Chien Hsing Cultural Enterprises Co.,
Ltd. violated the Fair Trade Law by disseminating false information on the www.cashbox.com.tw
website indicating that Cashbox Enterprises Ltd. had “exclusive rights” on songs
for musical accompaniment
Chinese Taipei
Case:
Chien Hsing Cultural Enterprises Co., Ltd. violated the Fair Trade Law by disseminating false information on the www.cashbox.com.tw website indicating that Cashbox Enterprises Ltd. had “exclusive rights” on songs for musical accompaniment
Key Words:
Cashbox KTV, exclusive right, Chien Hsing Cultural Enterprises Co., Ltd., www.cashbox.com.tw
Reference:
Fair Trade Commission Decision of July 18, 2002 (the 558th Commissioners' Meeting); Disposition (91) Kung Ch'u Tzu No. 091115
Industry:
Internet Information Supply Services (7321)
Relevant Law:
Article 24 of the Fair Trade Law
Summary:
1. A consumer filed a written complaint accusing Cashbox Partyworld Co., Ltd. (Cashbox KTV), a proprietor of karaoke sing-along establishments (generally termed “KTVs”), of misrepresentation on its website. The complainant discovered that, under the heading “New Releases” on Cashbox KTV's website, virtually every song listed was preceded by the word “exclusive (right)” The complainant further found that identical songs were available at other KTV establishments and therefore not “exclusively” available at Cashbox KTV as claimed on their website. The complaint alleged that this assertion of exclusivity is misleading to consumers and therefore in violation of applicable provisions of the Fair Trade Law.
2. The Fair Trade Commission (FTC) investigated and determined that the violations relevant to this case are chiefly attributable to Chien Hsing Cultural Enterprises Co., Ltd. (Chien Hsing), for the reasons below:
(1) The FTC found that although the website referred to in this case is named www.cashbox.com.tw, domain name records show that Chien Hsing is the website registrant and is charged with management of its contents.
(2) The core business of Chien Hsing is print media publication (Cashbox magazine) and management of the www.cashbox.com.tw website. Information regarding Cashbox KTV that appears on the website is compiled by Chien Hsing, through direct inquiry to Cashbox KTV's public relations department, and is independently reviewed, edited and published in the aforementioned magazine and website by the editing department of Chien Hsing. Cashbox KTV was not specifically involved with nor did they review the contents of the final report posted on the webpage. Considering the length and content of the information regarding Cashbox KTV that appear on Cashbox magazine and www.cashbox.com.tw, the information is a regular column, in consistent format, which is distinctly different from magazine advertisement pages for Cashbox KTV. It stands to reason, therefore, that information regarding Cashbox KTV published in Cashbox magazine and on www.cashbox.com.tw is independently produced by Chien Hsing as part of its media reports.
(3) The English name of the website in question is cashbox.com, and the song information posted there was provided for Cashbox KTV, and the dissemination of such information seems beneficial to Cashbox KTV. Cashbox KTV and Chien Hsing however work as separate entities in compiling this information. There is no convincing evidence to conclude that Cashbox KTV had a guiding role in determining the contents of the aforementioned website or print media or was in any way in a leading position or giving direction in regards to that content. Furthermore, a comparison of the contents of the print media and the website in question reveals slight differences. Chien Hsing asserted that the differences and the use of the word “exclusive (right)” were due to routine errors or omissions and to restrictions in column size. It can thus be presumed that the respondent's actions resulted primarily from the faults of Chien Hsing Perhaps Cashbox KTV expected that the aforementioned media report would be beneficial to its business, but lacking positive evidence that Cashbox KTV actively directed Chien Hsing to use the word “exclusive”, the responsibility remains with Chien Hsing.
3. Presently most of the musical accompaniment tapes purchased by KTV enterprises in Chinese Taipei are through commercial agents. KTV enterprises separately sign yearly contracts with these agents. After receiving authority from record companies these agents produce the tapes which are subsequently sold to KTV enterprises. A situation where a KTV company has exclusive rights to a song(s) in fact does not exist, and any discrepancy in terms priority or arrival time is solely related to market demand, delivery time, and relative difference between northern and southern regions. Consequently, the labeling of songs as “exclusive” on Cashbox KTV's website is solely to assert that they receive these tapes earlier than other establishments, which is different from what the term “exclusive (right)” is normally understood to mean.
The fact, however, is that statements on Cashbox KTV's website that they have “exclusive” right on songs falsely lead consumers to believe that these songs are available only at Cashbox KTV and not at other KTV establishments, which in turn has an adverse impact on other KTV companies. KTV companies that have signed contracts with a similar agent will obtain identical tapes to offer to their customers. Furthermore, the release date for these tapes is also the same, and any discrepancy in the speed at which KTV companies will stock these tapes will differ by, at most, one day. Therefore, listing songs as “exclusive” on Cashbox KTV's website inappropriately misleads consumers.
4. Audio-visual singing/musical services (commonly referred to as KTVs) separately sign yearly contracts with agents who produce the accompaniment tapes. After receiving authority from record companies these agents produce the tapes which are subsequently sold to KTV enterprises. A situation where a KTV company has exclusive rights to a song(s), in fact does not exist, and any discrepancy in terms of priority or arrival time is solely related to market demand, agent delivery speed, and relative distance of Chinese Taipei's north and south regions. Once a contract has been signed KTV companies can purchase accompaniment tapes from commercial agents. One cannot claim exclusivity if these tapes are freely available on the market to any KTV enterprise. Claims, therefore, on Cashbox KTV's website that they have “exclusive” songs will lead those looking for information on that website to mistakenly believe that Cashbox KTV alone offers these songs. This results in mistaken perceptions and decisions and constitutes a deceptive action.
Among the important factors consumers consider when deciding on which KTV establishment to frequent are not only the hardware and related facilities but also the amount and speed at which “new songs” are updated. Thus Chien Hsing's assertion of exclusivity on the Cashbox website would easily lead consumers to the misunderstanding that these songs are only available at Cashbox KTV. Consequently, this would increase the likelihood that consumers would not frequent other KTV establishments and therefore harm Cashbox KTV's competitors in the KTV market. This would definitely adversely impact other KTV companies to some degree and would unfairly disadvantage those competitors who abide by the rules and essence of fair trade.
Chien Hsing's dissemination of the aforementioned information on the website is readily available directly or indirectly to the unspecified consumer public. This information in turn creates mistaken perceptions and decisions and hinders fair competition in a manner sufficient to affect trading order. The FTC therefore found Chien Hsing in violation of Article 24 of the Fair Trade Law and imposed an administrative fine of NT$100,000 pursuant to the fore part of Article 41 of the same law.
Appendix:
Chien Hsing Cultural Enterprises Co., Ltd.'s Uniform Invoice Number: 70448165
Summarized by Mai, Huei-Li; Supervised by Cheng, Chia-Lin