Alleged violation of the Fair Trade Law by Somchen Co. Ltd, a household production agency
Chinese Taipei
Case:
Alleged violation of the Fair Trade Law by Somchen Co. Ltd, a household production agency
Key words:
high profitability, cash compensation, long term business
Reference:
Fair Trade Commission Decision of 26 January 1998 (the 326th Commission Meeting); Letter (87) Kung Erh Tzu No. 86128809-004; Disposition (87) Kung Ch'u Tzu No. 051
Industry:
Other Industrial Products Manufacturing Industry (3999)
Relevant Laws:
Article 24 of the Fair Trade Law
Summary:
According to the Fair Trade Commission's investigation, Somchen Co., Ltd. often recruited household production workers through the advertisements it published. The ads presented a catch line composed of "high profitability, cash compensation, long term business", but concealed important trading information, such as the fact that the task could be highly difficult for a novice. In addition, the recruited to the advertisements first had to spend a large amount of money to purchase dyestuffs and could not ask for refund when they were unable to finish the work. Such acts of Somchen Co., Ltd. were deceptive in nature and could adversely affect trading order, thus constituting a violation of Article 24 of the Fair Trade Law. Somchen Co., Ltd. therefore shall be punished pursuant to the first half of Article 41 of the same Law, and ordered to cease or rectify such behavior.
In addition, Somchen Co., Ltd. placed categoriaes newspaper advertisements all year round to recruit household production workers. Most of the recruited to the advertisements were housewives, students or recent graduates. When they went for the interview, representatives of Somchen Co., Ltd. would suggest that they entrust them with the purchase of the dyestuffs needed for the task and sign the contract. Once the recruited started to work on the task, they found it far more difficult than they had imagined, and, pursuant to the contract, they could not return the dyestuffs which they had bought at a high price. The Commission investigated the issue and found that household production tasks of this kind could be carried out, but they were usually very technical and difficult. If household production workers could not finish the task and said so to the company that had solicited them into the business, their appeals simply fell on deaf ears.
Furthermore, most of the contracts between the company and the workers were effective for only one to three months, and would become invalid as soon as the specified time limit expired. However, as the task in question was prone to failure at the very beginning, by the time the workers could master the techniques and come up with finished products, the contract would have expired. Many enterprises of similar nature resort to contracts whose terms are extremely short in order to evade responsibility, so members of the public may easily fall into the trap without realizing it. The investigation also showed that Somchen Co., Ltd. did not aim to manufacture handicrafts and sell them for profits, but to reap windfall profits by selling the dyestuffs. As most of the recruited were housewives or students, who lacked social experience or were unsophisticated, they were likely to believe in scripts boasting high profitability, cash compensation collected on a daily basis, long term business, and "easy to carry out the task," and agreed to sign the contract. Having purchased the needed raw materials at a considerably high price, they came to find out that the task was daunting and time-consuming. By this time there was nowhere they could go to seek compensation since the contract had specified that they were responsible for the raw materials they had bought. Therefore, Somchen Co. Ltd., while soliciting household production workers, concealed material trading information, which led to its trading counterparts sustaining losses. Such acts on the part of Somchen Co., Ltd. were tantamount to deceptive acts that can adversely affect trading order, thus constituting a violation of Article 24 of the Fair Trade Law.
Summarized by Jishyan Hwu
Supervised by Shin, Chin-ts'un
Appendix:
Somchen Co. Ltd.'s Uniform Invoice Number: 84115272