Sheng T'eng Enterprises Ltd., Chin Hai Pao International Ltd., Wei Shih K'ang International Enterprises Co., Ltd., Fan Po International Co., Ltd., Chun Ho Industries Co., Ltd. , and Chu Fu International Enterprises Co., Ltd. failed to report to the Commission within the period prescribed by Article 25 of the amended Supervisory Regulations Governing Multi-Level Sales (1999)
Case:
Sheng T'eng Enterprises Ltd., Chin Hai Pao International Ltd., Wei Shih K'ang International Enterprises Co., Ltd., Fan Po International Co., Ltd., Chun Ho Industries Co., Ltd. , and Chu Fu International Enterprises Co., Ltd. failed to report to the Commission within the p eriod prescribed by Article 25 of the amended Supervisory Regulations Governing Multi-Level Sales (1999)
Key Words:
multi-level sales, reporting, transitional article
Reference:
Fair Trade Commission Decision of November 16, 2000 (the 471st Commissioners' Meeting); Dispositions (89) Kung Ch'u Tzu No.193, 194, 195, 196, 197, 198
Industries:
cosmetics (5382), retailing of cleaning products (5373), retailing of drugs and medical products (5381), retailing of various other goods (5319), travel (6151)
Relevant Laws:
Article 25 of the Supervisory Regulations Governing Multi-Level Sales
Summary:
1. Article 25 of the amended Supervisory Regulations Governing Multi-Level Sales ("Supervisory Regulations") is a transitional article providing that "a multi-level sales enterprise that has already filed its written report [with the central competent authority] before these amended Regulations take effect shall file its report of the particulars in Article 5(1)(ii), 5(1)(iii), and 5(1)(v) and of amendments to the particulars in Article 5(1)(vii) within two months after the amendments to these Regulations take effect." Thus if a multi-level sales organization had reported its engagement in multi-level sales to the Fair Trade Commission (the Commission) before the 1999 amendment to the Supervisory Regulations was enacted and had continued to engage in multi-level sales after the 1999 amendment came into force, then that organization should have made these filings and amended filings within the specified two month period. However, after routine investigations by local agencies at the behest of the Commission between September and November of 1999, the Commission learned that the respondents had failed to comply with Article 25's filing requirement. The Commission then summoned the respondents and began its own investigation.2. After reviewing their business operations, the Commission found that Sheng T'eng Enterprises Ltd. ("Sheng T'eng") and five other multi-level sales organizations had engaged in multi-level sales before the 1999 amendment to the Supervisory Regulations was enacted and had continued to do so after the filing period prescribed in Article 25 of the amended Supervisory regulations had expired. Nonetheless, these organizations had failed to duly make their filings as required by Article 25 for various reasons including poor organization, the departure of employees from the firm without briefing their successors, and ignorance of the content of the transitional article. 3. The Commission's investigation found that Sheng T'eng et al. had violated Article 25 of the Supervisory Regulations. Although the respondents argued that t hey did not understand the content of the transitional article or that they had reported their cessation of multi-level sales, the Commission noted that after the Supervisory Regulations was amended, the Commission had sent copies of the amendment to all multi-level sales organizations and had publicized the amendments through a variety of channels. Even if the respondent did not intentionally violate the Supervisory Regulations, they were nonetheless grossly negligent. Moreover, the courts have never accepted ignorance of the law as a legitimate reason for immunity from administrative punishment. As for the argument advanced by some of the respondents that they had reported the cessation of multi-level sales to the Commission after the expiration of the transitional period, the fact remains that illegal acts were committed and that their reporting of cessation of multi-level sales does not exonerate them. The Commission finds this argument plainly unacceptable.Having considered the factors listed in Article 33 of the Implementing Rules to the Fair Trade Law including the number of participants in the respondent organizations, the Commission fined the respondents between NT$100,000 and NT$200,000 pursuant to Article 42(3) and the forepart of Article 41 of the Fair Trade Law. Appendix:Sheng T'eng Enterprises Ltd.'s Uniform Invoice Number: 97455250Chin Hai Pao International Ltd.'s Uniform Invoice Number: 16377826Wei Shih K'ang International Enterprises Co., Ltd.'s Uniform Invoice Number: 89413139Fan Po International Co., Ltd.'s Uniform Invoice Number: 86390816Chun Ho Industries Co., Ltd.'s Uniform Invoice Number: 86360340Chu Fu International Enterprises Co., Ltd.'s Uniform Invoice Number: 89760003Summarized by Chi Hsuen Li; Supervised by Lin Ching Tang