Presicarre Corp. and Chanson Sporting Goods Co., Ltd.

Case:

Key Words:

advertisement, advertiser, false, untrue or misleading, review

Reference:

Fair Trade Commission Decision of May 18, 2006 (the 758th Commissioners' Meeting); Disposition (95) Kung Ch'u Tzu No. 095051

Industry:

Retail Outlet (4754), Sporting & Athletic Articles Manufacturing (3111)

Relevant Laws:

Article 21(1) of the Fair Trade Law

Summary:

1. This case originated from letters forwarded by the Executive Yuan, in which the Chanson Sporting Goods Co. Ltd. (hereinafter called "Chanson") was complained for publishing advertisement of "CS-100 Silver Shark Massage Beetle" which claimed that the said product was "able to simulate fat dissipation to dissipate excess fat." It was found that the said product was not qualified as medical treatment equipment provided in the Law Governing Pharmaceutical Affairs. Therefore, the product should be unable to produce any medical effect. The statement claimed in the advertisement in question did not have any base of medical theory or clinical experiment. The advertisement had possibly violated the Fair Trade Law, and therefore, was submitted to the Fair Trade Commission ("FTC") for further investigation.

2. Regarding the advertiser in question:
   (1)The words of "Chanson Sporting Goods Co. Ltd." along with Chanson's company website and toll free customer service number were stated on the advertisement in question. Chanson also admitted that it paid for the production of the advertisement and delivered same to the Presicarre Corp. (hereinafter called "Presicarre"). Therefore, Chanson shall be the advertiser in this case.
   (2)Presicarre's logo of "Carrefour" and the red and blue arrows, company website and slogan "Everyday Low Price at Carrefour" were printed on both sides of the advertisement in question. People would have an impression that Presicarre's stores were selling the product in question, and that consumers might be able to purchase the product from Presicarre based upon the product and price information contained in the advertisement. Furthermore, according to the national contract entered by Presicarre and Chanson, Chanson shall supply products to Presicarre. Both Chanson and Presicarre acknowledged that the product in question was bought out by Presicarre and sold at Presicarre's stores. Presicarre also admitted that the advertisement in question was produced by Chanson and directly delivered to each of Presicarre's stores to be placed at the entrance and offered at no cost to the consumers. Since the advertisement contained Presicarre's company name and logo and was placed at Presicarre's stores for consumers, Presicarre shall bear the duties of a store administrator and due diligence regarding the information provided to the consumers and ensure that the advertisement or relevant sales information used and disseminated shall be true representations. Presicarre's obligation shall not be exempt, though it did not produce or review the advertisement in question. Moreover, Presicarre directly issued its uniform invoices for the sales of the product in question. Although Presicarre claimed that the advertisement was neither produces nor reviewed by Presicarre, Presicarre shall still be subject to Article 21 of the Fair Trade Law.

3. The advertisement in question has been confirmed by the Department of Health to be exaggerating and untrue by having no base of medical theory or clinical experiment. Additionally, Chanson claimed that the contents of the advertisement were based on the product function description provided by the manufacture and that Chanson failed to confirm the effects. Yet, Chanson still could not provide any specific evidence to support the claimed effects. Moreover, Presicarre admitted that the contents of the advertisement in question was, according to Chanson's representations, based upon the observation of personal experience of the product in question. However, Presicarre still could not provide any specific base of medical theory or clinical experiment to support the claimed effects. Therefore, upon the existing evidence, it is proved that Chanson and Presicarre violated Article 21(1) of the Fair Trade Law by producing false, untrue and misleading representations in the advertising flyers regarding the quality and contents of the product "CS-100 Silver Shark Massage Beetle."

4. The aforesaid acts were determined to be a violation of Article 21(1) of the Fair Trade Law by resolution adopted by the 758th Commissioners' Meeting. After considering the motivation and circumstances of the unlawful acts of Chanson and Presicarre; the degree of the acts' harm; business scale; remorse shown and attitude of cooperation in the investigation, the FTC ordered Chanson and Presicarre to immediately cease such unlawful acts and imposed an administrative fine of NT$2.17 million on Presicarre and NT$0.29 million on Chanson in accordance with the fore part of Article 41 of the Fair Trade Law.

Appendix:
Presicarre Corp.'s Uniform Invoice Number: 22662550
Chanson Sporting Goods Co., Ltd.'s Uniform Invoice Number: 34454640

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