Han-Shen Development Co. Ltd.

Case:

Key Words:

draw, scratch card, catalog

Reference:

Fair Trade Commission Decision of June 7, 2007 (the 813th Commissioners' Meeting); Disposition (96) Kung Ch'u Tzu No. 096108

Industry:

Other Retail Sale in General Merchandise Stores (4719)

Relevant Laws:

Article 21(1) of the Fair Trade Law

Summary:

1. This case originated from the general public's complaint that: On November 11, 2006, the general public found on-the-spot at the inauguration of Poya Living Mart of Poya-Living-Mart Co. Ltd.(hereinafter called "Poya Company"), the shop in Yu-Chang, Kaohsiung, that Poya Company held the scratch card and lottery drawing activities to celebrate the 200th anniversary of Colgate's establishment. Nevertheless, such activities already expired on October 31, 2006.
2. It was found that Poya Company published the message on a special offer, "Celebration of the 200th Anniversary of Colgate's Establishment," and the promotion messages, "The first chance: Have activities for free if you buy," "The second chance: Scratch card," and "The third chance: Draw," for "people who purchase Colgate oral care products for more than NT$ 99 in this shop" in the said company's promotion catalog dated from November 11 to December 5. The impression conveyed by the advertisement concerned was that if a person purchases Colgate oral care products for more than NT$ 99, he can participate in the gift or lottery drawing activity; it was however found that the scratch card which showed the purchase conditions and which was provided by Poya Company had the phrases, "From now to October 31, 2006, if a person purchases Colgate oral care products for more than NT$ 99 in this shop, he can receive one scratch card and will have the chance to win a Colgate Motion Whitening Battery-Powered Toothbrush" and "The draw: From now to October 31, 2006 …." It was found that the catalog concerned was applied from November 11 to December 5, and the lottery drawing or scratch card activity of the products concerned had ended before the advertisement catalogs were printed and distributed. It was also found that that a prizewinner must mail the original copy of the scratch card and the uniform invoice before November 5, 2006 to Poya Company to receive the gift stated in the card; before October 31, 2006, others, however, can mail the original copies of the cards to Poya Company for the draw. However, Poya Company only published the messages on the lottery drawing and scratch card activities for the concerned promotion after the expiry date of the activities, as it purported to seize its trading opportunities and to elicit consumers to trade by distributing the bait advertisement. Even if consumers had the scratch card, they could not receive gifts (if they won). It was obvious that Poya Company could not perform its obligation derived from the advertisement, which was to confer the prizes after the conclusion of transactions. Additionally, Poya Company argued that the design of the advertisement concerned was based on the products provided by the goods providers and the objects stated in the scratch card; however, it was found that the table on the arrival date of Colgate oral care products in concerned provided by Poya Company showed that Poya Company stocked the shop with the products before the expiry date of the activities concerned – Poya Company should know the expiry date of the activities before the advertisement was available. As Poya Company was the principal of the advertisement on the products concerned, it had the obligations to check the related operation affairs prior to the publication of the advertisement and to ensure that the representations were true at the time of advertising. It could not be immune from its obligations based on the ground that the lottery drawing and scratch card activities concerned were provided by the goods providers. Therefore, based on the existing evidence, the contents of the products conveyed by the advertisement designed by Poya Company were false, untrue and misleading and Poya Company violated Article 21(1) of the Fair Trade Law.
3. After considering the motive, the degree and duration of the unlawful acts of Poya Company and the scale of operation, the FTC, in accordance with the fore part of Article 41 of the Fair Trade Law, ordered Poya Company to immediately cease the unlawful acts and imposed an administrative fine of NT$250,000.

Appendix:
Poya-Living-Mart Co. Ltd.'s Uniform Invoice Number: 97151664

Summarized by Chu, Hsing-Pang; Supervised by Wu, Lieh-Ling