Foundation Technology Co., Ltd. committed an obviously unfair act by engaging in false advertising sufficient to affect trading order in violation of the Fair Trade Law

Chinese Taipei

Case:

Foundation Technology Co., Ltd. committed an obviously unfair act by engaging in false advertising sufficient to affect trading order in violation of the Fair Trade Law

Key Words:

false advertising, trading order, market function and competition, web site

Reference:

Fair Trade Commission Decision of February 22, 2001 (the 485th Commissioners' Meeting); Disposition (90) Kung Ch'u Tzu No. 044

Industry:

Information Services Industry (7503)

Relevant Laws:

Articles 21 and 24 of the Fair Trade Law

Summary:

1. Complaint letters from Chinatrust Real Estate Co., Ltd., North Rehouse, Evertrust Rehouse Co., Ltd., and Sinyi Realty Co., Ltd. alleged that Foundation Tec. Ltd. pirated the listings of properties for rent or sale published on the Web sites of other companies and used them without authorization to expand the listings on its own Web site "Chia T'ien Hsia." The letters held that that conduct was in violation of law. A complaint letter from the ROC Residential and Community Service Assistance and Advancement Association ("Ma Ma Ts'ui") alleged that Foundation obtained improper commercial gains by reproducing without first obtaining its consent or authorization a portion of the listings of properties for rent published on Ma Ma Ts'ui's Web site, and using them to expand the listings on its own Web site. The letter also alleged that Foundation's Web site exaggeratedly and falsely claimed that it offered 200,000 listings of properties for rent or sale. The letter also held that that conduct was in violation of law.

2. Findings after the investigation by the Fair Trade Commission (the Commission) are as follows:

(1) False Advertising

(i) Foundation's Web site claimed as follows: "national leader with 200,000 listings of properties for rent or sale; contact information on property seller provided; automatic online property matching function completed." Foundation contended that by June of 2000, the Web site published 160,000 listings of properties for rent or sale, and that because its Web site published links to Web sites in Mainland China, a total of nearly 200,000 listings could be searched. However, Foundation's Web site failed to state that the published listings included listings from Web sites in Mainland China, and objective data was not used. This sufficed to prove that the claim caused a large number of general consumers to make misidentifications or make mistaken decisions. Therefore Foundation's claims constituted false and misleading presentations.

(ii) Foundation contended that in early November it had made corrections on its Web site as follows: "maintains 100,000 listings of properties for rent or sale; national leader (includes those in the Web sites of mainland China); placement procedures listed by the property owners offered; automatic online property matching function offered." However the Commission found that the corrections were made after it had conducted its investigation. The Commission also found that the Web site's claim of being the national leader in terms of the number of listings of properties for rent or sale published on its Web site could not be substantiated. Thus, it is still credible to hold Foundation's advertisement being false and misleading.

(2) Obviously unfair conduct sufficing to influence trading order With respect to the expropriation of listings of properties for rent or sale published on the Web sites of other enterprises and the use of that information to expand the information on its own Web site, Foundation stated that such information had been obtained from certain publicly available sources such as the companies' Web sites, publications, DMs, and newspapers, and that the information had been collected by full- and part-time persons. Foundation contended that although it had not sought Ma Ma Ts'ui's approval, on certain occasions and at trade associations, it politely informed four brokers including Koos of the situation, and it obtained oral consent from the persons in charge. However, after checking the matter with its company-owned or franchised stores by the four brokers including Koos, none had found that these stores had never given oral or written consent to Foundation to use their listings of property for rent or sale. Without making any effort or sacrifice, and without seeking the other enterprises' approval, Foundation reproduced information owned by them. Foundation also expanded the information on its own Web site by indicating itself as the source of the information, which could mislead consumers who intended to purchase, sell, or rent properties into searching for the information published on its Web site rather than securing them from the complainants' Web sites.

3. Disposition and Grounds (1) The claim: "200,000 listings of properties for rent or sale; national leader" on Foundation's Web site constituted a false and misleading presentation in violation of Article 21(1) of the Fair Trade Law applicable mutatis mutandis pursuant to Paragraph 3 of the same Article. (2) Foundation expropriated listings of properties for rent or sale published on other enterprises' Web sites and used such listings to expand the listings on its own Web site. It did so to achieve its own economic goals. Its act constituted the expropriation of the fruits of other persons' labors, it impeded market efficacy and competition, it was culpable in terms of commercial ethics, and it was an obviously unfair act sufficing to affect trading order, which was a violation of Article 24 of the Fair Trade Law. After weighing Foundation's motives, revenues, impact on trading order, anticipated unlawful gains, duration of act, and attitude after being investigated, the Commission ordered the company to immediately cease its offending conduct. With respect to its false advertisement, the Commission imposed on the company an administrative fine of NT$100,000. With respect to expropriation of listings of properties for rent or sale published on other enterprise's Web sites and use of such listings to expand the listings on one's own Web site, the Commission imposed on the company an administrative fine of NT$250,000.

Appendix:

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