Solano Biochemical Technology Co., Ltd.

Case:

Key Words:

multi-level sales, written participation agreement, can hold the participant liable, ways of dealing with the returning of goods, specific reasons rendering a breach of the agreement and the ways of dealing with the breach

Reference:

Fair Trade Commission Decision of December 11, 2008 (the 894th Commissioners' Meeting), Disposition Kung Ch'u Tzu No. 097161

Industry:

Direct Selling Establishments (4872)

Relevant Laws:

Article 12,14 and 18 of the Supervisory Regulations Governing Multi-level Sales

Summary:

1. The case originated from the facts as follows: on November 5, 2008, the Commission visited the business place of Solano Biochemical Technology Co. Ltd. (hereinafter referred to as "Solano Company") to handle a business inspection. It however found out that the content of a written participation agreement concluded between a participant and Solano Company failed to encompass terms regarding the participant's withdrawal from the multi-level sales company and his/her returning of the goods. The contract also did not encompass laws and orders relevant to multi-level sales, ways of dealing with the returning of goods that can hold the participant liable, and specific reasons rendering a breach of the agreement and the ways of dealing with the breach. These facts constituted the company's violation of the relevant provisions of the Supervisory Regulations Governing Multi-level Sales.
2. The findings of FTC after investigation showed that Solano Company filed a report on December 20, 2007 concerning its intention to practice multi-level sales since January 1, 2008 to the Commission for reference and recordation. However, the company used excuses to cover its lateness and failure to print its business manual for participants. Though, the company claimed that its business was not good enough and had few new participants. This circumstance resulted that the content of a written participation agreement concluded between a participant and Solano Company had, all the time, failed to encompass terms on the participant's withdrawal from the multi-level sales company and his/her returning of the goods, laws and orders relevant to multi-level sales, ways of dealing with the returning of goods when the participant is liable, and specific reasons rendering a breach of the agreement and the ways of dealing with the breach. After the Commission's review of the company's act, it was found to have violated Articles 12(1), 14, and 18 of the Supervisory Regulations Governing Multi-level Sales. Accordingly, Solano Company was not only ordered to cease the abovementioned unlawful act immediately, but it was imposed with an administrative fine of NT$ 100,000 pursuant to Article 42(3) and the forepart of Article 41 of the Fair Trade Law.

Appendix:
Solano Biochemical Technology Co., Ltd.'s Uniform Invoice Number: 22829377
Summarized by Hsu, Tzung-Yu; Supervised by Hsu, Hung-Jen