Ta Ting Mei Construction and Development Corp. violated the Fair Trade Law for its fasle advertisement on the “Hsinchu Town Houses”

Chinese Taipei


Case:

Ta Ting Mei Construction and Development Corp. violated the Fair Trade Law for its fasle advertisement on the “Hsinchu Town Houses”

Key Word:

Ta Ting Mei; underground commercial complex; false advertisements

Reference:

Fair Trade Commission Decision of March 3, 1999 (the 382nd Commission Meeting); Disposition (88) Kung Ch’ u Tzu No. 028

Industry:

Real Estate Purchase and Sale (6811)

Relevant Law:

Article 21 of the Fair Trade Law

Summary:

  1. According to the complaining letters sent to the Fair Trade Commission (this Commission), the advertisements published by Ta Ting Mei Construction and Development Corp. (hereafter referred to as the“ disposed party” ) for the sale of its “ Hsinchu Town Houses” were false for the following reasons:

    The advertisement stated that high-resolution color video cameras would be installed at the entrance to the community, the swimming pool, the central garden, and the entrance to each building; however, only black-and-white cameras were installed instead. The number of camera installed was also inconsistent with what had been stated in the advertisement.

    Intelligent-function computer systems were not installed in the administration center as indicated in the advertisement. Neither had the infrared detectors and wide-angle monitors to guard against intrusion been installed on the walls surrounding the community.

    The incoming mail indication system was not installed in some of the apartments. Infrared auto-sensing lighting systems were also not installed in the corridors leading to the elevators at each floor.

    Anti-intrusion devices were not installed on the covers of the upper and lower water reservoirs.

    Standard badminton courts, tennis courts, in-door golf training facilities, and garbage disposal facilities were not built in accordance with the advertising.

    A family video and karaoke center, reading room, community guard house, and visitors’ lounge were merely empty rooms or open spaces, which were significantly different from what had been stated in the advertisement.

    The business entities did not receive proper assistance on how to operate their businesses and was therefore unable to provide necessary services to the community residents.

    The code of conduct for the residents was not strictly enforced, resulting in many illegally-built structures in the community.

    The electronic bulletin board system of the community was not set up.

    The B1 basement parking space, numbers 45 to 123, had been converted by the disposed party into its own metal-structured office space.

    The floor area of each resident unit was several pings less than the initially contracted floor area.

    The advertisement and contract stated that a central garden would be built for the common use of the residents in the community; but the central garden and leisure garden was open to non-residents of the community and was indeed an “open space” lacking any privacy.

  2. In accordance with Article 21 of the Fair Trade Law (the Law), “ enterprises shall not, on a product, in connection with the advertising of the product, or in any other way that is communicated to the public, make or use false or misleading presentations or symbols as to price, quantity, quality, content, production process, production date, validity period, method of use, uses, place of origin, manufacturer, place of manufacture, processor, or place of processing.” Any enterprise engaged in any of the aforementioned acts shall be punished in accordance with Article 41 of the Law.

  3. With respect to the failure to provide proper assistance to business entities, investigation showed that the advertisement in question stated that “ assistance will be provided to high-quality business entities to operate in the basement commercial complex supermarkets, beauty parlors, laundry shops, video rental stores, fine restaurants, drug stores, nursery and so on to meet the needs of the residents in the community.” Therefore, the availability of everyday convenience it provided is what attracted the consumers to purchase the housing facilities. However, the basement commercial complex was still empty, and there were no business entities providing the aforementioned services. Although investigation showed that the basement could still be used as a commercial complex but, as was claimed by the disposed party, was too remotely located to attract any business entity, yet upon request by the Fair Trade Commission (the Commission) and through telephone contact with its staffs to provide a list of the business it had contacted and evidence such as correspondence and draft agreements during the contact process, the disposed party asserted that no such materials were available. The Commission had also repeatedly inquired by letter the disposed party’s willingness to provide the assistance to businesses entity to operate in the basement complex, and requested the disposed party to forward the relevant working plans and timetables; but despite its express interest in providing the said assistance, the disposed party was unable to present any information in this regard.

    When the housing project was launched, the disposed party was already aware that the facility was remotely located. Thus, the disposed party should have taken this fact into consideration when negotiating for businesses entities to operate in the basement complex. Yet the disposed party made the aforementioned statement in the advertisement anyway. In addition, the disposed party offered no evidence to demonstrate that it had actively attempted to solve this problem five years after it obtained the use permit for the housing facilities in April 1994. Its intention to publish the false advertisement is obvious and its acts had violated Article 21(1) of the Law.

  4. With respect to the rest of the complaints, it was difficult to determine that they have violated Article 21(1) of the Law:

    The Hsinchu district prosecutor had conducted an on-site investigation on the dispute regarding the failure to install the high-resolution color video recorder, intelligent computer system, infrared installations to guard against intrusion, wide-angle monitor, and community electronic bulletin board. The results showed that the installations were completed, thus there were no false or misleading acts.

    With respect to the dispute that some apartments did not have incoming mail indication systems in their mailboxes, investigation showed that the housing facilities were sold in two forms: the pre-sold units and the completed units. The incoming mail indication systems were installed in the pre-sold units, which was consistent with the advertisement. Although the completed units did not have incoming mail indication systems, the consumer’ s purchasing decision was based on the then prevailing conditions of the units. Thus, it was difficult to hold the advertisement to be false or misleading.

    With respect to the dispute regarding the failure to install the auto-sensing lighting systems at the elevators and the anti-intrusion devices on the covers of the water reservoirs, investigation showed that the aforementioned devices were inspected and turned over to the residents’ management committee. Since the devices were already under the disposition of the committee, it was difficult to determine that there were false or misleading acts.

    With respect to the dispute regarding the failure to install the badminton courts, tennis courts, in-door golf training facility, and garbage disposal facilities, investigation conducted by the Hsinchu district prosecutor indicated that the badminton courts, tennis courts, and garbage disposal facilities were indeed built. Although the in-door golf training facility was re-constructed into an indoor swimming pool, yet the value of the indoor swimming pool was much higher than that of the golf facility. The residents’ rights and interests were not sacrificed. Thus it was difficult to determine that there were false or misleading acts.

    With respect to the complaint regarding the family video and karaoke center, reading room, community guard house, and visitors’ lounge, investigation showed that although the advertisement did state that a family video and karaoke center, reading room, community guard house, and visitors’ lounge were planned, the advertisement did not promise that they would be provided. In addition, the disposed party had offered space for the residents’ management committee to build the facilities for such activities by using the management fee collected from the residents. The function provided by those facilities could be equivalently served through such an arrangement. Thus it was difficult to determine that there were false or misleading acts.

    With respect to the failure to strictly enforce the residents’ code of conduct, investigation showed that since the residents had organized a residents’ management committee, it is the committee’s responsibility to enforce the code. Therefore, it was difficult to determine that there were false or misleading acts.

    With respect to the dispute regarding the basement parking spaces, investigation showed that numbers 45 to 123 were initially designed to be used as parking spaces. Although a previous application had been filed to change the use of the spaces as office space, a subsequent application was later filed to restore its original use. An on-site investigation conducted by the Hsinchu district court prosecutor showed that the disposed party had already removed the metal structures in the basement, and thereby restored its use as parking spaces. Thus there were no false or misleading acts.

    With respect to the dispute regarding the shortage in floor area, investigation showed that the advertisement in question used non-legal terms such as “ usage area in pings” and “ common area in pings” to denote the floor area and had thereby misled the trading counterparts. However, this is a problem common to companies in the construction industry. To provide supervision and guidance, the Commission issued an industry corrective program on August 17, 1994 to supervise the industry to undertake corrective measures starting November 1, 1994. Investigation showed that the advertisement was published between 1991 and 1993, prior to the implementation of the corrective program. Thus it was difficult to determine that the act had violated the Law.

    With respect to the dispute regarding the central garden’s being used as an open space, investigation showed that the open space in question was constructed in accordance with the “ Guidelines to Encourage the General Design of Sites without Floor Area Restrictions” issued by the Construction and Planning Administration, Ministry of Interior. The Guidelines were in nature encouraging measures issued to construction companies based on the consideration by the competent authority to accomplish a certain public-interest policies. Any effect on consumers or the general public from the implementation of the Guidelines would be only incidental. Therefore, unless the construction company had unequivocally stated in the advertisement that the open spaces would be for the sole use of residents, which in turn had misled the consumers to believe that the open spaces were part of the housing facility it had purchased, or were for their private use only, the mere failure to disclose the information on the design of the open spaces would not constitute misleading advertisement that would have violated the Law.

  5. In conclusion, the disposed party had made false and misleading representations with respect to the basement commercial complex, and violated Article 21(1) of the Law.

 

Summarized by Chen, Pin-chiu

Supervised by Pai, Yu-chuang

 

Appendix:

Ta Ting Mei Construction and Development Corp.’s Uniform Invoice Number: 30840038

 


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