Yulon Motor Co., Ltd. allegedly ran advertisements for sales of the SENTRA 180 model car in violation of Articles 21 and 24 of the Fair Trade Law
Case:
Yulon Motor Co., Ltd. allegedly ran advertisements for sales of the SENTRA 180 model car in violation of Articles 21 and 24 of the Fair Trade Law
Key Words:
comparative advertising, false and misleading representations, deceptive acts affecting trading order
Reference:
Fair Trade Commission decision of July 19, 2001 (the 506th Commissioners' Meeting)；Disposition (90) Kung Ch'u Tzu No. 096
Industry:
Automobile Manufacturing Industry (2931)
Relevant Laws:
Summary:
1. Complaints submitted by the public and Nanyang Industries Corp. alleged as follows: Yulon Motor Co., Ltd. (Yulon Motor) ran advertisements claiming that the SENTRA 180 model car had been awarded a national safety class certification and citing the latest Japan New Car Assessment Program (JNCAP) report released in 2000 by the National Organization for Automotive Safety and Victims' Aid (OSA). However, the advertisements failed to disclose the test results of the SENTRA 180 car model. Furthermore, without fully disclosing the relevant comparative information, Yulon Motor engaged in safety comparisons with other kinds of cars, and employed the deceptive tactic of promoting the SENTRA 180's safety features through television advertisements highlighting collision tests and alluding to the SENTRA 180, although such collisions tests did not actually involve the SENTRA 180. It also made false presentations with respect to the products of other car manufacturers. This caused misunderstandings among consumers, diminished the image of other enterprises, and impeded competitive order in the market. 2. Article 21(1) of the Fair Trade Law (FTL) provides that "An enterprise shall not, on goods, in connection with the advertising of the goods, or in any other way that is communicated to the public, make or use any false or misleading representation or symbol as to price, quantity, quality, content, production process, production date, validity period, method of use, uses, place of origin, manufacturer, place of manufacture, processor, place of processing, and so forth." Thus, if an enterprise makes false or misleading representations or symbols with respect to its own goods or services, it is in violation of the aforesaid provision. On the other hand, a comparative advertisement that makes false or unsubstantiated references to the strengths and weaknesses of another enterprise's goods or services does not fall under the purview of Article 21(1) as long as the representations are not false or misleading with respect to the goods or services of the proprietor of the advertisement. However such an advertising tactic may still be in violation of Article 24 of the FTL, which states that "In addition to what is otherwise provided for in this Law, an enterprise shall not engage in other deceptive or obviously unfair acts that are capable of affecting trading order." 3. The OSA report cited in the advertisements by Yulon Motor did not include the test results of the SENTRA 180, and Yulon Motor admitted that it had not sent the SENTRA 180 to Japan for testing. Although Yulon Motor claimed that the SENTRA 180 had adopted a safety design identical to that of the SUNNY model so the safety test results for the SUNNY model in the OSA report could be extrapolated to the SENTRA 180. However, the place of manufacture and the manufacturer of the two cars are not the same, so the SENTRA 180 cannot be deemed identical in safety features to the SUNNY, which is produced and sold in Japan. Yulon Motor also used the comparative advertising method when it cited the testing report to represent that its safety class was superior to that of the products of other car manufacturers, but failed to fully disclose the standards of the testing underlying the report and relevant information such as the kinds of cars that were tested. This made it likely for consumers to form the mistaken impression that the SENTRA 180 had undergone a Japanese safety appraisal. In sum, Yulon Motor clearly made false and misleading representations in the advertisement with respect to content and quality of the SENTRA 180 in violation of Article 21(1) of the FTL. 4. The Fair Trade Commission's investigation also showed that during the collision test part of the Yulon Motor's advertisement, the car appearing was an INFINITI Q45, the top model in the NISSAN line of cars, but at the end of the advertisement, a SENTRA 180 appeared. Yulon Motor argued that as the advertisement was for NISSAN brand cars, there was no impropriety in its choosing to use the top model car in the NISSAN line (to which the SENTRA 180 also belongs) in the collision tests in the advertisement. However, when Yulon Motor ran the advertisement, it was also actively promoting the SENTRA 180 in newspaper and magazine advertisements. So with the television and newspaper advertisements running simultaneously, consumers were led to mistakenly believe that the collision tests were conducted on the SENTRA 180. The method employed in the television advertisement, in which the NISSAN line of cars was promoted through different models appearing at the beginning and end of the advertisement, was likely to cause consumers to mistakenly believe that the SENTRA 180 had undergone collision testing. The advertisement therefore constituted a misleading presentation and violated Article 21(1) of the FTL. 5. The Fair Trade Commission's further investigation showed that in the image-building advertisement, with respect to an OSA safety class appraisal, Yulon Motor listed a competitor's product as having a value of "none." This vague wording misled consumers to the erroneous conclusion that the car had failed to live up to safety criteria rather than that it simply had not been tested, as was the case. Hence Yulon Motor made false and misleading representations with respect to a competitor's products. Its conduct impeded fair competition in the market, and was likely to deceive consumers and harm trading order. It clearly ran counter to social ethics and efficient competition in the trading order, which the Fair Trade Law seeks to uphold, and therefore constituted a violation of Article 24 of the FTL.Appendix: Yulon Motor Co., Ltd.'s Uniform Invoice Number: 03489200 Summarized by Yang, Chia-Wen; Supervised by Wu, Ting-Hung