Huang Hsian Construction Co., Ltd. made false and misleading representation in advertisement of “Huang Hsian Vienna” pre-sale houses and violated the Fair Trade Law

Chinese Taipei

Case:

Key Words:

Pre-sale house, construction, occupancy permit, false and misleading representation

Reference:

Fair Trade Commission Decision of December 29, 2005 (the 738th Commissioners’ Meeting), Disposition Kung Ch’u Tzu No. 094141

Industry:

Buildings Construction (3901)

Relevant Laws:

Article 21 Paragraph 1 of the Fair Trade Law

Summary:

1. A complaint was made against “Huang Hsian Vienna” pre-sale house advertisement, indicating that the plan for first floor has clearly illustrated several common facilities, including aerobic classroom, resting kiosk, gymnasium, meeting room, lounge, corridor, greeting hall, parent-child classroom and children’s playground. However, when the said floor plan was compared to that enclosed by Huang Hsian Company in the application of construction permit 92-Chian-Tzu 186, the said first floor plan was indicated as parking spaces for cars and motorcycles, an illustration very different from that in the advertisement.
2. Upon investigation, the Fair Trade Commission (FTC) found that Huang Hsian Company has obtained occupancy permit on April 12, 2005. However, the photos taken by the FTC during the building site examination and the photos submitted by the said Company in July 2005 after completing of works for first floor have clearly shown no common facilities indicated in the advertisement. The reply letter of Public Works Department of Taipei City Government noted, “With regard to the inquired construction project, this Department has already issued the occupancy permit 94-Shih-Tzu-097. According to its as-built diagrams, the first floor is reserved for parking spaces of cars and motorcycles. In accordance with Article 73 of the Building Code, usage alteration license must be obtained in case of altering the usage of a building. Anyone who violates the aforementioned provision shall be requested to make correction within a specified time limit or make up the administrative requirements according to Article 91 of the same Code. If the usage of the building mentioned is going to be altered in the future, the usage alteration license shall be applied according to the aforementioned provision. This Department shall examine the application according to the relevant building management regulations.” This implies that if the said construction project plans to change the original design of reserving first floor for cars and motorcycles parking spaces into common facilities of the advertisement at issue, a usage alteration must be filed or else the area cannot be used for other purposes. Moreover, Huang Hsian Company expressed clearly that the Company is unable to apply for usage alteration anymore when it presented at the FTC’s explanatory meeting.
3. Grounds of Disposition:
   1. The investigation found that the first floor plan enclosed with the building’s construction permit and occupancy permit (first floor in as-built diagrams) clearly indicated that the first floor is reserved for incentive and statutory cars and motorcycles parking spaces, not for the aerobics classroom and other common facilities stated in the advertisement at issue. Even though the punished attempted to shirk its advertisement responsibility with sales contract and conventions of contract’s enclosures, or made a plea that the aforementioned facilities will be constructed later in phases, but such arguments will not affect the fact that the petitioner has made false and misleading representation as to the content of product in its advertisement. Such conduct has violated Article 21, Paragraph 1 of the Fair Trade Law.
   2. Taken into consideration the motivation, purpose and expected improper benefit of the unlawful acts of Huang Hsian Company; the degree and duration of the act’s harm to market order; benefits derived on account of the unlawful act; scale, operating condition, sales volume and market position of the enterprise; whether or not the type of unlawful act involved in the violation has been the subject of correction or warning by the Central Competent Authority; types of, number of, and intervening time between past violations, and the punishment for such violations; remorse shown for the act and attitude of cooperation in the investigation, and other factors, therefore, Huang Hsian Company is ordered to cease the unlawful acts and a fine of NT$ 6,150,000 is imposed according to the anterior paragraph of Article 41 of the Fair Trade Law.

Summarized by Wu, Hung-Guan;
Supervised by Hsu, Hung-Jen

Appendix:
Huang Hsian Construction Co., Ltd.’s Uniform Invoice Number: 86379024