Taiwan 24hrs Electronic Information Co., Ltd.

Case:

Key Words:

product selling rights, nationwide price comparison, regional agency

Reference:

Fair Trade Commission Decision of November 30, 2006 (the 786th Commissioners' Meeting); Disposition (95) Kung Ch'u Tzu No. 095159

Industry:

Other Information Supply Services Not Elsewhere Classified (6399)

Relevant Laws:

Article 21(1) and Article 21(3) of the Fair Trade Law

Summary:

1. According to the complainant of this case, the complainant paid NT$630,000 in January 2005 to become a regional agent of the electronic commerce website system of Taiwan 24hrs Electronic Information Co., Ltd. (hereinafter called "24hrs"). However, the complainant later on found that 24hrs entirely focused on the recruitment of franchisers instead of the development of products. When 24hrs was initially recruiting, it claimed that it had "thousands of products for selling agents" on the website when it actually had about 170 products only. Moreover, the complainant joined 24hrs due to its system of "regional agency," which was surely contained in the materials for the "Conference on Special Contracted Merchants/Judicial Persons." However, 24hrs later on stated that the system was "assessed to be unfeasible" and was never commenced with regard to the operational stage.
2. Findings of FTC after investigation: In order to widely recruit non-specific franchisers to join its electronic commerce website system, 24hrs stated on its website during 2004 and 2005 that: "(24hrs) has gathered more than ten famous companies and thousands of products for selling agents;" "(24hrs) matches the product selling rights for major companies, such as Synnex, Xander and Kolin;" and "(24hrs) obtained the product selling rights with several major companies, such as Synnex, Xander, Kolin and Jazz Speakers." Based upon the aforesaid contents, 24hrs referred itself as the agent for tens of famous companies, such as Synnex, Xander, Kolin, and Jazz Speakers and obtained the selling rights for thousands of products. However, it was found that the contracts signed between 24hrs and BestCom Infotech Corporation and other 113 enterprises were partially payment commitments and other types of contracts unrelated to the obtainment of product selling rights. No contract of product selling rights signed by 24hrs and Synnex was found. Also, when the aforementioned contents were published on 24hrs' website, the contracts signed between 24hrs and Xander, Kolin and Jazz Speakers had already been expired. Moreover, according to the website overview of the product information, there were only 307 products to be sold. It is obvious that those representations made by 24hrs as mentioned before were false, untrue and misleading.
3. According to the flyer of electronic catalog printed and issued in 2005 by 24hrs, 24hrs employed the trademarks of 56 famous companies including Synnex. 24hrs also marked below the photos that "the above represented are the trademarks of products brands to be sold." However, 24hrs did not have the selling rights from the most of the 56 companies mentioned in the flyer. Even though some contract were signed with several companies, such as Xander, these contracts were already expired. It was also mentioned in said flyer that "as long as you call, we will not only compare 3 companies for prices but nationwide!" and that "regional agency website's profit special contracted merchants' main profit resource comes from the receipt and handling services through service offices." However, according to the product overview, the prices provided by 24hrs were higher than those of other websites and there was no price comparison at all. Through marketing its electronic commerce website system and falsely stating that it had a cooperative relationship with famous companies and that its participants would obtain better prices than other channels, 24hrs attempted to attract non-specific persons to pay a large amount of franchising fees. Though it had no intention and was unable to carry out the contents of the contracts or representations in the advertisement. For the regional agency system, 24hrs merely claimed that "it was assessed to be unfeasible" without providing any evidence to prove its actual operation. Therefore, it is proved that the aforesaid representation contained in said flyer was false, untrue and misleading.
4. After considering the motivation, purpose, and expected improper benefit of the unlawful act of 24hrs; the degree of the act's harm to market order; the duration of the act's harm to market order; benefits derived on account of the unlawful act; the scale, operating condition, sales and market position of the enterprise; whether or not the type of unlawful act involved in the violation has been correct ed or warned by the Central Competent Authority; types and number of and intervals between past violations, and the punishment for such violations; remorse shown for the act and attitude of cooperation in the investigation; and other factors, the FTC imposed an administrative fine of NT$3,420,000 on 24hrs in accordance with the fore part of Article 41 of the Fair Trade Law.

Appendix:
Taiwan 24hrs Electronic Information Co., Ltd.'s Uniform Invoice Number: 16982056

Summarized by Wang, Horng-Shiuan; Supervised by Yeh, Tien-Fu