigation, the Commission imposed on the respondent an administrative fine of New Taiwan Dollars 50,000 pursuant to the fore part of the same law provision. Appendix: HoellMueller Asia Ltd.'s Uniform Invoice Number: 16865938 Summarized by Yang Chia Hui; Supervised by Shin Gin Tsun