Kuo-Yang Tire Co., Ltd. violated the Fair Trade Law through publishing advertisement for Q8 petroleum products quoting prices well below the market value

Chinese Taipei

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Summary:

1. The complainant in this case was Yi Pang Enterprise Co., Ltd. (Yi Pang), which held that it was the local agent for Q8 products, had represented Q8 in the market for many years and enjoyed an excellent reputation, and that the Q8 products it represented were of high quality and regarded positively by consumers. Due to the fact that Q8 products had a established import value, with a retail value of approximately NT$258 per bottle, that was the price required to cover the general administrative and sale expenses. Kuo-Yang Tire Co., Ltd. (Kuo-Yang) published a promotional ad for Q8 oil products in the May 2002 issue of “Carnews” magazine, selling the product (at a loss) for an NT$99 price that Yi Pang claimed was a malicious attempt to steal market share. Further, although the products were not imported from Yi Pang, in the aforementioned ad they were shown with the complainant's distinctive yellow label, which would have caused misidentification by consumers and affected Yi Pang's reputation as an exclusive agent. Yi Pang therefore filed a complaint against Kuo-Yang alleging violation of the Fair Trade Law.

2. Following investigation, it was found that Kuo-Yang commissioned “Carnews” magazine on a regular basis to publish promotional advertisements in each month's issue for the featured products of that month (tires, motor oil, aluminum wheels, etc.). In the May issue, the Q8 oil products in question were one of that month's featured products; the promotional period lasted one month and included various other well-known brands of products such as tires and motor oil, so that the promotion did not specifically target Q8 products and should have been considered a standard business promotional activity. It was also found that Kuo-Yang's upstream supply of Q8 products did not come from one of the downstream distributors of the complainant (who was the exclusive agent), and therefore, the sale of these Q8 products constituted parallel importation. In the advertisement Kuo-Yang placed in the May issue of “Carnews” magazine, however, the containers of Q8 oil products shown had the exclusive agent's yellow label on the outside which would have led one to believe that this product was imported by Yi Pang when it was, in fact, parallel importation. This advertisement was obviously inconsistent with the existing facts and thus constituted false labeling in violation of Article 21(1) of the Fair Trade Law.

Appendix:

Kuo-Yang Tire Co., Ltd.'s Uniform Invoice Number: 84779279

Summarized by Lin, Hsiao-Hung; Supervised by Lin, Gin-Lan