Shin Tao Gas Pipeline Equipment Company

Case:

Key Words:

gas safety equipment, safety inspection, natural gas

Reference:

Fair Trade Commission Decision of August 26, 2009 (the 929th Commissioners' Meeting), Disposition Kung Ch'u Tzu No. 098120

Industry:

Manufacturing Not Elsewhere Classified (3399)

Relevant Laws:

Article 24 of the Fair Trade Law

Summary:

1. This case originated from a complaint alleging that Shin Tao Gas Pipeline Equipment Company (hereinafter referred to as the Respondent) dispatched employees to the complainant's home on December 9, 2008 to conduct a safety inspection. The employees claimed that there was a sever gas leak and promoted their products of gas control valves to the complainant. Under the pressure, the complainant purchased two sets of gas control valves for a price of NT$5,800. Later when the complainant was paying the gas bill, he learned that the Respondent and Shin-Tao Natural Gas were two different entities and determined that the Respondent falsely represented itself to be Shin-Tao Natural Gas (the provider of piped-in natural gas) in selling its products.

2. Findings of FTC after investigation:
   (1)It was found that the Respondent's business was to sell gas safety equipment with Taoyuan as its major business area. The business nature of the Respondent is different from a piped-in natural gas provider. However, the Respondent's business name was similar to Shin-Tao Natural Gas, a provider of piped-in natural gas in Taoyuan. The Respondent, when making a statement at the FTC, admitted that equipment companies would often name their businesses in a way similar to the local natural gas providers to increase their chance in selling their gas control valves. The statement showed that the Respondent had the intention to confuse the public.
   (2)It was also found that the Respondent would first send out a service notification two to three days before visiting a target. By using the trust that the general public has in the gas providers, the public would not suspect otherwise when the Respondent sent employees to their homes in the name of safety inspections and would allow these employees to enter into their homes to inspect the gas pipelines. The Respondent would later inform the target of the danger of a gas leak and in turn sell and install their gas control valves for the target who would be under the pressure after learning the emergency.

3. Grounds for disposition:
   (1)According to Article 24 of the Fair Trade Law, "in addition to what is provided for in this Law, no enterprise shall otherwise have any deceptive or obviously unfair conduct that is able to affect trading order." Additionally, Point 4 of the "Fair Trade Commission Guidelines on Selling Gas Safety Equipment" provides that "A gas safety equipment distributor shall not engage in any of the following deceptive or obviously unfair conducts: 1. mislead the consumers in the pretext of gas prevention promotions, gas safety inspections, public interest groups, or government subsidies…" ; 5. further provides that "…in the event that a gas safety equipment distributor violates Point 4 hereof and the conduct is sufficient to affect the trading order, it is a violation of Article 24 of the Fair Trade Law." The general public normally has higher trust in the piped-in natural gas providers. The gas safety equipment distributor would use this trust to sell its products in the pretext of gas safety inspections without telling the target the true purpose of selling gas safety equipment. The public, without suspecting otherwise, would let the gas safety equipment distributor come to their homes to inspect the pipelines. The distributor would later express the danger that lies in the existing equipment and sell its products to the public. The entire sales process would cause the public to mistakenly enter into a transaction with the distributor and affect the right of the public's freedom of choice. It can be said that such conduct is deceptive and sufficient to affect the trading order.
   (2)Shin Tao Gas Pipeline Equipment Company misled the public into believing that it was the same entity as the piped-in natural gas provider and sold its gas safety equipment in the pretext of safety inspections. Its overall sales activity violated Article 24 of the Fair Trade Law and an administrative fine of NT$200,000 was imposed on the Respondent.

Appendix:
Liu, Chang Fen / Shin Tao (in transliteration) Gas Pipeline Equipment Company's Uniform Invoice Number: 48999903
Summarized by Chang, Ching-Yi; Supervised by Sun, Ya-Chuan