Chinese Educational Development and Cooperation Association (CEDCA) disseminated fliers “BELI is not equivalent to the Language Center of University of California, Berkeley” and “Don’t Forget Your Rights and Interests”, and violated Article 19, Subparagraph 3, Article 22 and Article 24 of the Fair Trade Law

Chinese Taipei

Case:

Key Words:

Study tour service, improper means, coercion and inducement, business reputation

Reference:

Fair Trade Commission Decision of April 28, 2006 (the 755th Commissioners’ Meeting), Letter Kung Yi Tzu No. 0950003691, and Letter Kung Yi Tzu No. 0950003692

Industry:

Other Educational Services (7990)

Relevant Laws:

Article 19,Subparagraph 3, Article 22, and Article 24 of the Fair Trade Law

Summary:

1. This case originated from a complaint indicating that Chan Heng-Jui, was the actual responsible person of Chinese Educational Development and Cooperation Association (CEDCA). In order to harass and captivate the parents of the complainant’s student, Chan has pretended as the parent of a student and disseminated the false accusation fliers “BELI is not equivalent to the Language Center of University of California, Berkeley” to the complainant’s second batch students of BELI Language Institute in August 2004. Furthermore, Chan has traveled to the school in US together with the complainant’s students. He continued to engage in the acts of harassment there. In addition, CEDCA in virtue of malicious slander has disseminated the false fliers of “Don’t Forget Your Rights and Interests”, such fliers were sufficient to affect the wills of student parents when they were thinking of whether to allow their children attending the courses of BELI Language Institute arranged by the complainant. In addition, the fliers were sufficient to mislead the student parents into believing that the aforementioned courses of the complainant were not legally offered and their children were exposed to the risks of being repatriated. As a result, the goodwill of the complainant was damaged seriously.
2. Upon the investigation, the Fair Trade Commission (FTC) found that from the objective viewpoint, Chan Heng-Jui was entity of the conduct in this case; that is, Chan has disseminated the fliers at issue for the purpose of CEDCA’s competition in the market. The dispute of this case was that the complainant criticized CEDCA for making and disseminating the fliers at issue. Several questions were found in the fliers; such as the students in the study tour group were not arranged to attend classes with students from other countries, the intentional concealment of Language Center of University of California, Berkeley has already been closed in May 2004, the cost of study tour group was too high, the trading counterparts were unable to get official student visa, the completion certificates for the program were not issued by Language Center of University of California, Berkeley, an arrangement was made for the students to attend classes at BELI Language Center that was unable to issue Form I-20. Even more, the complainant has let its students to enter the US with Form I-20 of the other language center and thus they were confronting with the risks of forced to transfer to another school or been sent back home.
3. Grounds of non-disposition:
1. By means of disseminating fliers to the trading counterparts of the complainant, Chan Heng-Jui, the responsible person of CEDCA has questioned about the quality, fare and legality of the study tour groups arranged by the complainant. The ordinary conduct of disseminating fliers in fact did not have any nature of coercion or inducement, the purpose of such conduct inherently can be conceived as an intention to compete for trading counterparts. However, the fliers at issue did not include the name, address and telephone number of CEDCA. Also, the said means were unlike coercion or inducement that can either force or cause trading counterparts to have business activities with an enterprise, or distort the choices of trading counterparts. Except for the subjective judgment of reasonableness of group fare, the other points stated in the fliers at issue were originated from disputes arose from the policy change of Language Center of University of California, Berkeley. Such points should be explained to the trading counterparts spontaneously by the complainant at the beginning of the trading. Therefore, it is still difficult to conclude on these grounds that CEDCA has caused the trading counterparts of its competitor to do business with itself by improper means that have same degree of compulsion as coercion or inducement, and thus has act that was likely to lessen competition or to impede fair competition. It is still difficult to deem that CEDCA has violated the provision of Article 19, Subparagraph 3 of the Fair Trade Law.
2. The business data of CEDCA and the complainant showed that both parties were engaging in the business of study tour service and located at Taipei city. Therefore, it can be said that the fliers at issue were disseminated for the purpose of competition. As for the fliers at issue that were disseminated by CEDCA on the campus of University of California, Berkeley, there were some allegations. Amongst were “the official language center of University of California, Berkeley was closed in May of this year, do you know this when you signed up the program? Or the fact has been intentionally concealed?” and “the language center of University of California, Berkeley was closed in May of this year, Merica still enrolled students in the name of University of Berkeley, when were you informed about this fact? At the time of signing up? Or prior to the departure?” The complainant expressed that its company has announced the said messages with relevant advertisements in the enrollment forums. Therefore, the complainant was not in the condition of purposely concealing the said facts. However, the matters inquired by CEDCA in the fliers at issue were merely questions raised on the relevant issues and it was difficult to conclude that such questions were false messages. Regarding to the paragraph of BELI Language Institute was unable to issue the Form I-20, the Ministry of Education indicated, “In accordance with the regulations, any students who goes to school that is different from that recorded in the Form I-20 must leave the US or the entry will be denied. Taking the examples of BELI and ECIW, the students may be requested to leave the US.” Therefore, it is still difficult to regard the statements of the fliers at issue, “BELI is not related to the University of Berkeley at all. Hence, as a matter of fact your children are unable to obtain official student identification cards!” and “Merica ignored the rights and interests of the students, made arrangement for them to attend classes at BELI Language Center that was unable to issue Form I-20. Even more, it has let its students to enter the US with Form I-20 of the other language center. Who shall bear the risk of the students being forced to transfer to another school or been sent back home?” were false. Regarding to the paragraph of whether the conduct of CEDCA was sufficient to damage the business reputation of another, the relevant fact must be deliberated in order to make judgment of whether the damage of business reputation has been resulted. The judgment was not made solely on the subjective view of the party concerned. The complainant claimed that the fliers at issue have led to difficulty in student enrollment, damage in business reputation, losses of students’ trusts, and the teachers’ complaints that their reputations were affected in relation to the said fliers. However, the statements given by both parties did not show any case of student has rescinded contract with the complainant due to the fliers at issue and transferred to CEDCA. Furthermore, there was no positive evidence to prove that the number of student enrollment has declined or a drastic drop of sales volume. In addition, the complainant stated that it has spent huge amount of money to hold a press conference and run advertisement to clarify rumors made by CEDCA. However, the investigation found that Yang Chun-Kuo has revealed the controversies recorded in the fliers at issue to the reporter of China Times Weekly, not Chan Heng-Jui or CEDCA. According to the available evidences, it is still difficult to deem that the conduct of CEDCA was sufficient to damage the business reputation of the complainant. To sum up, the act of CEDCA in disseminating the fliers at issue for the purpose of competition still did not meet the condition of constitution, and hence it is difficult to conclude that CEDCA has violated the provision of Article 22 of the Fair Trade Law.
3. Next, Chan Heng-Jui was the responsible person of CEDCA, both CEDCA and the complainant were engaging in the business of study tour service and located at Taipei city. Therefore, it can be deemed that both companies were competitor to another. The conduct of Chan Heng-Jui in disseminating the fliers at issue and the content of the fliers were related to the business of both parties concerned. Thus, it is substantiate to conclude that the said conduct and the fliers at issue were for the purpose of competition. In addition, both CEDCA and the complainant have expressed that no trading counterpart has rescinded contract with the complainant and signed contract with CEDCA due to the fliers at issue. Furthermore, the content of the fliers at issue were not groundless and not at the level that would coerce and harass the trading counterparts. The nature of fair market competition was not violated and thus there was no deceptive or obviously unfair circumstance. Hence, in accordance with the available evidences, it is still not substantiate to conclude that there was a violation of the provision of Article 24 of the Fair Trade Law.

Summarized by: Mai, Huei-Li;
Supervised by: Lu, Li-Na

Appendix: Nil