Tai Ta Gas Station (Formosa Gas Station's Huatan City location) promoted sales of petroleum products at low prices by means of cash discounts in violation of the Fair Trade Law
Case:
Tai Ta Gas Station (Formosa Gas Station's Huatan City location) promoted sales of petroleum products at low prices by means of cash discounts in violation of the Fair Trade Law
Key Words:
gifts and prizes, promote
Reference:
Fair Trade Commission Decision of April 18, 2002 (the 545th Commissioners' Meeting); Disposition (91) Kung Ch'u Tzu No. 091074
Industry:
Petroleum Refineries (1910)
Relevant Law:
Article 19(iii) of the Fair Trade Law
Summary:
1. This case originated from a complaint filed with the Fair Trade Commission (FTC) by a gas station operator alleging that the Tai Ta Gas Station (Formosa Gas Station's Huatan City location) was promoting sales of petroleum products by giving away car wash coupons of equivalent value and offering NT$128 cash discounts, in violation of Article 19(iii) of the Fair Trade Law（FTL）. 2. According to the FTC Regulatory Principles for Cases Concerning Promotion by Means of Gifts and Prizes passed by the 172nd Commissioners' Meeting, the ceiling value for gifts given away by any enterprise when selling its goods shall be as follows: (1) half the value of the goods whose value equals or exceeds NT$100, or (2) NT$50 when the value of the goods is NT$100 or lower. Any violation of these standards constitutes an act likely to impede fair competition of market by "causing trading counterparts of a competitor to do business with itself by inducement with profit" under Article 19(iii) of the FTL. 3. The FTC investigated and discovered that any consumer bearing an invitation card when refueling at Tai Ta Gas Station received as a gift a car wash coupon with value equivalent to the amount spent, regardless of how much. The coupon was printed with the words "valued at NT$100" and could be exchanged for the ancillary car wash services operated by Formosa gas stations. With respect to the determination of the value of gifts, the FTC does so on the basis of the gift value as advertised by the enterprise in the promotional campaign, because such advertised value is the basis on which its trading counterparts identify the value of the gifts, and is the value they consider when making a judgment as to whether to transact or not. By adopting the competitive strategy of giving fill-up customers car wash coupons with value equivalent to the gas purchased rather than providing better terms of business such as quality, price, and service, Tai Ta Gas Station played on customers' opportunistic desire to profit from high-value gifts, and prejudiced their normal choices of goods or services, inducing them to do business with itself through economic benefits not pertaining to the transaction object. This practice constituted "causing trading counterparts of competitors to do business with itself by inducement with profit" in Article 19(iii) of the FTL. Accordingly, the FTC imposed an administrative fine of NT$500,000 on Tai Ta Gas Station pursuant to Article 41 of the same law. Summarized by Chiu, Chia-Yun; Supervised by Lin, Gin-Lan