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:
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.
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.
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.
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.
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