ShopNet Co., Ltd. and Shuan Cheng Enterprises Ltd.

Case:

Key Words:

advertiser, testing report, sales revenue

Reference:

Fair Trade Commission Decision of November 16, 2006 (the 784th Commissioners' Meeting); Disposition (95) Kung Ch’u Tzu No. 095154

Industry:

Electronic Shopping and Mail-Order Houses (4871)

Relevant Laws:

Article 21(1) of the Fair Trade Law

Summary:

1. This case originated from a complaint filed by the public stating that on May 11, 2006, VIVA Shopping Channel claimed that the product "Electricity Saving Warrior" sold by this channel had "20% to 30% savings in electricity." However, said electricity saver should only be a capacitor (power compensator). The advertisement might be exaggerated. The FTC therefore initiated an investigation to follow up the case.
2. Advertiser of this case:
   It was found that ShopNet Co., Ltd. (hereinafter called "ShopNet") was the operator of VIVA Shopping Channel, and Shuan Cheng Enterprises Ltd. (hereinafter called "Shuan Cheng") was the supplier of the aforementioned product, "Electricity Saving Warrior." According to the production and review of the advertisement in question, the allocation of revenues, overall transaction and invoicing procedure between ShopNet and Shuan Cheng, said companies shared a cooperative relation in terms of the sales and advertisement production of the product, "Electricity Saving Warrior." Also, due to the marketing effects of said advertisement, both companies increased their own trading opportunities and respectively obtained sales revenues from the product. Therefore, both ShopNet and Shuan Cheng shall be the advertisers of the advertisement in question.
3. As for the effect of "saving 20% to 30% in electricity" claimed in the advertisement of "Electricity Saving Warrior," both ShopNet and Shuan Cheng claimed that the statement was based upon the data contained in the "High Power Saving Testing Report" provided by Taiwan Electric Research and Testing Center. The FTC requested Taiwan Electric Research and Testing Center to comment on the testing report in question. However, said Center stated that page 2 of the testing report in question contained different data from that of the original report provided by the Center. Additionally, after referring to the professional opinions given towards the testing report in question by Taiwan Electric Research and Testing Center, Taiwan Power Company, and the Bureau of Standards, Metrology and Inspection, M.O.E.A., no sufficient evidence was able to prove the effect claimed in the advertisement in question. Furthermore, ShopNet and Shuan Cheng claimed that during the test on the TV program, the test result did show that the product yielded savings of 20% to 30% in electricity and that they did not make any false or untrue statement. However, both Taiwan Electricity Research and Testing Center and Taiwan Power Company stated that the video of the test was not sufficient to prove such effect. Moreover, Taiwan Power Company and the Bureau of Standards, Metrology and Inspection stated that an electricity saver could only yield limited effect and might cause the opposite effect as well. Both ShopNet and Shuan Cheng failed to provide any sufficient evidence to support the claimed electricity saving effect. Thus, based upon the existing evidence, ShopNet and Shuan Cheng shall have made false, untrue and misleading representation in their advertisement in violation of Article 21(1) of the Fair Trade Law.
4. After considering the motivation and purpose of the unlawful act; the business scale; and remorse shown for the act, the FTC ordered ShopNet and Shuan Cheng to immediately cease the unlawful act and imposed an administrative fine of NT$440,000 on ShopNet and NT$270,000 on Shuan Cheng in accordance with the fore part of Article 41 of the Fair Trade Law.

Appendix:
ShopNet Co., Ltd.’s Uniform Invoice Number: 27252350
Shuan Cheng Enterprise Ltd.’s Uniform Invoice Number: 16029236

Summarized by Lin, Yu-Ching; Supervised by Wu, Lieh-Ling