Pao-Tian-Hao Real Estate Agency

768th Commissioners' Meeting (2006)

Case:

Pao-Tian-Hao Real Estate Agency engaged in deceptive conducts sufficient to affect trading order by concealing the fact that a buyer had signed a “Negotiation Fee Receipt” and paid NT$300,000 during the transaction

Key Words:

real estate agency, negotiation fee, advantageous position in information

Reference:

Fair Trade Commission Decision of July 27, 2006 (the 768th Commissioners' Meeting); Disposition (95) Kung Ch'u Tzu No. 095119

Industry:

Real Estate Agencies (6612)

Relevant Laws:

Article 24 of the Fair Trade Law

1. This case originated from a complaint letter filed by the public saying that Pao-Tian-Hao Real Estate Agency (hereinafter called “Pao-Tian-Hao”) violated the Fair Trade Law by concealing relevant trading information regarding the sales of 3 adjacent plats of land.
2. Findings of FTC after investigation:

   After Pao-Tian-Hao entered into a “Commission Agreement of Real Estate Agent” with the complainant on November 29, 2004, it already knew that the sales price for the plats numbered 481 and 482-1 was NT$18.6 million. On December 9, 2004, a potential buyer, Mr. Tang, expressed his willingness to pay NT$85,000 for every 36 square feet (equal to “1 ping” in Chinese language), in a total of NT$24 million. On the same day, Mr. Tang signed a “Negotiation Fee Receipt” and gave NT$300,000 as the negotiation fee to commission Pao-Tian-Hao to negotiate the sales price with the seller (namely the complainant). At this point, Pao-Tian-Hao possessed information regarding the offers of both parties to the sales and the fact that the potential buyer was offering NT$5.4 million more than the sales price. On January 2, 2005, Pao-Tian-Hao additionally entered another Commission Agreement of Real Estate Agent with the complainant in regards to the plats numbered 481, 482 and 482-1, in a total sales amount of NT$27.6 million. According to the amount of said sales price less the buyer's offer of NT$24 million, the worth of plat 482 was only NT$3.6 million, which was NT$7.7 million less than the original sales price. It is obvious that Pao-Tian-Hao failed to perform its service and act as a truthful intermediary between both parties to the trade and violated the general trading conventions. Moreover, had the complainant known of the offer provided by the buyer, Mr. Tang, that was NT$5.4 million more than the sales price, the complainant would have never entered another Commission Agreement of Real Estate Agent to sell 3 plats of land for only NT$27.6 million. Although Pao-Tian-Hao claimed that it did inform the complainant of the fact that Mr. Tang signed a Negotiation Fee Receipt on the phone, and that because the leasing liability was left unsolved, it was designated upon both parties' consent to act as the responsible party for the lease affairs, it was found that the complainant only knew about the said Negotiation Fee Receipt and obtained the same from Mr. Tang few months after both parties signed the Real Estate Sales Contract. Pao-Tian-Hao never provided aforesaid information to the complainant. Additionally, the sales price paid by the buyer, Mr. Tang, was close to the offer stated on such a Receipt. Therefore, according to the existing evidence, it is certain that Pao-Tian-Hao concealed the fact that the buyer, Mr. Tang, had already offered a price and signed a Negotiation Fee Receipt.

3. Grounds for disposition:
1. Based upon the investigation results, Pao-Tian-Hao exploited its advantageous position in information to employ deceptive measures to conceal the fact that a potential buyer had signed a Negotiation Fee Receipt and paid NT$300,000 from the complainant during the trade. Such an act is surely against real estate agencies' business rules of disclosing information and providing truthful services, as well as their business ethics. Pao-Tian-Hao violated Article 24 of the Fair Trade Law by engaging in deceptive conducts able to affect trading order.
2. Taking into consideration the motivation, purpose, and expected improper benefit of the unlawful acts of Pao-Tian-Hao; the degree and duration of the acts' harm to trading 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 and remorse shown for the act and attitude of cooperation in the investigation, the FTC ordered Pao-Tian-Hao to immediately cease these unlawful acts and imposed an administrative fine of NT$500,000 in accordance with the fore part of Article 41 of the Fair Trade Law.

Appendix:
Pao-Tian-Hao Real Estate Agency's Uniform Invoice Number: 16682446

Summarized by Taur, Rong; Supervised by Chen, Yuhn-Shan