Taiwan High Court requests the Fair Trade Commission to determine whether Ko Teng-tang was involved in business defamation in violation of Article 22 of the Fair Trade Law
Case:
Taiwan High Court requests the Fair Trade Commission to determine whether Ko Teng-tang was involved in business defamation in violation of Article 22 of the Fair Trade Law
Key Words:
advertising, business defamation, disseminating untrue statements
Reference:
Fair Trade Commission Decision of March 1, 2001 (the 486th Commissioners' Meeting)
Industry:
Tourism (5710)
Relevant Law:
Article 22 of the Fair Trade Law
Summary:
1. This case was referred to the Fair Trade Commission (FTC) by the High Court, which requested a determination on whether Ko Teng-tang (the defendant) had disseminated false statements, in the name of Chin Chong Travel Agency, about the Princess Cruise Lines, thereby injuring the business reputation of the Shih Mei Travel Agency (the plaintiff) in violation of Article 22 of the Fair Trade Law (FTL). 2. According to Article 22 of the FTL, "An enterprise shall not, for the purpose of competition, state or disseminate any untrue statement capable of damaging the business reputation of another person." Therefore the elements constituting a violation of this article are (i) the purpose of competition, (ii) the act of making or disseminating a statement, and (iii) creating a result sufficient to damage the business reputation of another. The decision of Commissioners' Meeting based on the case dossier is as follows: (1) Determining whether the conduct of an enterprise arises out of "purposes of competition" is based on the prerequisite that enterprises must be in a competitive relationship. A "competitive relationship" is defined under Article 4 of the Fair Trade Law: "The term 'competition' as used in this Law means conduct of two or more enterprises to secure trade opportunities in a market by means of relatively favorable price, quantity, quality, service or other conditions." The plaintiff and the defendant's scope of business consisted sales of passenger tickets on commission for air, sea and ground travel enterprises, purchasing of domestic or overseas tickets for local passengers, baggage transport, assembly of overseas group tour packages including tours, accommodations, and related services, and agency and related services in assisting integrated travel services with accommodations for domestic and overseas tour customers. Thus it is clear that the plaintiff and the defendant had a substantive competitive relationship in the market for provision of overseas and domestic tours to travelers. (2) The terms "state" and "disseminate" with regard to "stating or disseminating any untrue statement" refer to acts employing speech, text, or pictures, and whether a statement is "untrue" or not shall be determined with reference to objective facts. The statements of the defendant regarding the passenger volume, safety, and running aground record of the Princess Cruise Lines were contrary to the local and foreign media reporting on the subject provided by the plaintiff; therefore, the advertising flyers printed by the defendant and the press conference it held fulfill the requirement for "stating or disseminating untrue statements." (3) The phrase "capable of damaging the business reputation of another person" refers to whether the content of the statements made or disseminated is sufficient to defame the enterprise or trading counterpart in question. With regard to assessing the business operations of the enterprise in question, "business reputation" refers to the reputation of the business itself, rather than that of its products or services; and whether a business' reputation has been injured shall be determined in each specific instance through considering the objective assessments of advertising content by actual or potential trading counterparts. While it is not a prerequisite that the advertisement should simultaneously list the names of the relevant products and enterprises in judging whether comparative advertising damages the business reputation of another, defamation only occurs when there is a damage to the business reputation of the enterprise supplying the given product such that there is a possibility the trading counterpart will lose confidence in the enterprise or refuse to trade with it. However, it cannot be presumed that a comparative advertising which has the effect of defaming a particular product will also have a defamatory effect on the enterprises acting as agents or distributors for the product in the marketing process. The plaintiff in this case was not the operating enterprise of the Princess Cruise Lines and the plaintiff was unable to provide concrete evidence to prove that the advertising in question was injurious to the business reputation of the plaintiff. (4) In conclusion, given the existing evidence in this case, while the defendant had a competitive relationship with the plaintiff, and the defendant indeed printed advertising flyers in which untrue statements were made or disseminated, it could not be determined that there was in fact injury to the business reputation of the plaintiff based on those evidence. Summarized by Yang, Chia-Wen; Supervised by Wu, Ting-Hung