Violation of Article 21 of the Fair Trade Law by Shuang Ho Lien Enterprise Co., Ltd. for false and misleading presentation or indication
Chinese Taipei
Case:
Violation of Article 21 of the Fair Trade Law by Shuang Ho Lien Enterprise Co., Ltd. for false and misleading presentation or indication
Key Words:
advertisement, plastic shopping bags, goods procurable under the government welfare system, operating principle, free riding
Reference:
Fair Trade Commission Decision of September 16, 1998 (358th Commission Meeting); Disposition Ref. (87) Kung Ch'u Tzu No. 210
Industry:
Other Retailing Industry of General Goods (5319)
Relevant Laws:
Article 21 of the Fair Trade Law
Summary:
Huei K'ang Co., Ltd. dispatched one of its staff to Shuang Ho Lien Enterprise Co., Ltd. (respondent) in April 1998 to make purchases. No special identification was required to enter the store and on the plastic shopping bag in which the purchases were packed the words "Shuang Ho Lien Welfare Station" were featured, implying the respondent to be a "cooperative." The packaging of the various snacks purchased were printed with the price indicating which could lead purchaser into believing that the respondent was selling welfare goods, which were supposed to be sold to military, government officials and teachers.
The investigation disclosed that the respondent is a business entity registered and approved by the Ministry of Economic Affairs in accordance with the Company Law, operating the retail and wholesale business of various ordinary merchandises and daily goods. It is open to the general public and no special identification card is required for entry. The respondent issues invoices and pays business tax for its sales.
The respondent stated that the name on its advertising signboard and plastic bags did not carry any special significance. Goods of the respondent were purchased through separate agreements with suppliers through normal payment methods. While some of the goods had their price directly printed on the packaging, this was because they were supplied by the same suppliers who were also suppliers to the Headquarters of Military and Public Officers' Welfare and Ch'uan Lien She. Those goods however were not goods that were leaked outside of welfare channels.
According to Articles 21(1) and 21(2) of the Fair Trade Law (FTL) and the "Guidelines for Dealing with Cases Regarding False, Untrue or Misleading Presentation or Symbol" established by the Fair Trade Commission (FTC), the term "misleading" refers to situations where the presentation or symbol at issue, whether true or not, causes confusion to, or results in a mistaken decision of, a substantial number of people in the general or relevant public.
The respondent, having registered in accordance with the Company Law, features the presentation "Shuang Ho Lien Welfare Station, No ID Required for Entry" on its signboard and printed "Shuang Ho Lien Welfare Station" on the plastic shopping bag. Such presentation misleads the public to believe the operation as a cooperative or as a distribution station of welfare goods for military and public officers - the purpose being to attract the consumers who will think that they will be able to purchase goods at the lower prices available in such cooperatives or welfare stations. Therefore, the respondent was found in violation of FTL Article 21(3) where the provision of FTL Article 21(1) shall apply mutatis mutandis. The respondent should be punished in accordance with FTL Article 41.
With regard to the respondent's alleged sales of welfare goods for military and public officers, although the term "welfare goods" is commonly known to the public. There is no definition or regulation of the term under the current laws and regulations. Whether from the business's subjective point of view or from the actual appearance of the goods, goods are no longer divided into welfare goods or non-welfare goods. Given that goods should be allowed for free circulation and resale in the stream of commerce, the FTC need not intervene in this aspect of the controversy. The respondent procured its supplies by bargaining with each suppliers. Some of the goods had their price directly printed on the packaging because they were supplied by the same suppliers who were also suppliers to the Headquarters of Military and Public Officers' Welfare and Ch'uan Lien She. We cannot find there is any likelihood of the respondent free-riding on the reputation of welfare goods, and for this part of the complaint we find no violation of the FTL.
In conclusion, the respondent's presentation of "Shuang Ho Lien Welfare Station, No ID Required for Entry" on its signboard and printed "Shuang Ho Lien Welfare Station" on the plastic shopping bag misled the public to mistake its identity as a cooperative and distributor of welfare goods and therefore was held in violation of FTL Article 21(3) where the provision of FTL Article 21(1) shall apply mutatis mutandis. The respondent will be punished in accordance with FTL Article 41.
Summarized by Tao Jung
Supervised by Hung Te-chang
Appendix:
Shuang Ho Lien Enterprise Co., Ltd.’s Uniform Invoice No.: 16337177