A complaint filed against Tsann Kuen Enterprise Co., Ltd. for making false advertisement of its ViewSonic flat square CRT displays products and violating Article 21, Paragraph 1 of the Fair Trade Law

Chinese Taipei

Case:

A complaint filed against Tsann Kuen Enterprise Co., Ltd. for making false advertisement of its ViewSonic flat square CRT displays products and violating Article 21, Paragraph 1 of the Fair Trade Law

Key Words:

member, price, flier, hypermarket

Reference:

Fair Trade Commission Decision of September 22, 2005 (the 724th Commissioners’ Meeting); Disposition (94) Kung Ch’u Tzu No. 094099

Industry:

Retail Sale of Household Appliance (4641)

Relevant Laws:

Article 21-1 of the Fair Trade Law

Summary:

1. The Fair Trade Commission received an electronic mail from a general public, alleging that Tsann Kuen Enterprise Co., Ltd. (hereinafter referred to as Tsann Kuen Company) has published in its company’s fliers that the member price for a ViewSonic flat square CRT display was NT$ 4,490 for the period between August 26, 2004 and September 13, 2004. However, the complainant has bought the aforementioned product twice, separately on September 5 and September 12 from Tsann Kuen Company Kuang Hua branch in Kaohsiung and the uniform invoices for both purchases show that the products were indeed sold at NT$ 4,880 each. It is obvious that the said advertisement was false.

2. The investigation found that the fliers of Tsann Kuen Company for the period between August 26, 2004 and September 13, 2004 showed that “ViewSonic flat square CRT display”, “Member price 4490”, the advertisement content gave consumers an impression that the member price of the product in this case was NT$ 4,490 each during the promotion. The sales list of the said product revealed that the company has sold 365 displays at the price of NT$ 4,490 each, 177 displays at the price of NT$ 4,880 each (regular price), 16 displays sold at prices below NT$ 4,880 each as a result of clearance, combination sales for promotion and price competition, a total of 558 displays were sold.

3. In addition, the purchase invoices provided by the complainant show that the complainant has not paid the member price NT$ 4,490 for the purchases although the complainant is the member of Tsann Kuen Company. Tsann Kuen Company admitted that this mistake was due to the check out system has not duly corrected the price to NT$ 4,490 and its employees’ unfamiliarity with the operation. The Fair Trade Commission conducted a random investigation on the sales uniform invoices of the said product during the promotion at eighteen retail stores of Tsann Kuen Company. The random investigation has checked 145 sales records and amongst the consumers, 48 sales records are for members of Tsann Kuen Company. However, the prices paid by these members were NT$ 4,880 rather than the member price NT$ 4,490 as published in the fliers. Today, most hypermarkets have used bar code scanners at its checkout counters, including Tsann Kuen Company. It is possible that some consumers have trusted this form of electronic pricing and do not cross-check the uniform invoices. Taking into account the type of consumption in this case, and Tsann Kuen Company relatively has sufficient information to foresee and thus to avoid the dispute at issue, it is deemed that Tsann Kuen indeed should pay more attention to ensure that the prices recognized by the consumers are consistent with the actual checkout prices. If Tsann Kuen Company does not pay attentions to this aspect, many consumers will be overcharged and incur losses because of their unawareness. Since this case involves public welfare, Tsann Kuen Company should not simply shirk its responsibility with the reason of operation negligence and place the responsibility of paying attention to its consumers. Furthermore, the price of a good or service is an important determinant of consumer’s purchase decision. Although Tsann Kuen, out of the 558 sold displays, has sold 365 displays at the advertised price, but there are still many displays sold at prices different from the advertised price. Even though most products were sold at the advertised price, nevertheless, such sales will not affect the conclusion that the aforementioned advertisement is false. Therefore, according to the available evidences, the publication of “ViewSonic flat square CRT displays”, “Member price 4490” in Tsann Kuen Company’s fliers are false or misleading representation, violating the provision of Article 21 of the Fair Trade Law. Taking into consideration the motivation of the unlawful acts of Tsann Kuen Company; the degree of the act’s harm to market order; circumstances of the unlawful act; scale of the enterprise; attitude shown for the unlawful act and other factors, therefore, Tsann Kuen Company is ordered to cease the unlawful acts immediately and a fine of NT$1 million is imposed according to the fore part of Article 41 of the Fair Trade Law.

Summarized by Yu, Fei-Ping;
Supervised by Wu, Lieh-Ling

Appendix:

Tsann Kuen Enterprise Co., Ltd.’s Uniform Invoice Number: 69568009