Taiyen Biotech Co., Ltd.

765th Commissioners' Meeting (2006)

Case:

Taiyen Biotech Co., Ltd. was complained for violating Article 22 of the Fair Trade Law by stating and disseminating untrue statements sufficient to damage the business reputation of another

Key Words:

table salt, industrial salt, business reputation, counterfeit

Reference:

Fair Trade Commission Decision of July 6, 2006 (the 765th Commissioners' Meeting); Disposition (95) Kung Ch'u Tzu No. 095105

Industry:

Table salt Manufacturing (0872)

Relevant Laws:

Article 22 of the Fair Trade Law

1. This case originated from a complaint letter submitted by Chuan Yi Enterprise Co., Ltd. (hereinafter called the “Complainant”) complaining that:
   After the Rules of Salt Affairs were abolished on January 20, 2004 and table salt and industrial salt fully open for importation, the Complainant has been importing salt from Mainland China which can be proved by the import declaration sheet, imported food inspection certificate and the approval of random inspection conducted by the Department of Health. However, Taiyen Biotech Co., Ltd. (hereinafter called the “Respondent”) disseminated untrue statements at the press conference held on May 14, 2004. During the said press conference, the Respondent stated that counterfeits of Taiyen's salt products, worth only NT$15, had been discovered in the market. The Respondent had found said counterfeits at many supermarkets and outlets in Taipei, Kaohsiung, etc. since April 2004 and many of these counterfeits were industrial salt imported from China and Southeast Asia countries. It was stated by the Respondent that these products counterfeited Respondent's packaging and trademark and had chemical anti-caking agents added with excess copper, cadmium and mercury. On May 15, 2004, the China Times reported on its newspaper, section A10, with a headline “Good Grief! Industrial Salt Packaged to Counterfeit Taiyen Products,” “Mostly From China & Southeast Asia With Less Clarity and Anti-Caking Agents Added Excess Chemical MetalsLong-Term Usage Will Cause Danger To Citizens' Health,” and a subheading “Taiyen Criticizes CounterfeitsChuan Yi Steps Up.” Additionally, the news reported by Ettoday News can also serve as proof. After the Respondent disseminated the said untrue information, the Complainant's table salt took a dramatic fall in sales and was returned by consumers. Moreover, the Respondent held and displayed Complainant's product during the aforementioned press conference for the press to take photos and publish the same on the newspapers distributed to the public. The Respondent's acts led Complainant's trading counterparts to cease or terminate trade with Complainant and blocked any possible trading relations. Such acts might constitute a violation of Article 22 of the Fair Trade Law.
2. Grounds for disposition:
1. Article 22 of the Fair Trade Law provides that “no enterprise shall, for the purpose of competition, make or disseminate any false statement that is able to damage the business reputation of another.” Based on the said provision, the requirements shall be that an enterprise engages in “making or disseminating any false statement” for “the purpose of competition,” and that such a statement shall “be able to damage the business reputation of another enterprise.” Therefore, in the event that an enterprise makes or disseminates a false statement by holding a press conference and that such a statement is able to damage the business reputation of another, such an act of this enterprise should constitute a violation of the aforesaid provision.
2. Was the press conference held for “the purpose of competition”
   Both parties of the case are the sellers of table salt and compete in the same domestic market. Therefore, both parties shall have a competitive relationship. It was found that the Respondent collected table salt sold in the market by the Complainant and other companies for tests and employed the test result to hold a press conference called “Feeling Safe in Using Salt” on May 14, 2004 participated by Respondent's president Pao Ching Cheng, General Manager, Yun An Chiou, Director of Miaoli Tongshiao Salt Factory, Wu Long Lin, etc. During the said press conference, the Respondent displayed other competitors' products (including Complainant's) and its test result to the press and made its comments. It was also found that in the “quality comparison table of commercially available salt products” provided by the Respondent at the press conference, the Respondent compared its product, Taiyen Salt, with the competing product imported from Southeast Asia and China. Additionally, the Respondent labeled its product to be “completely qualified with national sanitation standard for table salt,” while the other six competing products were “disqualified.” Furthermore, the news article released by the Respondent said, “after the Rules of Salt Affairs were abolished, a lot of industrial salt or table salt products imported from India, Thailand or China can be often seen in the market, most of which are disqualified with the CNS' sanitation standard or Health Department's safety regulations for table salt and have far lower quality than Taiyen's products. Consumers should select Taiyen's salt products which are safe and liable and should not choose money over their health!” Upon the facts stated above, it can be found that the Respondent purposely compared its own product with others and provided a chart with information only in favor of the Respondent to emphasize its superiority and devalue other competitors' products or imply their poor quality. Therefore, it is certain that the press conference was held for the purpose of competition.
3. Did the Respondent hold the press conference to “make or disseminate false statements”

It was found that the quality comparison table of commercially available salt products prepared by the Respondent was insufficient to prove whether the Complainant's salt product contained excess heavy metals, or sodium ferroyanide, or insufficient potassium iodate or excess water insoluble substances or insufficient sodium chloride and was disqualified with the “Table Salt Sanitization Standard” as claimed by the Respondent. Furthermore, the Respondent alleged that Complainant's salt product was imported from China with a lower than normal price and should therefore be industrial salt. However, according to the professional opinions provided by the Department of Health, based on the Food Sanitation and Management Law, table salt shall conform to the sanitation standard for table salt, and that food additives shall conform to the Scope and Application Standards of Food Additives set by the Department of Health. Furthermore, imported table salt shall also conform to the aforementioned regulations and could only be imported when it was tested and found to conform to the relevant regulations on food sanitation by the Bureau of Standards, Metrology and Inspection, Ministry of Economic Affairs, commissioned by the Department of Health. Thus, based upon the import declaration sheet, imported food inspection certificate and import information from January to May 2004 provided by the Bureau of Foreign Trade, Ministry of Economic Affairs, it can be proved that the table salt imported by the Complainant met all the abovementioned requirements. Moreover, according to the random inspection enforced by the Department of Health on the six table salt products sold in the market in 2004 (including Complainant's salt product), the inspection result did not show any disqualification. Therefore, the Respondent did not possess any specific evidence to support its statement saying that the Complainant substituted table salt with industrial salt. In addition, neither did the Respondent obtain any court decision or authentication report by any accredited institution to support the infringement of trademark claimed by the Respondent, nor properly exercise its rights to the trademark. Without any supporting evidence, the Respondent accused other enterprise of counterfeiting its trademark and displayed the products of the Complainant and other enterprises for the press to take photos. By doing so, the Respondent had disseminated false statements about the counterfeit. Based on the aforesaid facts, the table salt imported by the Complainant in accordance with relevant laws and regulations is not as disqualified with the “CNS' sanitation standard or Health Department's safety regulations” as claimed by the Respondent, or replaced with industrial salt or counterfeiting Respondent's product. On the other hand, the aforesaid facts also prove that the Respondent did “make or disseminate false statements.”

4. Did the statement made or disseminated by the Respondent during the press conference “damage the business reputation of another enterprise”
   In light of the significant impact of the quality of table salt on human health, if the salt product sold in the market had had the negative effects as claimed by the Respondent during its press conference, general consumers would have had serious distrust with these products. Moreover, the Respondent has been in the leading position in the domestic market. With its exclusive professional image and goodwill, its false statement made and disseminated at the press conference “Feeling Safe in Using Salt” could have respectably high influence on the general public. Therefore, once the public had known of the negative information about the salt products imported from China and Southeast Asia (including Complainant's salt product) provided by the Respondent, objectively, the general public or trading counterparts would depreciate Complainant's business or have distrust against the Complainant and furthermore refuse to trade or decrease the possibility of trade with the Complainant. Thus, based upon the aforesaid facts, the Respondent's acts are able to damage the Complainant's business reputation.
5. In conclusion, the Respondent hereof had violated Article 22 of the Fair Trade Law by making or disseminating a false statement that was able to damage the business reputation of another for the purpose of competition through hosting a press conference. The FTC therefore imposed an administrative fine of NT$780,000 on the Respondent.

Appendix:
Taiyen Biotech Co., Ltd.'s Uniform Invoice Number: 89397503