Concord Consolidated Securities Co., Ltd. and Concord Futures Co., Ltd.

Case:

Key Words:

gift and prize, advertisement, efficiency competition

Reference:

Fair Trade Commission Decision of August 24, 2006 (the 771st Commissioners' Meeting); Disposition (95) Kung Ch'u Tzu No. 095129

Industry:

Securities (6311) and Futures (6321)

Relevant Laws:

Article 19 of the Fair Trade Law

Summary:

1. According to the information gathered from the public and Internet, it was found that Concord Consolidated Securities Co., Ltd. (hereinafter called "Concord Securities) and Concord Futures Co., Ltd. (hereinafter called "Concord Futures") claimed in their giveaway activity "Wow! House Giveaway" that in the event that a client enters into a contract with a futures consultant during the activity, purchases one set of Super Deal Card worth NT$3,600 with a securities transaction amount of more than NT$200,000 or more than 10 transactions of domestic/foreign futures and options, such a client could have a chance to participate in the drawing of house purchasing funds of NT$10,000,000. Due to the possible violation by the said activity, the Fair Trade Commission (FTC) initiated an investigation ex officio.

2. The FTC stipulated the FTC Guidelines on Cases Concerning Promotion by Means of Gifts and Prizes pursuant to Article 19(iii) of the Fair Trade Law for cases where enterprises employ gifts and prizes to induce and strive for their competitors' trading counterparts. According to Article 4 of the said rules, in the event that an enterprise hosts any giveaway event, the biggest price shall not exceed 120 times of the monthly basic wage announced by the Council of Labor Affairs, Executive Yuan. Additionally, pursuant to Article 6 of the said rules, in the event that an enterprise violates Article 4 when hosting a giveaway event, said enterprise shall also violate Article 19(iii) of the Fair Trade Law. Upon investigation, the FTC found that Concord Securities and Concord Futures held the activity in question from August 25, 2005 to October 14, 2005. The biggest price, house purchasing funds NT$10,000,000, exceeded 120 times of the monthly basic wage announced by the Council of Labor Affairs (the biggest price shall not exceed NT$1,900,800) in violation of the said guidelines. Furthermore, although said enterprises claimed that the NT$10,000,000 price was merely a reciprocation for the clients instead of an inducement, said enterprises also admitted that the purpose of the price to be set at NT$10,000,000 was set as the biggest price in the market to attract clients and to create a climax for the activity. Additionally, said enterprises employed conspicuous characters to advertise "Wow! House Giveaway $3,600 + Small Amount Transactions to Make NT$10,000,000 House Purchasing Funds," which caused a rather effective inducement to relevant public and affected consumers' judgment when deciding to trade. It is obvious that said enterprises attempted to attract clients, boost sales and strive for trading opportunities by using a drawing activity of a high amount price to affect clients' normal selection of goods or services. Said actions are against the nature of efficiency competition and cause competition restraints or impede fair competition violating Article 19(iii) of the Fair Trade Law.

3. After considering the motivation, purpose, and expected improper benefit of the unlawful act of Concord Securities and Concord Futures; 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 warn ed 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$400,000 on Concord Securities and an administrative fine of NT$240,000 on Concord Futures in accordance with the fore part of Article 41 of the Fair Trade Law.

Appendix:
Concord Securities Co., Ltd.'s Uniform Invoice Number: 23824511
Concord Futures Co., Ltd.'s Uniform Invoice Number: 16848544

Summarized by Tseng, Chiu-Chen; Supervised by Tai, Pei-Yi