Stolle International Co., Ltd. changed its method for calculating commissions, bonuses, and other economic benefits and added new products for sale without first notifying the competent authority, in violation of Article 3(2) of the Supervisory Regulations Governing Multi-Level Sales enacted pursuant to Article 23(2) of the pre-amendment Fair Trade Law
Case:
Stolle International Co., Ltd. changed its method for calculating commissions, bonuses, and other economic benefits and added new products for sale without first notifying the competent authority, in violation of Article 3(2) of the Supervisory Regulations Governing Multi-Level Sales enacted pursuant to Article 23(2) of the pre-amendment Fair Trade Law
Key Words:
multi-level sales, unreported changes
Reference:
Fair Trade Commission Decision of March 22, 2000 (437th Commissioners' Meeting); Disposition (89) Kung Ch'u Tzu No. 027
Industry:
General Merchandise Wholesale (5110)
Relevant Laws:
Article 3(2) of the pre-amendment Supervisory Regulations Governing Multi-Level Sales
Summary:
1. When the respondent Stolle International Co., Ltd. ("Stolle") carried out report-filing and changes report-filing pursuant to the amended Supervisory Regulations Governing Multi-Level Sales (the Regulations) in August 1999, the Fair Trade Commission (the Commission) noticed that the respondent had previously failed to report partial changes to its principal place of business, incentive plan, and product line. The Commission therefore opened an investigation ex officio. 2. It was found that the respondent had changed its incentive system twice since initially reporting its multi-level sales operations to the Commission. The first change was on record as having been reported to the Commission on 30 June 1993. A second change in the incentive system on 1 April 1998, however, went unreported due to careless work transfer by a departing sales supervisor and poor acquaintance with the law. The key elements of the unreported change were as follows: (1) the personal value (PV) at the zero level for the leadership bonus was increased by 2%; (2) the travel fund was changed from 1% to 0.5%; (3) the retail competition bonus was changed to a "vitality" bonus and the payment rate was changed from 1% to 3.5%. In May 1994 and March 1997, the respondent reported to the Commission that it was adding Stolle fiber supplements and Stolle goat's milk powder to its product line. In August 1997, it successively reported that it was further adding a DuPont nutritional supplement and intern al cleanser, Stolle toothpaste, and a Lanfar pure water dispenser to its product line. However, inattention to the law due to a change in administrative personnel resulted in failure to report the new products to the Commission. 3. In summary, the respondent candidly admitted its failure to report the changes in its incentive system and product line to the Commission before implementing them, in violation of Article 3(2) of the pre-amendment Regulations. Appendix: Stolle International Co., Ltd.'s Uniform Invoice Number: 86525976 Summarized by Wei Hsueh-li; Supervised by Hsu Shu-hsing