The P'ingchen wholesale warehouse of RW-Mart International Limited violated the Fair Trade Law for failing to operate in accordance with the Guidelines for Wholesale, Warehousing and Distribution in an industrial zone

Chinese Taipei

Case:

The P'ingchen wholesale warehouse of RW-Mart International Limited violated the Fair Trade Law for failing to operate in accordance with the Guidelines for Wholesale, Warehousing and Distribution in an industrial zone

Key Words:

wholesale warehouse, verification, obviously unfair

Reference:

The Fair Trade Commission Decision of October 1, 1997 (the 309th Commission Meeting); Disposition (86) Kung Ch'u Tzu No. 176

Industry:

General Retail Industry for Other Commodities (5329)

Relevant Laws:

Article 24 of the Fair Trade Law

Summary:

1.Mr. Li and others jointly filed a complaint to the Fair Trade Commission alleging the following facts:

(1)The land used by the P'ingchen branch of RW-Mart International Limited (hereinafter, the "RW Branch") is industrial land, for which the RW Branch applied for construction of buildings to be used for wholesale warehousing. However, before the license for building use and the business permit were issued, the RW Branch had commenced operations.

(2)The RW Branch unlawfully recruited individuals as members in violation of the Guidelines for Wholesale, Warehousing and Distribution.

(3)The above unlawful acts constitute a violation of the construction and building laws and regulations, the Company Law, the Guidelines for Wholesale, Warehousing and Distribution and the Fair Trade Law and have undermined the livelihood of grocery stores in the neighboring areas.

2.To study the actual operation circumstances for the issuance of membership cards and shopping entry control by the RW Branch, the Commission conducted an on-site investigation on May 14, 1997. The officials of the Commission personally entered the location to shop and walked through the cash registers without possession of the Grand RW-Mart Membership Card. During the investigation with on-site observation, the officials found out that the RW Branch had failed to impose strict control over the issuance of the membership cards and to faithfully verify the identification of card holders when operating wholesale business in the industrial zone. Such de facto operation of retail business is inconsistent with the RW Branch's claim of having operated wholesale business through the issuance of wholesale membership cards. Furthermore, the subject of the RW Branch's distribution was extended to general consumers, thus changing the nature of its operation into a retailing warehouse beyond its scope of business originally registered and authorized. As a result, illegal operation took place where retail business and commerce were operated in an industrial zone. The retailing behavior with lower operating costs within an industrial zone has constituted unfair competition for general retailers and may affect trading order in violation of Article 24 of the Fair Trade Law, which prohibits “obviously unfair acts that are sufficient to affect trading order.” Thus, the RW Branch is hereby penalized in accordance with Article 41 of the Fair Trade Law

3.The issue concerning the administration of zoning requirement and factory registration governing the factory established by the RW Branch in the industrial zone should be handled by the Ministry of the Interior and the Ministry of Economic Affairs within the scope of the Urban Plan Law and the Rules for Factory Registration. Therefore, the Fair Trade Law is not applicable to the issue that the land is unlawfully used by the RW Branch, and this matter has been referred to the Ministry of the Interior and the Ministry of Economic Affairs, the competent authorities for adjudication.

Summarized by Lin, Yi-chao
Supervised by Pai, Yu-chuang

Appendix:
RW-Mart International Limited Uniform Invoice Number: 97173127

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