Durban Group Oak Park Construction Co., Ltd.

Case:

Key Words:

untrue advertisement, principal of the advertisement, land use zoning, area

Reference:

Fair Trade Commission Decision of December 17, 2008 (the 893rd Commissioners' Meeting), Disposition Kung Ch'u Tzu No. 097164

Industry:

Buildings Construction (4100)

Relevant Laws:

Article 21(1) of the Fair Trade Law

Summary:

1. This case was originated from a complaint abbreviated as follows: Durban Group published an advertisement (hereinafter referred to as "Commercial Times ad in casu") for the property at "Durban Double Happiness" (hereinafter referred to as "construction case in casu") which was sold by it in the Commercial Times dated April 24, 2006,. The advertisement made the following claims: "landscaped and serene 'Durban Double Happiness': there are a large living room, a large study room, a large main bedroom, and so on in each house"; and "a product with 51 pings (an area measure equal to 3.3057 square meter or 36 square feet) has open interior living space which sizes 40 pings." However, the findings of FTC after investigation showed that the use of the construction case in casu as specified in the usage license of such a construction case in casu, was "Medication and Health Services," and the size of the area for the main building was only approximately 34.33 pings. Even if the areas of the auxiliary facilities, the balcony and the rain awnings were added to the original net floor area, the calculated net floor area was merely 38.85 pings. Consequently, Durban Group involved in publishing an untrue advertisement. In the same way, Durban Group also published the advertisement on sales of the construction case in casu on the outside back cover advertisement of the Journal of Taipei Medical Association Vol. 48 Issue No. 7 (hereinafter referred to as "Medical Association Journal ad in casu") on July 2004, and on the front page advertisement of the United Daily News (hereinafter referred to as "United Daily News ad in casu") dated August 8, 2004, and the representations such as "residence houses of national treasure," "landscaped residence houses," "a simply respectable residential building," and "a single duplex building for a big family" used in the advertisements all involved in untruth too.
2. The findings of FTC after investigation: Durban Group admitted that it was the investor and seller of the said construction case, and it commissioned Oak Park Construction Co. Ltd. to sell the case for it. Therefore, Durban Group might be considered as the advertiser of the advertisements in this case. The findings of the investigation also demonstrated that the content of the Medical Association Journal ad in casu and the United Daily News ad in casu were drawn up by Oak Park Construction Co. Ltd. Moreover, the content of the Commercial Times ad in casu was written by a journalist upon the provision of the information from Oak Park Construction Co. Ltd. In addition, the advertisement expenses were paid by the same company and thus the company had the ability to substantially determine and control the content and the use of the advertisements. The findings of the investigation also showed that the commission from a closed deal would be the service fee of Oak Park Construction Co. Ltd. Therefore, the more the number of residence houses were sold during the commission period, the higher the profits could be received by the company. Accordingly, the aforesaid facts were sufficient to deem Oak Park Construction Co. Ltd. as an advertiser of the advertisements in this case.
3. The usage description of a building in an advertisement on sales of houses is a factor that affects consumers' buying decisions of the houses. General consumers can learn how they may use the houses in the future based on the usage description stated in the advertisement. It is difficult for consumers to judge whether the usage specified in the advertisement violates laws and regulations related to construction management. Therefore, they may incur risks of being fined, being ordered to demolish their houses, reconstructing the houses, ceasing to use the houses, or restoring their houses to the previous conditions. The findings of FTC after investigation demonstrated that the construction case in casu was located in the "Cultural and Educational Area" delineated under the urban plan, and the usage license of the construction case in casu as specified in "Human Health Services." From the perspective of law, therefore, such an area might not be used for residence houses. Nevertheless, Durban Group and Oak Park Construction Co. Ltd. used the representations, "residence houses of national treasure," "landscaped residence houses," "a simply respectable residential building," "a single duplex building for a big family," "let all people who are accustomed to proud celebrities houses acknowledge allegiance to this property truly and willingly," "serene residential houses for living," "landscaped and serene residential houses," and "there are a large living room, a large study room, and a large main bedroom in each house". These parts create a large-scale style that is commonly used by a wealthy and influential clan." These representations would easily make consumers mistakenly perceive that such a construction case could be used for residential houses, and the consumers made buying decisions based on such a wrong perception. In other words, there was a considerably large disparity between the content represented by the advertisements in this case, and the perception of the general consuming public, and this disparity had been beyond the point that could be accepted by the general public. The disparity was sufficient to result in wrong perceptions or decisions of the general public. Both companies were found to violate Article 21(1) of the Fair Trade Law.
4. Furthermore, if an enterprise uses non-statutory terms as representations or symbols of the area of the building, and fails to give clear instructions as to the scope of such an area, these acts would likely result in people's wrong perceptions of the size of the area. Therefore, these representations or symbols are false, untrue, and misleading. The fact that in the advertisement published in Commercial Times, Durban Group and Oak Park Construction Co. Ltd. claimed "a product with 51 pings has open interior living space which sizes 40 pings" would easily made consumers perceive that the construction case was a 51-ping product, and the size of the "interior space" of the main building was 40 pings. However, the findings of FTC after investigation showed that the size of the main building was only between 34.29 and 34.60 pings – even if the areas of the auxiliary facilities, the balcony and the rain awnings, were added to the original net floor area, the then calculated net floor area was at most merely between 38.68 and 38.99 pings, and had not reached 40 pings size of the interior space that was claimed in the advertisement. After the Commission's review of the acts of Durban Group and Oak Park Construction Co. Ltd., these two companies were found to violate Article 21(1) of the Fair Trade Law for the false, untrue, and misleading representations of their product. Pursuant to the fore part of Article 41 of the same Law, the companies were not only ordered to cease the aforesaid unlawful act immediately, but Durban Group was also imposed with an administrative fine of NT$ 2 million, and Oak Park Construction Co. Ltd. with an administrative fine of NT$ 1 million.

Appendix:
Durban Group's Uniform Invoice Number: 22817581
Oak Park Construction Co. Ltd.'s Uniform Invoice Number: 84918933
Summarized by Chi, Hsueh-Li; Supervised by Shen, Li-Yu