Yi-Xiang Construction Co. Ltd.

Case:

Key Words:

pre-sale real estate property, false advertisement, public facilities

Reference:

Fair Trade Commission Decision of November 8, 2007 (the 835th Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 096172

Industry:

Buildings Construction (4100)

Relevant Laws:

Article 21(1) and 24 of the Fair Trade Law

Summary:

1. Summary of report from complainant: Yi-Xiang Construction Co. Ltd. (hereinafter referred to as "Yi-Xiang Co.") advertised that the kitchen and the living room position in its pre-sale real estate commercial for its "Jia-Xing Park" construction project. The information contained in the advertisement is inconsistent with that in its construction blueprint, and the contract signed by the purchaser did not state common facilities, area entitlement and the calculation for its shares and other information. It was reported there's some suspicion that this was in violation of the Fair Trade Law.
2. Findings of the FTC after investigation:
   (1) Yi-Xiang Co.'s pre-sale real estate property advertisement for its "Jia-Xing Park" construction project provided pictures of sofa, tea table, television shelf, table, chairs and other living room objects in its legally appointed car parking area of the "first floor layout configuration reference diagram"; pictures of dinning table, kitchen sink unit etc, indicating being part of kitchen and dinning room, in its "second to fourth floor, fifth floor, sixth floor's furniture layout configuration reference diagram". However, according to the construction layout diagram provided by Yi-Xaing Co., the first floor should have been utilized as a bomb shelter or alternate use as car parking. As for the second to sixth floors, side space to the kitchen and dinning room was designated for indoor electronic machines. Also, the Bureau of Urban Development of Taipei City Government advised that the advertisement for the said construction project is inconsistent with the approved construction plan.If Yi-Xiang Co. implement in accordance with the advertisement, it would be contravening to Article 73 of the Building Act. Yi-Xiang Co.'s abovementioned advertisement, apart from being inconsistent with the approved building plan, also misled the public to believe that the living room facilities, kitchen and dinning room's side space as drawn on the reference diagram are of legal usage purpose and the building has common entertainment area and larger kitchen and dinning room area for use. The abovementioned information revealed a difference to the reality, and is obviously beyond the acceptance of normal public and shall be classified as false and misleading presentation.
   (2) Furthermore, according to Article 1 of the "sales contract for pre-sale real estates" between Yi-Xiang Co. and the purchaser with respect to the sales indication content, Yi-Xiang Co. failed to state the common facilities, area entitlement and the calculation for its shares and did not disclose the total share entitlement of each property holder's share of the common facilities and related information. Although Yi-Xiang Co. argued to have explained to the purchaser, at the time of the sale, about common area proportion with the layout plan, the layout plan provided by Yi-Xiang Co., failed to indicate the abovementioned related information. In addition, since the layout plan is that of professional blueprint, it is difficult to expect the normal public to understand about the common facilities and related information from mere dimensions on the layout plan and salesperson's verbal explanations. It is concluded that Yi-Xiang Co. took advantage of its advantageous market position and stronger bargaining power to conceal important dealing information and such deceitful act is sufficient to influence the trading order.
3. Grounds for disposition:
   (1) Yi-Xiang Co., in its advertisement for the pre-sale real estates in its "Jia-Xing Park" construction project, marked the "legally appointed car parking space" as living room layout configurations, and marked indoor "electronic machine space" as extensions for kitchen and dinning room, making content of its product false and misleading. It was therefore in violation of Article 21(1) of the Fair Trade Law. In addition, the common facilities, area entitlement and the calculation for its shares and other information disclosed in its sales contract are deceitful conduct sufficient to influence trading order and in violation of Article 24 of the Fair Trade Law.
   (2) After considering Yi-Xiang Co.'s motivation, purpose, and expected improper benefit of the unlawful acts, the degree of the unlawful act's harm to market order, the duration of the unlawful act's harm to market order, the benefits derived on account of the unlawful act, the scale, operating condition, and market position of the enterprise, whether or not the type of unlawful act involved in the violation has been the subject of correction or warning by the central competent authority, the types of, number of, and intervening time between past violations, and the punishment for such violations, remorse shown for the unlawful act and attitude of cooperation in the investigation, and other factors, the Commission decided on a fine of NT$ 1 million in accordance with the fore-section of Article 41 of the Fair Trade Law.

Appendix:
Yi-Xiang Construction Co. Ltd.'s Uniform Invoice Number: 84905851

Summarized by Tseng, Chiu-Chen; Supervised by Liao, Hsien-Chou