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:
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.
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.
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.
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