Chunjih Branch of Carrefour Co., Ltd. violated the Fair Trade Law for conducting retail sale business in an industrial district
Chinese Taipei
Case:
Chunjih Branch of Carrefour Co., Ltd. violated the Fair Trade Law for conducting retail sale business in an industrial district
Key Words:
deceptive or obviously unfair act, industrial zone, wholesale and warehousing business
References:
Fair Trade Commission Decision September 13, 1995 (the 205th Commission Meeting); Disposition (84) Kung Chu Tzu 121
Industry:
Wholesale and Warehousing Business (5314)
Relevant Laws:
Article 24 of the Fair Trade Law
Summary:
1. Mr. Wei, a local citizen, file a complaint to the Fair Trade Commission (FTC) indicating that the Chunjih Branch of Carrefour Co., Ltd. (also known as Carrefour Warehousing) adopts the membership system. According to its operation rules, membership application will be granted only when the business permit is presented by the applicant, and members must show the membership cards and purchase commodities in large quantities. Mr. Wei also indicated that, in fact, ordinary people are also permitted to make a small amount of purchase without holding a membership card. In addition, the selling prices of commodities at Carrefour are much cheaper than the selling prices of same goods at ordinary retail stores, which large price difference has caused the business of Mr. Wei's store drastically declined to the extent that he was unable to continue his business operation.
In order to collect more information about the actual operation of the Chunjih Branch of Carrefour Co., Ltd., the FTC request Taoyuan County Government to provide information related to the land where the business place of the said Branch Office us located, including the land zoning plan, the name of the Urban Plan governing the use of such land and other relevant information pertaining to the factory and business permit records of the said Branch. According to the information provided by the Taoyuan County Government to the FTC: "(1) The land where Chunjih Branch of Carrefour is located is designated as an industrial zone under the New Township Urban Planning in Nankan, Taoyuan. (2) The said Branch has obtained a Factory Registration Certificate for its Plant located at 85 Yen Ku West Street, Bien Chou Li, Taoyuan City and also obtained a business permit for the business place of its Chunjih Branch on Chunjih Road, Bien Chou Li, Taoyuan City." In addition, a representative of the said Company appearing before the FTC explained that the market place of Chunjih Branch is located on a piece of land within an industrial zone, except its cashier counters which are located on a piece of land within a business zone.
In order to learn further about the membership card issuance and customer access controls of Chunjih Branch Office, the FTC sent a staff, on November 2, 1994, to conduct an on-site investigation. The FTC staff visited its market place as an ordinary citizen without holding a Carrefour membership card, but was admitted to shop. According to its membership card issuing procedures, the applicant can either be: (1) an "individual", who shall be a military personnel, government official/employee or school staff and teacher (he/she shall submit a government insurance card, ID card, or a membership card of a business association or labor union); or (2) a “corporation or firm”, which includes any ordinary company or firm (it shall submit a business permit, a photocopy of the responsible person’s personal IDs, the ID card of the applicant).
On November 15, 1994, the FTC requested the staff of Carrefour Co., Ltd. and its Chunjih Branch to explained the case before the FTC. In reply to the FTC's inquiry regarding their lack of a strict membership card verification system as witnessed by the FTC's investigator on November 2, 1994, representatives of Carrefour and its Chunjih Branch stated that "Membership card verifiers are always deployed at the entrances. However, on that particular day, the loose access control might be caused by personal negligence of membership card verifiers on duty or due to excessive flow of customers. The Company will improve the membership card verification." As further inquired by the FTC for the reason of allowing military personnel, government employees and school teachers and staff to apply for membership cards, the representatives of Carrefour replied that "As some military personnel, government employees and school teachers and staff may run their own family retail stores, therefore they need to purchase the commodities from our Company for resale at their stores."
2. The issue concerning the use of the land where Chunjih Branch of Carrefour is located shall be handled by the competent authority having the jurisdiction over such land.
The Chunjih Branch is operating the wholesale and warehousing business within an industrial zone, but it has failed to maintain a strict control over both the membership card issuance (the scope of card holders has even been extended to cover military, government and educational personnel) and the membership card verification. The foregoing conducts of Carrefour and its Branch not only were unethical in business competition which further undermined the fair competition by efficiency competition, but also extended to cover general consumers thus changing the nature of its business into retail sale and warehousing business which has in turn affected the fair competition ability of other stores selling daily consumer goods. Judging from the foregoing facts, the act of Carrefour Co., Ltd. has constituted an "obviously unfair act which is sufficient to affect the trading order" as prohibited by Article 24 of the Fair Trade Law.
With regard to the issue concerning the Carrefour membership card issuance, the FTC sent Department of Commerce of Ministry of Economic Affairs a written request to clarify whether Carrefour had violated the "Company Law" or "Business Registration Law" so as to enable the FTC to take disciplinary action against the said Company.
A resolution was adopted at the 205th Commission meeting of the FTC held on September 13, 1995 deciding that the act of Chunjih Branch of Carrefour Co., Ltd. in conducting retail sale business within an industrial zone was obviously unfair to ordinary retailers to the extent sufficient to affect the trading order and therefore is in violation of Article 24 of the Fair Trade Law.
Summarized by Lin, Yi Chao
Supervised by Pai, Yu Chuang
Appendix:
Carrefour Co. Ltd.’s Uniform Invoive Numeber:22662550
＄: For information of translation, click here
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