Chiu Shun Co. Ltd. was complained for violation of Article 21(1) of the Fair Trade Law

Chinese Taipei

Case:

Chiu Shun Co. Ltd. was complained for violation of Article 21(1) of the Fair Trade Law

Key Words:

untrue advertisements, deceptive or patently unfair acts

Reference:

Fair Trade Commission Decision of 16 February 1994 (the 123rd Commission Meeting); Disposition (83) Kung Chu Tzu No. 026

Industry:

Retail industry (4020)

Relevant Laws:

Article 21(1), Article 24 and Article 41 of the Fair Trade Law

Summary:

1. Twin Crane Co., Ltd, (Twin Crane) complained to the Fair Trade Commission that Chiu Shun Co., Ltd. (Chiu Shun) had placed untrue commercial ads on three TV channels. In the ads, the narrator said "Twin Crane glossy ganoderma: the same quality with a new trademark," while the footage showed that the twin crane trademark of Twin Crane was altered to be a flying man, Chiu Chun's trademark. The complainant believed the purpose of such advertising was to mislead the consumer and Twin Crane's direct distributors to think that Twin Crane had either been dissolved or restructured to become Chiu Chun Direct Marketing Enterprise. In addition to the TV ads, Chiu Chun also published statements in newspapers, where an arrow was placed between Twin Crane's trademark and Chiu Chun's trademark to indicate that the former had been changed into the latter. Below the two trademarks were words in boldface explaining that all Twin Crane products had been renamed as Chiu Chun products. On the packaging of the Chiu Chun products, next to the mark of "Chiu Chun product" there were parentheses containing the expression of "the original Twin Crane product." Such advertising and packaging as described above all involve violation Article 21 of the Fair Trade Law .

2. Article 21(1) of the Fair Trade Law provides that, "An enterprise shall not make, on goods or in its advertisement relating thereto, any false, untrue or misleading presentation which may likely cause confusion to or mistake by consumers such as their price, quantity, quality, content, manufacturing process, date of manufacturing, validity period, use method, purpose of use, place of origin, manufacturers, place of manufacturing, processor, and place of processing."

Accordingly, an enterprise shall be deemed in violation of the provisions of Article 21(1) if it provides misleading information in connection with the manufacturer of the product or with any other content of the transaction that causes its trading counterpart to make wrong decisions. For most consumers, Chiu Chun's advertisement and the indications made on the packaging of its products were sufficient to mislead them to believe either that Twin Crane and its products were not existing any more, or that they had been renamed as Chiu Chun. Thus, it can be concluded that Chiu Chun violated the provisions of Article 21(1) by engaging in these acts.

3. Article 24 of the Fair Trade Law provides, "In addition to what has been provided for in this Law, an enterprise shall not conduct other deceptive or obviously unfair acts that are sufficient to affect trading order." As both Chiu Chun and Twin Crane were multi-level distribution and sales organizations that sold healthful food like glossy ganoderma and pollen, they were competitors in the same market. Therefore, neither should engage in deceptive or patently unfair acts that might adversely affect trading order. However, for most consumers, Chiu Chun's ads and the indications on the packaging of its products were sufficient to mislead them to believe either that Twin Crane and its products were not existing any more, or that they had been renamed as Chiu Chun. As a result, the consumers who had in the past purchased Twin Crane's products might then turn to Chiu Chun's products. It would not be too difficult to imagine that the same consumers would be very confused when they discovered afterward that Twin Crane products were still sold in the same multi-level distribution and sales market. So, Chiu Chun's actions in the advertising and packaging of its products were not only deceptive and obviously unfair, but also very likely to affect trading order, which constituted a violation of Article 24 of the Fair Trade Law.

4. The case has been submitted to the 123rd Commission Meeting for discussion, and the Commission pursuant to Article 41 of the Law ordered that, starting the day after receiving the Disposition, Chiu Chun shall cease and desist from making misrepresentations on its products or advertisements, and any of its deceptive or obviously unfair acts that might adversely affect trading order, and within thirty days of the day after receiving the Disposition rectify the wording it used on the packaging of its products.

　

Summarized by Hsiu, Hung-jen
Supervised by Tsuo, Tien-liang

＊＊: For information of translation, click here

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