He Yi Hang violates the Fair Trade Law by placing false advertisements on its website

Case:

He Yi Hang violates the Fair Trade Law by placing false advertisements on its website

Key Words:

He Yi Hang, agent, Internet, false advertisements, alloy welding rods

Reference:

Fair Trade Commission Decision of June 10, 2004 (the 657th Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 093060

Industry:

Wholesale of Metal Building Materials (4516)

Relevant Laws:

Article 21 of the Fair Trade Law

1. The Fu Li Kang Co., Ltd. filed a complaint of this violation by letter. The gist of the letter is: While that company was the general agent in Taiwan for the Magna maintenance welding alloy of the Wan Neng Industrial Co., Ltd. (hereinafter called "Wan Neng Industrial"), He Yi Hang (the respondent) and Chi Chung Trading Co., Ltd. (hereinafter called "Chi Chung Trading" claimed on their websites to be the general agents for Magna alloy welding rods. Since Wan Neng Industrial's Magna product is well-recognized, the foregoing claim of agency obtained customer interest by deceit, giving He Yi Hang the opportunity to sell the customers low-price dumped Ostler brand welding rod products represented by its subsidiary Chi Chung Trading. While Wan Neng Industrial subsequently terminated He Yi Hang's agency and distribution rights for the Taoyuan/Hsinchu/Miaoli area of Taiwan, it still continues to post false advertisements on its website in an attempt to deceive customers, which is a suspected violation of the Fair Trade Law (FTL).
2. Findings of the Fair Trade Commission (FTC) after investigation:
   The respondent and Chi Chung Trading are two independent profit-seeking enterprises, and have no relationship with Wan Neng Industrial. However, the respondent was formerly Wan Neng Industrial's agent and distributor for the Taoyuan/Hsinchu/Miaoli area, and was sales agent for Magna welding rods. The complainant's sales area consists of Taipei and Ilan. Wan Neng Industrial unilaterally terminated He Yi Hang's contract in 2002. The respondent published the news that it was a sales agent for Wan Neng Industrial's Magna welding rods starting on July 21, 2001 (while still under contract), and later failed to delete the words "general agent" through negligent management. He Yi Hang immediately revised its website after being notified by the FTC, and deleted the words "general agent." The foregoing website is produced and maintained by the company itself, which has not commissioned any other company to perform the work
3. Grounds for disposition:
   1. With regard to the respondent's publication of false advertisements on the Internet, according to the photocopy of an online advertisement provided by the complainant reads "He Yi Hang Magna welding rods... General agent: He Yi Hang...The most recent date of updating is 11:39:01 8/21/2003." It had been discovered that the respondent and Wan Neng Industrial signed an agreement on November 30, 1996 making the respondent as Wan Neng Industrial's distributor for Taiwan's Taoyuan, Hsinchu, and Miaoli counties. Although Wan Neng Industrial subsequently terminated the two companies' cooperative relationship on January 10, 2002 due to sales and ordering problems, the respondent still continued to claim on its website to be Wan Neng Industrial's general agent as of August 21, 2003. While the respondent revised the wording of its online advertising upon receiving the FTC's notification, its website no longer actively informed customers [of its former relationship], and the number of website visitors was very small, and so on, the fact that the respondent had continued to state online that it was Wan Neng Industrial's general agent when in fact it possessed no such qualifications led customers to wrongly assume that the respondent was indeed Wan Neng Industrial's general agent. All false or misleading representations concerning the content of provided products were thus deemed to be violations of Article 21 (1) of the FTL.
   2. As for the complainant's statement that the respondent claimed to be general agent for Wan Neng Industrial's highly-recognized product to deceitfully attract customers, giving it the opportunity to sell the customers low-price dumped Ostler brand welding rod products represented by its subsidiary Chi Chung Trading, and so forth, no concrete evidence and grounds for judging that He Yi Hang violates the related Article of the FTL.

Appendix:
He Yi Hang's Uniform Invoice Number: 36418971
Summarized by Lin, Yu-Ching; Supervised by Wu, Ting-Hung