Alleged violation of the Fair Trade Law by Tong-Fu Jewelry Shop for failing to sufficiently disclose the method of price calculation; alleged violation of the Fair Trade Law by Taipei Jewelers' Association for fixing the method of price calculation
Chinese Taipei
Case:
Alleged violation of the Fair Trade Law by Tong-Fu Jewelry Shop for failing to sufficiently disclose the method of price calculation; alleged violation of the Fair Trade Law by Taipei Jewelers' Association for fixing the method of price calculation.
Key Words:
published price, service charge
Reference:
Fair Trade Commission Decision of October 14, 1998 (362nd Commission Meeting); Dispositions Ref. (87) Kung Yi Tzu No. 8704305-006 and 007
Industry:
Retail Sales of Jewelry and Precious Metal (5470)
Relevant Laws:
Summary:
1. According to the complaint, the complainant purchased jewelry from Tong-Fu Jewelry Shop (Tong-Fu) by credit card and was charged the amount more than what the complainant had initially been informed of by the clerk. On inquiry, the clerk admitted that a 3% service charge was added to payments by credit card. Both the price for payments by credit card and the added service charge were recommended by the Taipei Jewelers' Association (TJA).
2. After conducting on-site visits and interviews, the Fair Trade Commission (FTC) found that the TJA publishes the price ceiling and floor on a daily basis but does not require price discrimination between payments by credit card and those by cash. Nor does the TJA require a service charge be added to payment by credit card. Since payments by credit card involve taxation and service charge on jewelers, on cost considerations, jewelers individually would offer lower prices to customers who pay cash. For those who pay by credit card, the price ceiling as was published by the TJA alone, or plus an added service charge, will apply. (Tong-Fu said it does not collect a service charge.) According to the TJA, the daily-published price information are determined on the basis of the international price and data from the Central Trust of China, taken into account the exchange rate and the conditions of market supply and demand. The purpose of publishing the price information is to provide jewelers and consumers references regarding the objective and reasonable price floor for purchases and price ceiling for sales. They also serve as references to the investigation on prices by the government and the courts. For thinly capitalized jewelers, moreover, the publication is a convenient source of price information. Despite that the TJA expects its members to transact within a reasonable price range, the TJA does not and has no power to mandate the method for price calculation. How the price will be determined or whether a service charge will be added is subject to the jewelers?discretion based on the reasonable considerations of their operation costs. As long as the prices are acceptable to the customers, the TJA does not intervene with their pricing policy.
3. The Fair Trade Commission (FTC) found that although Tong-Fu did not explain to the complainant that the price was determined by Tong-Fu, the clerk did disclose beforehand that payments by credit card would be price discriminated. Therefore, even if the complainant misinterpreted the price discrimination scheme between payments by credit card and by cash as was required by the TJA, it would not affect his knowledge about the real price. In addition, due to the difference between both parties' conception of the price calculation, the complainant misinterpreted the service charge as additional surcharge to the total price. Therefore, the FTC does not have ground to find Tong-Fu having the intention to conceal the service charge. Based on the findings of the investigation, the TJA has not strictly required its members to abide by the prices it publishes. Nor does it prohibit its members from negotiating prices with their trading counterparts. Therefore, the FTC does not find the TJA's daily price publication as concerted action. However, the FTC has addressed a letter to the TJA advising it that once the practice of daily price publication gains the potential of restricting market price from functioning, it must apply for approval. The TJA is also aware of that the FTC will closely supervised the matter.
Summarized by Lin, Hsing-Wen
Supervised by Hu, Kuang-Yu