Jing-Shen International Enterprise Co., Ltd.

Case:

Key Words:

untrue advertisement, health food, agent

Reference:

Fair Trade Commission Decision of March 15, 2007 (the 801st Commissioners' Meeting); Disposition (96) Kung Ch'u Tzu No. 096062

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 a complaint letter filed by Yusen Biotechnology Co., Ltd. (hereinafter called the "Complainant") stating that Jing-Shen International Enterprise Co., Ltd. (hereinafter called "Jing-Shen") violated Article 21 of the Fair Trade Law by engaging in the following acts: The Complainant was the exclusive agent authorized by Japanese AFC company (hereinafter called "AFC") in Taiwan. It was found that Jing-Shen placed an advertisement on the website http://www.multicare.com.tw to sell AFC's products and described itself as a legal agent or associate of AFC in the organizational chart of Multicare. Jing-Shen's act had affected the legitimacy of the Complainant's business as the exclusive agency. In addition, Jing-Shen was selling the products at different prices and confused the market order. Jing-Shen's acts allowed the consumer to purchase health food without guarantee and caused uncertain risks of claim. Such acts should violate Article 21 of the Fair Trade Law governing false, untrue or misleading representations. The FTC also learned that Jing-Shen stated on the aforesaid advertisement that "AFC the only health food available in the market in Japan," which might be in possible violation of the Fair Trade Law. The FTC therefore included all of the accused acts of violation in the investigation.
2. Jing-Shen claimed that the organizational chart of Multicare on its website was to show that the products it sold were from AFC. Jing-Shen further stated that the term "only" used in the statement of "AFC the only health food available in the market in Japan" in the advertisement meant that AFC was the only system under AMS Group. However, after reviewing the copies of documentations provided by Jing-Shen regarding imported products and goods lists, it was found that these documentations listed the items as cosmetics without content descriptions, or with the name "Suzuki Toshiaki" but without the stamps or certifications of AFC. Said documentations were not sufficient to prove the relationship between Suzuki Toshiaki and AFC or that Suzuki Toshiaki was a lawful agent of AFC. The advertisement in question had caused the public to believe that Jing-Shen was AFC's agent, distributor or branch or shared a certain relationship with AFC. Such advertisement was also sufficient to make the general public with common knowledge and experience to wrongfuly believe such relationship and further make decisions to trade. In addition, Jing-Shen explained that the statement of "AFC the only health food available in the market in Japan" was used to show the consumer that the products were manufactured, sold, and legally imported by a Japanese company instead of a family factory without clear sources. Jing-Shen further claimed that the term "only" used in the statement merely referred to the fact that AFC was the only system under AMS Group and was only selling health food in Japan. Upon the common sense of the general consumer, the statement of "AFC the only health food available in the market in Japan" should not only refer to the aforesaid facts claimed by Jing-Shen. In conclusion, the organizational chart of Multicare and the statement of "AFC the only health food available in the market in Japan" placed by Jing-Shen were false, untrue and misleading representations in violation of Article 21(1) of the Fair Trade Law.
3. After considering the motive, purpose and anticipated improper profits of the unlawful acts of Jing-Shen; the degree and duration of the unlawful acts' harm to market order; the benefits derived on account of the unlawful acts; the scale, operating condition and market position of the enterprise; the conditions of past violations; the remorse shown for the acts and attitude of cooperation in the investigation; and other factors, the FTC, in accordance with the fore part of Article 41 of the Fair Trade Law, ordered Jing-Shen to immediately cease the aforesaid unlawful acts and imposed an administrative fine of NT$80,000.

Appendix:
Jing-Shen International Enterprise Co., Ltd.'s Uniform Invoice Number: 27701841

Summarized by Chiu, Yu-Chih; Supervised by Yeh, Tien-Fu