Taiwan Paging Network Inc. violated the Fair Trade Law for unilaterally raising the price of the “One-Dollar Paging Services”

Chinese Taipei


Case:

Taiwan Paging Network Inc. violated the Fair Trade Law for unilaterally raising the price of the “One-Dollar Paging Services”

Key Word:

unilaterally raise prices, abuse of advantageous position, transfer of non-profitability, low price sales promotions

Reference:

Fair Trade Commission Decision of May 26, 1999 (the 394th Commission Meeting); Disposition (88) Kung Chu Tzu No. 057

Industry:

Telecommunications Industry (6320)

Relevant Law:

Article 24 and the fore-part of Article 41of the Fair Trade Law

Summary:

  1. Taiwan Paging Network Inc. launched a “ One-Dollar Paging Services” promotional campaign in March 1988. For NT$1 and an NT$1,500 deposit (returnable without interest after 18 months of continuous use) and by purchasing the company’ s pager and by choosing an NT$100 monthly rental fee, consumers enjoyed five “ intelligent full coverage services” including voice registration roaming, paging record mailbox, password paging, email paging display, and two-way “ meet me” conversation.

    Taiwan Paging Network claimed that its store outlets used the wrong application forms and that the “ One-Dollar Paging Services” campaign in fact did not include the “ intelligent full coverage services” covered by the NT$100 monthly rental fee. Citing the aforementioned reasons and without the consumers’ agreement, the company unilaterally raised the monthly rental fee to NT$250 and this was notified through payment notices for the months of June and July mailed out in July 1998.

    After repeated complaints from the consumers, Taiwan Paging Network offered a solution to which it hoped the consumers would agree. In the proposal, the selected range of services and the amount of monthly rental fee would be valid until December 31, 1988. Beginning on January 1, 1999, the consumers would select again their preferred type of services from the range of services available at the time, and pay the corresponding service fees. The deposit would be returned after 18 months of accumulative use from the time that the old contract was signed.

  2. Taiwan Paging Network’ s main business operation was to provide paging services. The company enjoyed advantages over the consumers in terms of legal knowledge, technology, people, and finances. It also had control over an important medium of contact, the paging services, as well as an NT$1500 deposit from each consumer. Since the consumers disputing with the company were spread throughout the island, contact between them was difficult. They could not unite to ask for fair treatment from the company so the company was able to deal separately with each consumer.

    In advocating its rights, the company had more legal knowledge and resources than the consumers. In dealing with consumer complaints, the company made use of its advantages in deposits, contact numbers, legal knowledge, people, finances and professional knowledge. The company refused to provide the services that were initially agreed upon according to the original monthly fee, forcing the consumers to face the risk of services being disrupted and the deposit being difficult to collect. Consumers that disagreed with the monthly fee increase also had to bear the costs of advocating their rights. This constituted the said abuse advantageous position.

  3. Taiwan Paging Network admitted that its store outlets used the wrong application forms, resulting in the incident. Furthermore, with regard to the conclusion of the service agreement, as the store outlets were its agents, the company, in accordance with business ethics, should not use its own oversight as an excuse to transfer a burden of non-profitability to trading counterparts. The “ One-Dollar Paging Services” offered by Taiwan Paging Network was a promotional campaign to attract a large number of customers through low prices; it had a significant impact on market competition. After attracting and signing contracts with the customers, it did not bear the costs arising from the negligence of its store outlets, and continued to use its advantageous position to transfer the burden of non-profitability to consumers through a price increase. It also failed to provide reasonable alternatives. The acts impede efficiency competition should be deemed as patently unlawful acts capable of affecting trading order, and violated Article 24 of Fair Trade Law.

  4. Pursuant to the fore part of Article 41 of the Fair Trade Law, the Fair Trade Commission ordered Taiwan Paging Network Inc., beginning on the date of the receipt of the Disposition, to discontinue the said act of unilaterally raising prices. In addition, within one month from the day after the Disposition is received, the company shall restore the original agreed upon service fees to the consumers whose fees were unilaterally raised by the company; or upon the consent of the consumers, the company shall provide alternative programs of similar value.

Summarized by Wang, Li-ta

Supervised by Wu, Ting-hung

 

Appendix:

Taiwan Paging Network Inc.’s Uniform Invoice Number: 16084477


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