Family Mart allegedly violated the Fair Trade Law when it held a give-away promotional campaign with maximum prize money of NT＄2 million
Chinese Taipei
Case:
Family Mart allegedly violated the Fair Trade Law when it held a give-away promotional campaign with maximum prize money of NT＄2 million
Key Words:
convenience store; promotional campaign with gifts and prizes; maximum prize; inducement with profit
Reference:
Fair Trade Commission Decision of June 9, 1999 (the 396th Commission Meeting); Disposition (88) Kung Chu Tzu No. 065
Industry:
Chain Convenience Stores (5313)
Relevant Law:
Article 19(iii) of the Fair Trade Law
Summary:
A complaint was filed against Family Mart for conducting a super lottery promotion campaign during its 10th anniversary celebration, with maximum prize money of NT$2 million. The act allegedly violated Article 19 of the Fair Trade Law (FTL).
To celebrate its 10th anniversary, Family Mart
conducted a super lottery promotion campaign from November 1, 1988 to December 31, 1988 in
order to attract more customers. The consumers could join the lottery using uniform
invoices issued by Family Mart, and the winners would be announced on January 5, 1999.
Family Mart claimed that the maximum prize money in question, NT$2 million, was patterned
after the bi-monthly unified invoice lottery draw conducted by the Ministry of Finance.
The company claimed that the campaign was held as a service and as a way to give back to
its customers, and that no undue profits were obtained as a result. Although the maximum
prize money was NT$2 million, the company also informed the consumers through posters,
newspaper advertisements, and other mass media that 15% income tax would be deducted from
the prize money. The monthly basic salary as announced by the Council of Labor Affairs of
the Cabinet, was NT$15,840, and 120 times the basic salary was NT$1,900,800. Although the
maximum prize money in the campaign was NT$2 million, only NT$1.7 million would remain
after deducting 15% income tax; thus there was no violation of relevant regulations of the
Fair Trade Commission (the Commission).
In addition, the company claimed that the maximum price was set at NT$2 million because
the company thought that the maximum price stipulated in Article 4 of the “Regulatory Principles for Cases Concerning Promotion by Means of Gifts and
Prizes” formulated by the Commission was the actual amount
given after deduction of income tax. The company claimed that the mistake was
unintentional, as could be proven from the prize money claim procedures printed on posters
in every store outlet. The procedures clearly stated that in accordance with the
regulations of the Ministry of Finance, 15% of the prize money would be deducted from the
amount won. In addition, the maximum prize money in another promotion conducted by the
company in April 1999 was lowered to NT$1 million in order not to violate the FTL.
Article 19(iii) of the FTL stipulates that
enterprises shall not, where there is a likelihood of restraining competition or
obstructing fair competition, engage in acts that would cause a competitor's trading
counterparts to deal with itself by coercion, inducement with profit, or other improper
means.
The legal interests protected by this article of law are general interests relating to
ethics and competition among members of the same trade. Any action of an enterprise
contrary to the provisions of Article 19(iii), even though the enterprise does not
prossess a significant force in the market, is sufficient to damage the legal interests
the FTL is set to protect. In other words, any enterprise, regardless of its market power,
shall fall under the regulation of this article. Thus any enterprise using inducement with
profit to cause a competitor's trading counterpart to deal with itself, and where there is
a likelihood of restraining competition or obstructing fair competition, has violated the
aforementioned provision of the FTL.
In addition, the term “competition” as used in the FTL refers to enterprises using more advantageous pricing,
quantity, quality, service, or other terms and conditions to contest trading opportunities
within the market. Since more and more domestic companies had been conducting promotions
using very expensive gifts and large amounts of prize money, the Commission formulated the
“Regulatory Principles for Cases Concerning Promotion by Means
of Gifts and Prizes” as a reference for determining whether an
enterprise had violated Article 19(iii) of the FTL. The Regulatory Principles took effect
on April 1, 1995. According to Article 4 of the Regulatory Principles, “where an enterprise conducts promotions through prizes, the maximum prize
money shall not exceed 120 times the monthly basic salary as announced by the Council of
Labor Affairs of the Cabinet,” Article 5 of the Regulatory
Principles further stated that an enterprise would be in violation of Article 19(iii) of
the FTL if it violated Article 4 of the Regulatory Principles when conducting promotions
by means of gifts and prizes.
Investigation showed that Family Mart conducted a
promotion from November 1, 1988 to December 31, 1988 by giving away maximum prize money of
NT$2 million, the amount of which exceeded 120 times the monthly basic salary (NT$15,840)
as announced by the Council of Labor Affairs of the Cabinet (calculated to be
NT$1,900,800). This act was contrary to Article 4 of the “Regulatory
Principles for Cases Concerning Promotion by Means of Gifts and Prizes” formulated by the Commission. In accordance with Article 5 of the Regulatory
Principles, it constituted a violation of Article 19(iii) of the FTL.
Family Mart had questioned whether the “market” should be that of the island-wide convenience store chain, or should it
include that of the other general retail stores as well. It further claimed that no
consumer had come forward to claim the maximum prize money in question and that in its new
promotion campaign, the maximum prize money was lowered to NT$1 million. However, the
aforementioned claims did not change the fact that the promotion campaign in question had
already violated Article 19(iii) of the FTL.
Family Mart also claimed that after deducting 15% income tax from the maximum prize money
in question, the winner would only receive NT$1.7 million. However, the maximum prize
money stipulated in the “Regulatory Principles Governing Cases
of Promotion by Means of Gifts and Prizes” formulated by the
Commission did not indicate the amount to be the after-tax amount. In addition, if a
consumer did come forward to claim the maximum prize money in question, the deducted tax
amount would be transferred to the tax authorities, so Family Mart would still have to pay
the NT$2 million regardless of whether the tax amount would be deducted beforehand.
Therefore, the aforementioned assertions of Family Mart were dismissed.
In summary, the super lottery campaign conducted by Family Mart violated Article 19(iii) of the FTL. Since the act occurred during 1998, and since the company had no previous record of related dispositions, it was disposed in accordance with the fore part of pre-amended Article 41 of the FTL.
Appendix:
Family Mart's Uniform Invoice Number: 23060248
Summarized by Tao, Jong
Supervised by Hung, Te-ch'ang