Chu Ho Fa Construction Corporation

Case:

Key Words:

pre-sale housing, turn the balcony into swimming pool

Reference:

Fair Trade Commission Decision of August 2, 2007 (the 821st Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 096127

Industry:

Buildings Construction (4100)

Relevant Laws:

Article21(1) and 41 of the Fair Trade Law

Summary:

1. This case was originated from the complaints filed by the general public and the complaints stated briefly as follows: Chu Ho Fa Construction Corporation (hereinafter called "Chu Ho Fa") marked the "balcony"as part of the living room in its pre-sale housing advertisement on "Li Ching Century Governor"published in Feng Yuan City, Taichung County, and misled the consumers into believing that they could utilize the balcony legally. The advertisement also claimed that there were an "outdoor swimming door,"a "low temperature garbage disposal room"and an "illuminated spring pool."However, the swimming pool was only a paddling pool. Also, there was no space that was especially reserved for this purpose and the advertised low temperature facility was not installed for garbage disposal. Instead, only a dumpcart was located in the corner. Finally, there was basically no spring pool facility.

2. Findings of FTC after investigation:

   1. Chu Ho Fa drew a TV stand, sofas and a table to mark the range of the living room at the part of living room in the "D5 Floor Plan of Furniture"of the pre-sale housing advertisement on "Li Ching Century Governor."However, it was found that the part that fell outside the range of the living room marked in dotted lines in the reference diagram was marked as the "balcony"in both of the as-built plan and as built drawing –Chu Ho Fa turned the balcony into part of the living room at the second construction after it acquired the usage license. Chu Ho Fa nevertheless placed the balcony as part of the living room in the aforesaid reference diagram. This act led to the result that the part of the diagram was inconsistent with what was drawn in the as-built plan and as built drawing. Such an act was sufficient to mislead the general consumers into believing that the range of the living room marked in the diagram was all legal. In the same way, Taichung County Government had determined that the balcony that was turned into part of the living room was illegally constructed and it was difficult for a considerable number of consumers to accept the differences between what was presented in (the reference diagram of) the advertisement and what had been constructed. The FTC found that the representations of the contents of the product were false, untrue and misleading.
   2. Chu Ho Fa published twenty-nine public facilities in the advertisement related to the case. Amongst these facilities, the fifth public facility was an "outdoor swimming door,"the ninth a "low temperature garbage disposal room"and the twenty-second an "illuminated spring pool"– the locations of such facilities were marked in the "Master First Floor Plan."However, it was found that a children's pool with SPA spouts was located in the "outdoor swimming door"marked in the diagram, all of its size and functions would be difficult from the general perceptions of consumers. In addition, only the dumpcart was placed in the location of the "outdoor swimming door"marked in the diagram, and only eight ground lamps were installed on-site in the location of the "illuminated spring pool"manifested in the plan. The claims of the company's advertisement were therefore not consistent with the facts and it was difficult for a considerable number of consumers to accept the differences between what was presented in (the reference diagram of) the advertisement and what had been constructed. The FTC therefore found that the representations of the contents of the product were false, untrue and misleading.

   3. Grounds for Disposition:

   1. Chu Ho Fa made the false, untrue and misleading representations on the contents of the product by marking the "balcony"as part of the living room and claiming that there were an "outdoor swimming door,"a "low temperature garbage disposal room"and an "illuminated spring pool"in the area of the "Li Ching Century Governor."It therefore violated Article 21(1) of the Fair Trade Law.
   2. After considering the motive, purpose and anticipated improper profits of the unlawful acts of Chu Ho Fa; the degree and duration of the unlawful acts' harm to trading order; the benefits derived from the unlawful acts; the scale, operating condition and market position of the enterprise; whether or not the types of unlawful acts involved in the violation have been corrected or warned by the Central Competent Authority; the types and numbers of and intervals between past violations, and the punishment for such violations; the remorse shown for the acts and attitude of cooperation in the investigation; and other factors, Chu Ho Fa was therefore imposed with an administrative fine of NT$ 6,000,000 in accordance with the fore part of Article 41 of the Fair Trade Law.

Appendix:
Chu Ho Fa Construction Corporation's Uniform Invoice Number: 86640027

Summarized by Fong, Jyun-cyuan; supervised by Shen, Li-yu