Tung-Hao Corporation

Case:

Key Words:

car monitor, untrue advertisement, auction site

Reference:

Fair Trade Commission Decision of June 7, 2007 (the 813th Commissioners' Meeting); Disposition (96) Kung Ch'u Tzu No. 111

Industry:

Liquid Crystal Panel and Components Manufacturing (2641)

Relevant Laws:

Article 21 of the Fair Trade Law

Summary:

1. This case originated from a complaint that the main business of Ms. Lee, Shu-Hua, who was in charge of Chen Han Chiu Chiu Car Audio was the wholesale and retail of car TV and audio; she invented "APOLLO" car monitors (hereinafter called "products concered") and sold them (the current price is NT$ 6,500) by herself while she put the third party, Dah Jing Enterprise Co. Ltd. (hereinafter called "Dah Jing"), in charge of manufacturing the products concered. Tung-Hao Corporation and Ms. Lee were in the same business and they competed to each other. Surprisingly, Tung-Hao Corporation knew well that it did not have the products concered for sale, it however placed related sales messages on Yahoo's auction site and claimed, "We have four types of monitors (AVT IM-621, SAMSEN, APOLLO, necvox 7069) for your choices; each of the items costs NT$ 4,500, and we will assemble it for you without extra charges." Among these types of monitors, there was one type which was the product concered; when a consumer made inquiries on such a product, Tung-Hao Corporation responded by shuffling that " … is made by Dah Jing in Chunghua; as its picture quality is average, why not choose 7069 (it was the car monitor of another brand). The mechanical structure of the APOLLO products in this batch has some imperfection, and the products have been retruned to the factory for handling …." The aforesaid act of Tung-Hao Corporation made Ms. Lee's original clients or potential clients doubt about the products and resulted in affecting Ms. Lee's business and its commercial reputation severely.
2. Findings of FTC after investigation: Ms. Lee applied to the Intellectual Property Office for the examination of the trademark, "SUPER APOLLO," on March 10, 2006 and applied the trademark concered for the products, "digital TV receptors, car monitors, raw speakers" and entrusted Dah Jing to manufacture these products. After the manufacture, Dah Jing, sent the goods directly to four stores managed by Ms. Lee for sale, or Ms. Lee used the name of the seller, "Chiu Chiu Car Audio" on the auction site to sell these products – she did not authorize any resellers to sell the products concered, and Dah Jing also did not send the products in the brand "APOLLO" to other parties for sale. On the objective term, Tung-Hao Corporation could not have acquired APOLLO products concered for sale.
3. Grounds for disposition:
   1. Sales messages, "We have four types of monitors (AVT IM-621, SAMSEN, APOLLO, necvox 7069) for your choices; each of the items costs NT$ 4,500, and we will assemble it for you without extra charges," which were placed on Yahoo's auction site by Tung-Hao Corporation misled consumers that Tung-Hao Corporation had APOLLO products concered for sale. The representations were therefore false, untrue and misleading, for the grounds that Ms. Lee did not authorize any resellers to sell the products concered, and Dah Jing also did not send the products in the brand "APOLLO" to other parties for sale. Additionally, Tung-Hao Corporation used this advertisement to draw consumers for trade and left a message in the website that the mechanical structure of the said products had some imperfection at the time that a consumer made an inquiry on such products. It even recommended the consumer to purchase products of the other brands. These acts were sufficient to mislead consumers and affect their decisions. Therefore, Tung-Hao Corporation violated Article 21(1) of the Fair Trade Law.
   2. After considering the factors, operating revenue, the motive of the act, the procedures that affect trading order and anticipated improper profits of Tung-Hao Corporation; the duration of the violations and the attitude after the violations, the FTC ordered Tung-Hao Corporation to cease the unlawful act and imposed an administrative fine of NT$120,000 in accordance with the fore part of Article 41 of the Fair Trade Law.

Appendix:
Tung-Hao Corporation's Uniform Invoice Number: 13922801

Summarized by Chen, Shu-Hua; Supervised by Liou, Chi-Jung