Gas Disaster Prevention Association was complained for selling commodities under the disguise of public interest group in violation of the Fair Trade Law

Chinese Taipei

Case:

Gas Disaster Prevention Association was complained for selling commodities under the disguise of public interest group in violation of the Fair Trade Law

Key Words:

deception; obviously unfair (unconscionable) conduct, associated industrial organization

Reference:

Fair Trade Commission Decision of June 22, 1994 (the 141st Commission Meeting); Disposition of (83) Kung Chu Tse 077

Industry:

Other Industrial Products Manufacturing Industry not within the scope of other categories (3999)

Relevant Law:

Article 24 of the Fair Trade Law

Summary:

1. The Fair Trade Commission (FTC) received a complaint from a citizen alleging that the Gas Disaster Prevention Association (hereinafter referred to as the "GDPA) is conducting sale of commodities under the disguise of a public interest organization.

2. In the present case, the GDPA was incorporated in 1990 by its promoter Mr. Jung Chao Chuang, the Vice President and also the de facto responsible person of Xin Pin Corporation, and was subsequently registered with the Ministry of the Interior in February 1991. According to the Articles of Association of GDPA, it is a non-profit organization (as defined in Article 1 thereof) with objectives to eliminate gas disasters and accidents, to safeguard the stability of society, as well as to minimize the loss and/or harm to the life and property of nationals (as stipulated in Article 3 thereof). As stated by Mr. Jung Chao Chuang, the Chairman of the Board of the GDPA, the number of gas appliance traders admitted as members of the GDPA is no more than one third of the total number of members of the GDPA. In fact, there are only six companies in Taiwan area engaged in gas appliances business, i.e. the business of manufacturing and supplying conventional gas pressure regulator with an overflow cut-off device, or added with a leak indicator and a timer. Among these six companies, only three of them, namely Xin-Pin, Min-An Corporation and Dynasty Corporation, posses significant market power. According to the statements of certain individual members of the Min-An system, such as Tzun Hua Chen (of Min-An Company), Chung Sheng Chao (of Li-Pei Company) and Lung Hsio Chou (of Li-Pei) and the group member, Jian-Bin Company, none of them participated in establishment of the GDPA, nor joined in the GDPA. In addition, the Dynasty system neither joined the GDPA nor participated in any activities held by he GDPAS. Mr. Jung Chao Chuant, the promoter and the present Chairman of the Board of the GDPA, and concurrently the Vice President and the de facto Responsible Person of Xin-Pin (he is the son-in law of the President), has the authority to represent the Xin-Pin in case that President is unable to perform his duties (as provided for in Article 208:3 of the Company Law). Although the efforts of GDPA in promoting the gas disaster prevention concept is helpful to the public, it is also known that after the promotion activities, the GDPA always asks the audience to complete a questionnaire which includes an appendix printed with the statement "The undersigned hereby appoints the GDPA to apply, on behalf of the undersigned, for the following gas disaster prevention equipments.", and subsequently passes all such appendixes completed by the audience to the manufacturers and/or suppliers of such appliances. By doing so, Xin-Pin is taking the advantage of the dual status as its Vice Chairman of the Board of Directors serving also as the Chairman of the Board of the GDPA for the purpose of transferring the information obtained in the course of gas disaster prevention publicizing activities to the distributors of its own company. For the trading counterparts, the Xin-Pin is causing, by misleading other persons through deception or hiding important facts, its trading counterparts to do business with itself. This marketing practice of Xin-Pin is despendently conducted on the public education activities for disaster prevention sponsored by a public interest organization, with result of causing consumers to trust product of Xin-Pin. Such practice constituted an obviously unfair act to other competitors following the rules of fair competition, and thus violated Article 24 of the Fair Trade Law.

Summarized by Chuang, Chieh Huang
Supervised by Yu, Su Su

＄: For information of translation, click here

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