Megaful Co., Ltd. falsely made goods advertisement in violation of the Fair Trade Act

Chinese Taipei

Megaful Co., Ltd. falsely made goods advertisement in violation of the Fair Trade Act

Key Words:

specially priced goods, POP price displays, false advertising

Reference:

Fair Trade Commission Decision of May 15, 2003 (the 601st Commissioners' Meeting); Disposition (92) Kung Chu Tzu No. 065

Industry:

Retail Sale of Food Products and Groceries (4620)

Relevant Law:

Articles 21 of the Fair Trade Law

Summary:

1. The complainant in this case made repeated trips to Megaful Co., Ltd.'s (the respondent) place of business in Keelung from 10 January 2003 to 30 January 2003 and purchased large amounts of goods that had been marked on the store shelves and on large point of purchase (POP) price displays throughout the store as “specially priced goods.” The complainant subsequently discovered that two-thirds of the goods in the store were marked as specially priced goods but were actually sold at their original prices. For example, the “Luxury Steel Tube Armrest Sofa Bed” display was originally marked as specially priced at NT$2,499 and was later marked as originally priced at NT$2,499 and specially priced at NT$1,999. The complainant stated that they paid a price of NT$2,499 for the sofa bed, and that it should not have been marked as specially priced goods given that NT$2,499 was later indicated as the original price. It also provided additional examples of similar unlawful price claims involving the “Tabletop Bookshelf” and the “Large Space-Saving Television Cabinet.”

2. The Fair Trade Commission's investigation found that some of the goods sold by Megaful were priced at ordinary retail prices but had been marked as specially priced goods. This had resulted from the proliferation of special prices on many goods during the Lunar New Year holiday period due to seasonal promotional activities, and the shuffling of entry-level personnel among various posts, which led to errors in POP price display procedures, i.e. the use of POP price displays indicating specially priced goods when a POP price display indicating the ordinary retail price should actually be used.

3. Comparison of prices of goods and services is a major factor influencing consumer decisions on whether to engage in a commercial transaction. The ordinary consumer's understanding of “specially priced goods” is that the price of such goods is below the ordinary retail price for the goods, which raises consumer willingness to purchase. Some of the goods sold by the respondent, however, were marked as specially priced goods but were not actually sold at a lower price but, rather, at their original price. Megaful attributed the discrepancies to operation errors caused by seasonal price fluctuations and reshuffling of personnel postings. Its such actions, however, indeed caused potential consumers to be lured by the false price displays on goods to an extent sufficient to influence an ordinary member of the general public to make a rational judgment on deciding to conclude the transaction, and thus constituted a false or misleading representation in violation of the provisions of Article 21(1) of the Fair Trade Act. Upon considering factors such as Megaful's cooperative attitude, the minor degree of harm to the trading order, clean record of prior violations, the motive, purpose and duration of the improper benefit, and the scale of its business, the Fair Trade Commission ordered Megaful to cease the illegal practices and imposed a fine of NT$50,000 under the fore part of Article 41 of the Fair Trade Act.

Appendix:
Megaful Co., Ltd.'s Uniform Invoice Number: 86423942

Summarized by Yu, Fei-Ping; Supervised by Yeh, Ning