Textbook Publishing Enterprises

Case:

Key Words:

textbooks, sale promotion

Reference:

Fair Trade Commission Decision of August 20, 2008 (the 876th Commissioners' Meeting), Dispositions Kung Ch'u Tzu No. 097113, No. 097114, and No. 097115

Industry:

Books Publishing (5813)

Relevant Laws:

Article 24 of the Fair Trade Law

Summary:

1. This case originated from the following facts: After the market of junior high school elementary school textbooks was liberalized, it was often-heard that some publishing enterprises adopted the marketing strategy of giving away free teaching tools and gifts in order to seize sales opportunities and continue to maintain the market share. This Commission accordingly initiated an ex officio investigation on it in order to understand whether related enterprises violated the Fair Trade Law during the time when each junior high school and elementary school selected textbooks. Meanwhile, the Taoyuan County Station and Taipei County Station of the Investigation Bureau, Ministry of Justice provided the Commission with the information concerning Kang Hsuan Educational Publishing Corp. involving in giving away gifts to schoolteachers. Therefore, the Commission consolidated this Kang Hsuan case with the ex officio investigation.
2. Findings of FTC after Investigation:
   (1) During the textbook selection period in 2007, Kang Hsuan Educational Publishing Corp. gave every schoolteacher a free Mother's Day bags (a Mother's Day bag contained a paper-made card, 50% discount coupons for Ma-Kao Ecology Park, grape seed facemasks and a pack of tissue).
   (2) During the textbook selection period, Nani Books Corp. provided "Class Management Kits." The company claimed that this Class Management Kit was in the form of a box that allowed a salesman to carry easily during the period of textbook selection. At the time of exhibition, each item contained in the box would be placed and displayed. The Kits were to be provided to teachers, as the items contained in it were to be source materials for decorating the classroom of the First Grade, and also to collocate with teaching materials of the subject, Technology and Living Consumables, which was taught in the first term of the First Grade.
   (3) Han Lin Publishing Co. Ltd. provided Super Signets Treasure Boxes, correction signets for mathematics, and CD Holders during the textbook selection period.
3. Grounds for Disposition:
   (1) Textbooks are significant in terms of education policies, and their nature are different from general products. In order to assure fairness in the textbook selection, an evaluation meeting on textbooks is established in each school for the purpose of determining which version of textbooks will be used for each subject. In other words, persons having the powers to select textbooks are schoolteachers who formed such an evaluation meeting. However, the purchasers of the textbooks are students who use the selected textbooks or their parents, rather than the teachers. As for those who select textbooks are different from the aforesaid persons who are actual purchasers, if publishers offer or claim to, during the textbook selection period, provide improper gifts to people who have the right to select textbooks. The publishers' acts may affect the decision-making processes of the teachers, irrespective whether they did indeed provide these free gifts after being chosen. Therefore, in order to ensure fairness in the selection of textbooks, sales enterprises that promote the textbooks improperly by giving away money, commodities or other economic benefits to seize the opportunity to be selected, the enterprises' acts are deemed to be blameful to commercial competition ethics, and will likely violate Article 24 of the Fair Trade Law. Moreover, the determination whether an item provided by an enterprise to a teacher with the power to select textbooks is proper or not will depend on whether the given item is directly linked to the teaching of the adopted textbook, rather than the value of the item.
   (2) With regard to the fact that Kang Hsuan Educational Publishing Corp. gave all teachers free Mother's Day bags, Kang Hsuan Educational Publishing Corp. admitted that it provided gifts to teachers of all junior high schools on Mother's Day in 2007. The findings of FTC after investigation showed that 50% discount coupons for Ma-Kao Ecology Park, and grape seed facemasks that were contained in the Mother's Day bag should all characterized for personal use. Also, it was especially difficult for the Commission to believe that these items were directly linked to teaching of the adopted textbook. Moreover, Mother's Day is in May each year, and it is in just the same period for of the junior high school textbooks and primary school textbooks selection season. The Kang Hsuan Educational Publishing Corp. was very likely to affect the decision-making process through providing the above-said items to teachers who have powers to select textbooks.
   (3) With respect to the fact that Nani Books Corp. gave for free "Class Management Kits," the finings of FTC after investigation showed that the kit contained less than 20 types of source materials that were used to decorate a classroom, such as color printed paper castles, flowers, grass, trees, insects, and fireworks. In the same way, the company admitted that the articles contained in the "Class Management Kit" were prepared at the time of textbook selection. In addition, they were also regarded as source materials for decorating the classroom of Grade One, and hence, they were provided to teachers. Furthermore, although the company claimed that such source materials could collocate with the class taught in the first term of Grade One, and with the classroom decoration works that is scheduled in the first term class of Grade Three, the findings of the Commission after investigation demonstrated that the content of the preparation for teaching the aforesaid curricula was that slips of blank paper, color pens, glues, scissors, and drawing tools prepared for decoration works. Decorating the classroom did not really need each kind of color printed and designed source materials provided by the company, and therefore, it was still difficult for the Commission to believe that such articles were directly connected to the adoption and teaching of the specific textbook. The circumstance that the company provided such improper articles had fit in the phrase provided in the Commission's explanatory regulation on textbooks that "utilizes the method of giving for free improper goods to seize the opportunity that teachers select free goods providers' textbooks."
   (4) With respect to the fact that Nani Books Corp. gave free "Class Management Kits," Han Lin Publishing Co. Ltd. provided Super Signets Treasure Boxes, correction signets for mathematics, and CD sholders, the treasure box and the correction signets were merely for teachers' convenience when they corrected school assignments or set examination questions, and CD storage covers were merely for storing discs and thus it would be difficult for the FTC to believe that all of these articles were directly connected to the teaching of the adopted textbook. Therefore, during the textbook selection period, Nani Books Corp.'s act of providing the above-mentioned items to teachers, might affect teachers' judgments on selection of textbooks. Accordingly, it had fit in the phrase provided in the Commission's Explanatory Regulation on Textbooks that "utilizes the method of giving free improper goods to seize the opportunity that teachers select the providers' textbooks."
   (5) In conclusion, the acts of Kang Hsuan Educational Publishing Corp., Nani Books Corp., and Han Lin Publishing Co. Ltd. to give school teachers free improper goods that had no direct connection to the teaching of the adopted textbooks, fell under the type of act that utilized the method of giving free improper goods to seize the opportunity that teachers would select the providers' textbooks, and which was reprehensible in terms of commercial competition ethics. These companies' acts violated Article 24 of the Fair Trade Law. Kang Hsuan Educational Publishing Corp., Nani Books Corp., and Han Lin Publishing Co. Ltd. were imposed with an administrative fine of NT$ 5 million, NT$ 2.3 million, and NT$ 2.5 million respectively.

Appendix:
Kang Hsuan Educational Publishing Corp.'s Uniform Invoice Number: 23142092
Nani Books Corp.'s Uniform Invoice Number: 68461979
Han Lin Publishing Co. Ltd.'s Uniform Invoice Number: 69382361
Summarized by Chang, Chan-Chi; Supervised by Yang, Chia-Hui