Kwang Yang Motor Co., Ltd. violated the Fair Trade Law for its false advertisements on Filly 50/80 motorcycles
Chinese Taipei
Case:
Kwang Yang Motor Co., Ltd. violated the Fair Trade Law for its false advertisements on Filly 50/80 motorcycles
Key Word:
Kwang Yang; motorcycles; false advertisements; misleading
Reference:
Fair Trade Commission Decision of March 10, 1999 (the 383rd Commission Meeting); Disposition (88) Kung Chu Tzu No. 030
Industry:
Motorcycle Manufacturing (3241)
Relevant Law:
Article 21 of the Fair Trade Law
Summary:
According to the complaint: the disposed party published
an advertisement on Filly 50/80 motorcycles on the back cover of the June
1998 issue of Living Magazine. The advertisement claimed that “ the Filly
can travel 50 kilometers on one liter of gasoline,” “ the fuel
consumption is one-half that of the two-stroke scooters (DIO, JOG,
Cha-cha),” and is “ highly recommended by the Administrator of the
EPA.” The advertisements were alleged to be false and to have violated
Articles 21 and 24 of the Fair Trade Law.
Investigations showed that the Filly motorcycles as
advertised were 50 cc and 80 cc models. In the advertisement, no distinction
was made between the two models; it simply claimed that “ the Filly can
travel 50 kilometers on one liter of gasoline.” According to two fuel
consumption test reports from the Industrial Technology Research Institute,
fuel consumption of the 50 cc model was 46.8 kilometers per liter; at a
constant speed of 40 kph, the fuel consumption was 69.1 kilometers per
liter. Thus the average fuel consumption was 53.7 kilometers per liter. For
the 80 cc model, fuel consumption was 41 kilometers per liter, and 51.4
kilometers per liter at a constant speed of 50 kph. The average fuel
consumption was 44.6 kilometers per liter.
Although the 50 cc model sold by the disposed party could attain an average
fuel consumption of more than 50 kilometers per liter, it could only travel
up to 46.8 kilometers in city traffic. The 80 cc model could only manage
51.4 kilometers per liter when traveling at constant speed and 41 kilometers
in city traffic. The average was 44.6 kilometers. Both were far less than 50
kilometers. And taking into consideration the traffic conditions for
ordinary motorists, such as road conditions, traffic flow, stops at traffic
lights, and the number of accelerations, the fuel consumption level at
constant speed as indicated in the report in most cases are unattainable.
In addition, the “ motorcycle fuel consumption level,” as announced by
the Energy Commission under the Ministry of Economic Affairs, referred to
the “ minimum distance in kilometers per liter that a motorcycle travels,
using the fuel consumption average calculated based on the fuel consumption
level in city traffic and the consumption level while traveling at constant
speed.” Thus, what should concern the consumers is the “ average
consumption level.” From the above figures,
although the average consumption level of the 50 cc model was 53.7
kilometers, the average level of the 80 cc model was only 44.6 kilometers,
which was significantly less than the advertised “ 50 kilometers per
liter.” The advertisement was clearly inconsistent with the facts. In its
advertisement, the disposed party placed the two models side by side, and
claimed that “ the Filly can travel 50 kilometers on one liter of
gasoline.” Without distinguishing between the different consumption levels
of the two models, and with the fact that the consumption level only applied
to travel at constant speed, the consumers would be led to believe that the
80 cc model could also travel 50 kilometers on one liter of gasoline. It was
thus determined that the advertisement was false and misleading.
Investigations also showed that in the advertisement, the
disposed party claimed that “ the fuel consumption is one-half that of the
two-stroke scooters available on the market.” However, when making its
statements at the Fair Trade Commission (the Commission), the disposed party
admitted that there were no test results in support of the above claim. The
disposed party said its original intention was to emphasize that the
hydrocarbon (HC) emission levels of the four-stroke motorcycle was one-third
that of the two-stroke motorcycle, thus the “ fuel consumption level
comparison in the advertisement should be a comparison of the hydrocarbon
emission levels.” Yet investigation showed that although the four-stroke
motorcycle had lower emission levels compared with the two-stroke
motorcycles, the hydrocarbon emission levels did not equate to fuel
consumption level. Moreover, in the May 13, 1997 issue of the Min Sheng
Daily submitted by the disposed party, the most fuel-efficient motorcycle
RB25AB model as was announced by the Energy Commission was the “ Chin-yong
125” model manufactured by the company, not Filly 50 (SD10AA) or Filly 80
(SD15AA).
In addition, according to the “ Fuel Consumption Guide for Light Passenger
Vehicles and Motorcycles” published by the Energy Commission in May 1998,
the three models of two-stroke scooters described in the advertisement had
the following fuel consumption levels: Sanyang DIO 50, 43.5 kilometers per
liter; Yamaha Jog Pro 50, 46 kilometers per liter; and Sanyang Cha-cha, 46.7
kilometers per liter. Although there was a difference between these figures
and that of the Filly 50 (53.7 kilometers per liter), the difference was far
from the statement in the advertisement, which claimed that “ the fuel
consumption is one-half that of the two-stroke scooters (DIO, JOG,
Cha-cha).” Thus, it was determined that the disposed party made false and
misleading statements in its advertisement.
The disposed party also claimed in the advertisement that the models were “ highly recommended by the Administrator of the EPA.” On this issue, the EPA responded that it had post the “ community of man, vehicle, and the environment” advertisement to encourage consumers to purchase four-stroke motorcycles and thereby to minimize air pollution. And when the advertisement was post, the disposed party was the only manufacturer that had launched the four-stroke 50cc motorcycles; thus the said motorcycle was included in the advertisement. While making its statement at the Commission, the disposed party also acknowledged that the statement “ highly recommended by the Administrator of the EPA” in the advertisement was used only to emphasize that the motorcycle was recommended for its low-pollution nature. It was not intended to emphasize on the brand name and model, nor was it intended to promote the models in question. Since the EPA advertisement was aimed to encourage the public to purchase low-pollution four-stroke motorcycles, and since the Filly 80 was indeed a four-stroke motorcycle, though not included in the EPA advertisement, the statement was consistent with the goal of the EPA advertisement. Thus, with regard to this issue, it was difficult to determine that the advertisement was false.
Summarized by Tu, Hsing-feng
Supervised by Pai, Yu-chuang
Appendix:
Kwang Yang Motor Co., Ltd.’s Uniform Invoice Number: 75195800